Czech commercial contracts: the basics under the Civil Code

Foreign businesses sometimes arrive in Prague with a contract drafted for another legal system and an assumption that it will behave the same way. Usually it does, which is what makes the exceptions memorable. Czech contract law is broadly liberal, but a few rules override drafting and a few defaults surprise people who have not read them.

This explainer covers the general framework (as of 2026; check the official source). It is not legal advice. For anything with real money behind it, have a Czech-qualified lawyer read the final version.

One code for everything

The new Civil Code (Act no. 89/2012 Coll.) took effect on 1 January 2014 and replaced both the old Civil Code and the Commercial Code. One law now covers contracts between businesses, between individuals and between the two. There is no separate commercial code for traders, though the Civil Code applies certain rules to entrepreneurs and professionals, and consumers have separate protections (see Czech consumer-business law for online shops).

The Code starts from the idea that private law should respect private choices. Parties may arrange their rights and duties as they wish, provided they do not breach mandatory provisions of law, good morals or public order.

Freedom of contract and its limits

In principle you can agree a contract of any type, including one the law does not name. The Code also lists named contracts, such as sale, lease, work contracts, mandate, agency and licence, each with default provisions that apply where the parties say nothing.

The limits are these. Some rules are mandatory and a contract cannot depart from them. A contract contrary to good morals, or unfair in ways the Code describes, can be void, and the Code also deals with usury and grossly disproportionate exchanges. A contract must be sufficiently certain, so the essential terms, such as the price or a means of fixing it, have to be settled.

Interpretation turns on what the parties meant, not only on the words. That is one reason a long, well-drafted agreement does not replace a clear shared understanding.

Form and signature

Most contracts need no particular form. Some must be in writing, and the law sometimes demands a notarial deed or a registry entry, as for property transfers. Parties can also agree that a contract takes effect only in writing. Electronic signatures are recognised under EU rules (eIDAS), and a qualified electronic signature has the same status as a handwritten one.

A clause requiring all amendments to be in writing is common and generally respected, though a court looks at the parties' conduct as a whole.

Default rules that matter

Where a contract is silent, the Code supplies defaults for matters such as place and time of performance, delivery and warranty periods. A seller's liability for defects in business sales, the time within which a buyer must notify defects and the rules on risk of loss are all set out. Do not assume your home-country default applies. If it matters, put it in the contract.

Liability for damage follows its own rules: a party who breaches a duty must compensate the other for the loss, except where circumstances exclude liability. Limitations of liability are allowed within limits, and the Code (§ 2898) does not permit liability to be excluded or limited in advance for harm to a person's natural rights, such as health, or for harm caused intentionally or by gross negligence.

Standard terms and surprising clauses

Standard business terms (obchodní podmínky) bind the other party only if the contract refers to them and they were known or attached. A clause in them that the other party could not reasonably expect is ineffective unless that party expressly accepted it (Civil Code, § 1753). Separate rules protect the weaker party in adhesion contracts, where terms are dictated with no real chance to negotiate. The typical example is a clause hidden in small print that shifts risk heavily. If your template contains terms like that, put them in front of the counterparty and get explicit agreement.

Contractual penalties

A smluvní pokuta (contractual penalty) is a common way to secure performance. Agree it in writing, with the sum or the way of calculating it stated: that makes it provable, and some contracts require written form anyway. A court can reduce a penalty that is unreasonably high, a point that also comes up in late payment rules and debt recovery. Do not assume a clause can strip the court of that power in advance.

Changed circumstances

The Civil Code has a rule for a substantial change of circumstances that makes performance excessively difficult for one party. That party can ask the other to renegotiate and, failing agreement, apply to a court. Parties can modify the rule in their contract. It is not a general escape from a bad deal.

Termination

Czech law distinguishes withdrawal (odstoupení), which in many cases ends the contract as if from the start, from notice (výpověď), which ends a continuing relationship for the future. The grounds depend on the contract and the law. A fixed-term agreement can be ended early only on a ground in the contract or the law. Read the termination clause before you sign, not when you need it.

Choice of law and courts

Parties may choose the governing law and the courts, subject to EU conflict-of-laws rules. Czech law with courts in Prague is a common choice with Czech counterparties. Where foreign law governs, mandatory Czech rules may still apply in some situations. Foreign judgments are straightforward to enforce inside the EU, but outside it depends on treaties. Our guide to the court system describes the venue.

Finally, check who you are contracting with. Verify the company in the commercial register and confirm that the person signing has authority, as set out in directors' duties.

This is a general explainer, not legal or tax advice.