Contract invalidity under the new rules: introducing avoidance

Disputes over whether a contract is valid are among the longest in civil practice. The current Civil Code almost invites them: it distinguishes absolute and relative invalidity, and under § 39 any act whose content or purpose contravenes the law is invalid, regardless of whether the breached legislation seeks to address private law consequences at all. The draft new Civil Code reverses this approach.

Validity as the rule, invalidity as the exception

According to the explanatory memorandum, the draft is based on the principle of preferring the validity of legal acts. Invalidity will mean only what is currently associated with absolute invalidity. An act contrary to the law will be invalid only where the meaning and purpose of the law require it, not for every breach. Established case-law conclusions are also codified, such as the rule that a contractual prohibition does not affect the effectiveness of a disposition of property; the consequences of breaching the contract remain unaffected.

Avoidance replaces relative invalidity

Relative invalidity is to disappear from the code, replaced by avoidance, primarily for defects of consent: unlawful threats, fraud (a deliberately induced mistake, now regulated separately) and mistake. For mistake, this would apply only under the conditions set by the draft, for example where the addressee caused the mistake or knew or should have known of it; an inexcusable mistake is not enough. A key practical change is that the right to avoid the act would expire (preclusion) unless the entitled person avoids the act within six months of the day it learned of the ground, and no later than three years after the act was performed, unless the law provides otherwise (§ 102 of parliamentary print 1312). It would expire even earlier if the entitled person confirmed the act after the period began to run despite knowing or having to know of the ground. Expiry means the right is extinguished entirely once the deadline passes. Consistent with case law, protection of good-faith third parties is also strengthened: a person who honestly acquired rights should not suffer for defects they did not know and need not have known about.

What this means for businesses

For ordinary commercial dealings, this is good news: transactions gain greater certainty that a formal defect will not overturn them years later. The other side is that anyone wishing to rely on a defect must act faster. Anyone who delays raising an objection may lose the right as soon as six months after learning of the ground. Templates also deserve attention: invalidity and severability clauses drafted for today’s dual system are worth checking against the new regime.

When will the change arrive?

The government submitted the draft Civil Code to the National Council on 7 May 2026 (parliamentary print 1312), which advanced it to second reading on 9 June 2026. On 15 September 2026, the Constitutional and Legal Affairs Committee recommended approving it with amendments, and on 22 September 2026 MPs tabled further amendments in the plenary; the plenary will decide on the final wording. The proposed effective date is 1 July 2027 (as at 26 September 2026). The wording may still change, but the direction is clear.

To understand how the new approach affects your templates and general terms, see our preparation for the new Civil Code. If you need a contract designed to handle the transition with minimal changes, we can prepare a bespoke commercial contract.