Legal Q&A · Commercial Contracts

When is an agreement invalid?

Law as at 21 July 2026

Short answer

An agreement may be invalid for several reasons: it was not made freely, seriously, certainly and comprehensibly; a party lacked capacity; or its content or purpose conflicts with or circumvents the law or is contrary to good morals. Absolute invalidity operates by law against everyone, while relative invalidity must be invoked by the affected person, for example where a party acted under a mistake. Until then, an act subject to relative invalidity is treated as valid.

The law imposes basic requirements on every legal act: it must be made freely and seriously, with certainty and clarity, otherwise it is invalid (Section 37(1) of the Civil Code). An act involving impossible performance is also invalid (Section 37(2)). Lack of capacity likewise causes invalidity: an act by a person lacking legal capacity, or acting under a mental disorder that makes them incapable of that act, is invalid (Section 38).

When does an agreement conflict with the law?

The most common ground is a substantive conflict with the law. A legal act is invalid if its content or purpose conflicts with or circumvents the law or is contrary to good morals (Section 39). This catches both direct breaches and structures that formally evade the law, as well as arrangements grossly contrary to moral principles. These are precisely the risks we identify before signing through a contract review.

Absolute and relative invalidity: what is the difference?

Not all invalidity operates in the same way. Absolute invalidity, for example a conflict with the law under Section 39, operates by law from the outset against everyone, and the court considers it on its own initiative. Relative invalidity applies only if the affected person invokes it; until then, the act is treated as valid (Section 40a). An example is an act made under a mistake concerning a decisive fact that the other party caused or must have known about (Section 49a). A mistake in motive alone does not invalidate an act.

Consequences and remedies

An invalid agreement creates a duty for the parties to return what they received as unjust enrichment. Whether an agreement is invalid and which form of invalidity applies is often disputed. A well-drafted agreement prevents risks through our bespoke commercial agreements service. Where a dispute has already arisen, we represent clients in court proceedings.

This answer provides general information on the law as at 21 July 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.

More legal questions

All questions and answers
  1. When do our standard terms actually become part of the agreement? When the other party knows them or received them with the proposed agreement. The Commercial Code permits part of an agreement's contents to be set by reference to standard terms, but only if the parties know them or they are attached to the offer. In a dispute, the party relying on them must prove this. Publishing them online alone is insufficient. Every agreement and order should identify the terms precisely and confirm receipt; if both parties exchange their own terms, the conflict must be resolved expressly.
  2. Our agreement is in Slovak and English. Which version applies if the texts differ? It is advisable to designate the prevailing text expressly, but statutory rules and the dispute forum must always be considered. Under Section 8(5) of the State Language Act, the state-language version of an agreement applies in the event of ambiguity or inconsistency in proceedings before the authorities and legal entities specified in Section 3(1). Outside this specific rule, the agreement's meaning is assessed under the governing law and applicable interpretation rules; expert examination of the translation is not automatically required.
  3. How do we sell goods with retention of title so we do not lose them before payment? Agree it in writing in the sale agreement, framework agreement or properly incorporated standard terms. Without it, the buyer acquires ownership on delivery, leaving you only a claim if payment is not made. Retention keeps ownership with you until full payment, especially valuable in the buyer's bankruptcy. Risk of damage still passes on receipt regardless of retained title, so also require insurance and prohibit further disposal.
  4. Our commercial agency agreement has ended. Is the agent still entitled to commission on later transactions? Possibly. The Commercial Code grants commission after termination where a transaction results mainly from the agent's activity and takes place within a reasonable period, or where the third party's order arrived before termination. This rule can be varied or excluded by agreement. Alongside it, however, the indemnity under Section 669 is mandatory and cannot be waived in advance. The agent must assert that right within one year of termination.

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Mgr. Patrik Tulinský, LL.M. Czech and Slovak attorney · SAK 300422 · ČAK 19654

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