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Breach of contract37

Three types of claims are distinguished:

  1. action for a declaratory judgment;
  2. action for performance (e.g., damages); and
  3. action for shaping the law.

The basic element of a claim for breach of contract is always a valid contract. However, culpable violation of contractual or pre-contractual obligations (culpa in contrahendo) also leads to a claim for damages. In principle, what applies in general also applies to culpability: anyone who invokes a circumstance that is more favourable to him or her in the proceedings must prove that this circumstance has actually occurred. The aggrieved party must, therefore, also prove the fault of the tortfeasor (liable party). However, there is an exception to this rule.

A highly significant reversal of the burden of proof for culpa in contrahendo exists, for example, in the event of a breach of contractual or contract-like obligations. This means that it is not the aggrieved party who must prove that the tortfeasor is at default, but the tortfeasor who must prove that he or she is not at fault. The determination of the burden of proof in Section 1298 ABGB only applies to the area of culpability, but not to the area of causality.

In the event of a breach of contract, a party is, based on Sections 1293 et seq. of the ABGB, entitled to sue the other party or parties for damages.

However, contracts can also be challenged on usury (Section 879, Paragraph 2 No. 4 ABGB) or owing to material imbalance (leasio enormis, Section 934 ABGB). A contract may also be contested on the grounds of error, cunning or threat.

In the event of defective performance of a contract, the affected party is entitled to the statutory warranty rights, provided by Section 932 ABGB. According to the law, the transferee can demand rectification (repair of or providing the missing), the replacement of the asset, a reasonable reduction of the price (price reduction) or the rescission of the contract (redhibition). A warranty claim must be asserted within three years if it relates to immovable assets, and within two years if it relates to movable assets. Warrant law does not apply if assets are transferred outright, in the case of obvious defects or in case of contractual exclusion. In principle, the warranty right can be excluded contractually unless one of the contracting parties is a consumer. Therefore, in the case of a consumer contract, warranty rights are obligatory. In addition, contractually agreed warranty clauses can be made subject to a lawsuit as well.

Defences to enforcement

It is within the scope of normal practice that sometimes one of the contract parties, under certain circumstances, attempts to avoid any obligation to perform a contract or to avoid enforcement of contractual obligations. In addition, this party could try to challenge claims of breach of contract.

Under Liechtenstein law, there are several options to try to defend oneself against unjust enforcement of contractual obligations. In general, every party can object that no contract has been formed at all (e.g., unenforceable agreements, indefinite or missing essential terms). Further, it can be argued that the limitation periods are over, the contract was formed under duress or there was a lack of consideration. One could also argue that the contract violates public policy or is unenforceable because of fraudulent inducement, misstatement or misrepresentation.

Where contractual exclusions of liability have been agreed, it may be argued that the liability out of the contract is limited – this also with regard to punitive or consequential damages, contractual agreed limits on representation or other disclaimers.

Depending on the case, the objection of force majeure may also be taken up.