Chapter 1 - Formation of a Contract
An offer to enter into a contract and the reply to such offer are, in accordance with the provisions of sections 2–9 below, binding on the offeror and offeree respectively.
The provisions of the aforementioned sections shall apply unless the contrary may be inferred from the offer or the reply, from commercial practice, or from any other custom.
Specific provisions govern agreements the validity of which are, according to law, dependent upon the observance of particular formalities.
Where the offeror stipulates a specific time for the reply, he shall be deemed to have prescribed that the reply shall be communicated to him within such time.
Where the offer is contained in a letter or telegram, and where a period of time is stated for the reply, such period shall be calculated from the day the letter is dated or from the day on which the telegram was delivered for dispatch.
Where the offer is contained in a letter or telegram and no period of time is stipulated for the reply, the offeree’s reply must be communicated to the offeror within such period of time as, at the time of the offer, the offeror could reasonably have estimated was required. In calculating such period of time, the offeror shall be entitled to presume, save where otherwise occasioned by the circumstances, that the offer will be received in due time, that the reply will be sent without delay after the offeree has been afforded a reasonable time for consideration, and that the reply will not be delayed en route. Where the offer is conveyed by telegram, the offeror shall also be entitled to presume that the reply will be dispatched in the same manner or will reach him as quickly by any other means.
Oral offers made in the absence of a specified time for acceptance, must be accepted immediately.
An offeree’s acceptance which is belatedly received by the offeror shall be deemed to constitute a new offer.
The aforementioned shall not, however, apply where the offeree assumes that it has been received in due time and this fact must have been realised by the offeror. In such circumstances the offeror shall, should he wish to repudiate the acceptance, so inform the offeree without unreasonable delay. Should he fail to do so, a contract shall be deemed to have been concluded through the acceptance.
An offer shall lapse upon rejection, notwithstanding that the period of time during which it would have otherwise been valid has not expired.
A reply which contains an acceptance but which, by reason of any addition, restriction or reservation does not conform with the offer, shall be deemed to constitute a rejection in conjunction with a new offer.
The aforementioned provisions shall not apply where the offeree believes it to correspond to the offer, and where this fact must have been realised by the offeror. In such circumstances the offeror shall, should he wish to repudiate the acceptance, so inform the offeree without unreasonable delay. Should he fail to do so, a contract shall be deemed to have been concluded through, and in accordance with, the acceptance.
An offer or acceptance which is revoked shall be void if the revocation is communicated to the party to whom the offer or acceptance is directed prior to, or simultaneously with, receipt by that party of the offer or the acceptance.
Where an offeror states that he does not require an express acceptance, or where the circumstances indicate that an express acceptance is not expected by the offeror, the offeree shall nevertheless be required, on request, to state whether he wishes to accept the offer. Should he fail to do so, the offer shall be deemed to have lapsed.
Separate provisions govern particular circumstances where a failure to reject an offer shall be deemed to constitute an acceptance thereof.
Where a statement which would otherwise be deemed to constitute an offer includes the words “not binding”, “without obligation”, or suchlike expression, such statement shall be deemed to constitute an invitation to tender an offer on the basis of the contents of the statement. Where such an offer is forthcoming within a reasonable period of time thereafter from a party thus invited, and where the recipient must realise that the offer has been occasioned by his invitation, the recipient shall, should he not wish to accept the offer, so inform the offeror without unreasonable delay. Should he fail to do so, he shall be deemed to have accepted the offer.
Chapter 2 - Agency
Any person who grants authority to another to enter into contracts or to otherwise perform legal acts shall, in relation to any third party, directly acquire such rights and assume such obligations as result from the legal acts performed by the agent within the scope of his authority and in the name of the principal.
A person who, being employed in the service of another party or otherwise as a result of an agreement with another party, occupies a position which, according to law or custom, confers certain authority to act on behalf of the other party, shall be deemed to be authorised to perform such legal acts as fall within the scope of such authority.
Where the agent performs a legal act in breach of specific restrictions prescribed by the principal, such legal act shall not be binding on the principal if the third party realised, or should have realised, that the agent had exceeded his authority.
Where the authority is of such a nature as stated section in 18, any legal act performed by the agent in excess of his authority shall not be binding on the principal, notwithstanding that the third party acted in good faith.
Where a principal wish to revoke a grant of agency as referred to in sections 13–16, he shall, notwithstanding that he has informed the agent that he no longer wishes the grant of agency to apply, be obliged to act in accordance with the relevant provisions of the aforementioned sections. Where a grant of agency is governed by several of the aforementioned sections, all such sections shall apply.
Where a third party is notified of the revocation of a grant of agency in the manner set forth in section 13, such third party shall not be entitled to rely on the fact that the revocation was not affected in another manner.
Where a third party has been informed of a grant of agency by means of notice specifically addressed to that party by the principal, such grant of agency shall be deemed to be revoked upon receipt by the third party of specific notice from the principal that the grant of agency is no longer valid.
A grant of agency which has been published by the principal in the press or otherwise publicly announced, shall be deemed to be revoked through an announcement published in a similar manner.
In the event of obstacles to such publication, the revocation may be announced in any similarly effective manner. The principal shall be entitled to obtain from the public authority stated in section 17, directions as to the manner in which such publication shall be affected.
A grant of agency such as referred to in section 10, second paragraph, shall be revoked through the dismissal of the agent from the service or other position by virtue of which he held his authority.
A grant of agency which is contained in a written document given to the agent to be held by him and presented to third parties, may be revoked through the principal repossessing the document or causing it to be destroyed.
The agent shall be obliged to return the document containing the grant of agency to the principal upon demand.
Where a principal establishes that it is probable that a document as referred to in section 16 has been lost or that, for any other reason, he cannot regain possession of the document without delay, such document may be declared void, in accordance with the provisions set forth below.
Applications in such circumstances shall be submitted to the district court in the jurisdiction in which the principal resides. Where there exist grounds for granting the application, the district court shall issue, and the applicant shall cause, an announcement to be published in the Post- och Inrikes Tidningar stating that upon the expiry of a specified period of time, which may be not more than fourteen days after the publication of such announcement, the grant of agency shall become void. If so, ordered by the district court, the announcement shall likewise be published in another newspaper, once or several times, prior to publication in the Post- och Inrikes Tidningar.
A grant of agency which is based solely on a communication by the principal to the agent, shall be deemed to have been revoked upon receipt by the agent of a communication from the principal that the grant of agency is no longer valid.
Where a principal has specific reason to believe that, notwithstanding that a grant of agency has been revoked or declared void, the agent will, on the basis of such grant of agency, perform a legal act towards a third party who may be presumed to be unaware of the termination of the grant of agency, the principal shall, if possible, notify such third party that the grant of agency is no longer valid. Should he fail to do so, he shall be estopped from relying on the termination of the grant of agency against a person who, in good faith, was a party to the legal act.
Where the principal, without terminating a grant of agency in the manner prescribed above, has nevertheless enjoined the agent from exercising the grant of agency, or where such principal has otherwise informed the agent that he does not desire the grant of agency to continue, legal acts performed by the agent shall not be binding on the principal if the third party was aware, or should have been aware, of such circumstances.
In the event of the death of the principal, the grant of agency shall remain in force unless there exist special circumstances causing it to lapse. However, notwithstanding that such circumstances exist, a legal act performed by the agent shall be binding on the estate of the deceased, provided that the third party neither knew nor should have known of the death of the principal, and of the consequences thereof with respect to the authority of the agent to perform the legal acts. Where the grant of agency is such as referred to in section 18, the legal act shall be valid only where, at the time of the legal act, the agent neither knew, nor should have known, of the death of the principal.
Where the estate of the deceased has been placed in bankruptcy, a legal act which, in accordance with the aforesaid, is binding on the estate of the deceased, is no more effective against the creditors than it would have been, had such act been performed by the heirs to the estate.
Where the principal is placed under the care of a guardian in accordance with the provisions of the Code on Parents, Guardians and Children, and where the agent performs any legal act which is within the scope of the responsibilities of the guardian, such act shall have no greater effect than it would have had, had it been performed by the principal himself.
Where the property of the principal is in bankruptcy or insolvent liquidation, a legal act performed by the agent shall have no greater effect on the estate in bankruptcy or insolvent liquidation than it would have had, had the act had been performed by the principal himself. Where the grant of agency is such as referred to in section 18, the legal act shall not be binding on the estate if the agent knew, or should have known, of the bankruptcy or insolvent liquidation at the time he performed the legal act.
Notwithstanding that the principal has been deprived of legal capacity, the agent may, pursuant to the grant of agency, engage in such legal acts as are required to protect the principal or his estate in bankruptcy or insolvent liquidation against loss, until such time as the requisite measures can be taken by the person who, according to law, is entitled to act on behalf of the principal.
Any person who acts as the agent of another shall ensure that he obtains the requisite grant of agency, and accordingly, shall be liable, where he is not able to establish that he has acted in accordance with terms of the agency or where he fails to prove that the legal act in question has been ratified by the purported principal or is otherwise binding upon him, to compensate any third party for any damage sustained by the third party as a consequence of the fact that he cannot enforce the legal act against the principal.
However, such provision shall not apply where the third party knew or should have known that a grant of agency did not exist, or that the terms of an existing grant of agency had been exceeded. Nor shall such provision apply where the party performing the legal act has acted on the basis of a grant of agency which was not binding on the principal as a consequence of special circumstances of which the agent was not aware and of which the third party could not reasonably presume that the agent would be aware.
The above provisions of this Chapter with regard to the authority of an agent to perform legal acts shall apply mutatis mutandis to the authority of agents to represent the principal in legal acts which are taken against the principal.
The provisions of sections 13 and 19 of the Partnership Registration Act (SFS 1974:157) shall apply to the revocation of a registered power of attorney which has been entered in the trade register. Where a revocation has been entered in the trade register and published in the Post- och Inrikes Tidningar, the proprietor of the undertaking shall not be obliged to revoke the grant of agency in any other manner.
A grant of agency to conclude agreements for the purchase, barter, or disposition by gift of real property shall be made in writing. Where such a grant of agency has been revoked or declared null and void in accordance with the provisions of sections 16 and 17 above, the grant of agency shall be without effect.
The above provisions of this Chapter whereby legal acts of an agent will not, in certain cases, be binding on the principal, are without prejudice to the provisions of Chapter 18, section 3 of the Commercial Code relating to the consequences of such a legal act, where such consequences have been utilised to the benefit of the principal.
Chapter 3 - The invalidity of certain legal acts
A legal act performed under duress, where such duress has been exerted through violence to the person or threats of imminent danger to the person, shall not be binding on the party subjected to such duress.
Where the duress is exerted by a party other than one in respect of whom the legal act is performed, and the latter has acted in good faith, the party subjected to the duress shall, where he wishes to plead the duress, inform the other party thereof without unreasonable delay following the cessation of the duress. Should he fail to do so, the legal act shall be deemed to be binding.
A legal act which a person has been coerced into performing other than as a consequence of duress as stated in section 28, shall not be binding on such person if the party in respect of whom the act was performed exerted the coercion or knew, or should have known, that the act was performed as a result of coercion exerted by another.
Where a person in respect of whom a legal act is performed has induced the performance of the act by fraudulent deception, or where such party knew, or should have known, that the act was induced by fraudulent deception on the part of a third party, such act shall not be binding on the person fraudulently deceived.
Where a person in relation to whom a legal act is performed has fraudulently represented or withheld facts which may be presumed to be material in relation to the act, such person shall be deemed to have thereby induced the legal act, unless it is shown that such legal act was not influenced by the fraud.
Where a person exploits the distressed circumstances, lack of mental capacity, irresponsibility, or dependence of another, in order to attain for himself or induce benefits which are manifestly disproportionate to the consideration paid or promised, or in respect of which no consideration shall be paid, such legal act shall not be binding on the person exploited.
The aforementioned provision shall also apply where the fraudulent practice referred to in the first paragraph is imputable to a person other than the one in respect of whom the legal act was performed, and where that person knew of, or should have been aware of, such circumstances.
Contracts for salvage are governed by separate provisions.
Where any person provides a statement of intent which, as a result of a typographical error or other mistake on his part, imparts a different meaning than the one intended, such person shall not be bound by the statement of intent if the party to whom it was addressed realised, or should have realised, the mistake.
Where a statement of intent which has been forwarded by telegram or transmitted orally through a messenger, has been distorted due to a telegraphic error or due to an inaccurate rendition by the messenger, the sender shall not be bound by the statement, notwithstanding that the recipient thereof is in good faith. However, where the sender does not wish the statement to be binding by reason of the aforesaid, he shall be obliged to inform the recipient thereof without unreasonable delay after becoming aware of the distortion. Should he fail to do so, and where the recipient is in good faith, the statement of intent shall be binding as delivered.
A legal act which would otherwise be deemed valid may not be relied upon where the circumstances in which it arose were such that, having knowledge of such circumstances, it would be inequitable to enforce the legal act, and where the party in respect of whom such legal act was performed must be presumed to have had such knowledge.
Notwithstanding that a promissory note, written contract or other instrument is a sham document, any claim or right assigned by the party entitled thereto under the document shall be enforceable by a transferee who was in good faith at the time of the assignment.
Where any person has signed a promissory note or other instrument which is valid in the hands of the bearer or is otherwise negotiable, such document shall, notwithstanding that it has been removed from the possession of the party without his consent, be enforceable against him where it is acquired by a subsequent assignee in good faith.
Where a payment order for a sum of money has been removed from the possession of a creditor without his consent, any payment effected by the debtor in good faith against presentation of the payment order when the debt is due, shall be valid against the creditor.
A contract term or condition may be modified or set aside if such term or condition is unconscionable having regard to the contents of the agreement, the circumstances prevailing at the time the agreement was entered into, subsequent circumstances, and circumstances in general. Where a term is of such significance for the agreement that it would be unreasonable to demand the continued enforceability of the remainder of the agreement with its terms unchanged, the agreement may be modified in other respects, or may be set aside in its entirety.
Upon determination of the applicability of the provisions of the first paragraph, particular attention shall be paid to the need to protect those parties who, in their capacity as consumers or otherwise, hold an inferior bargaining position in the contractual relationship.
The provisions of the first and second paragraphs shall apply mutatis mutandis to questions relating to the terms of legal acts other than contracts.
The provisions of section 11 of the Consumer Contracts Act (SFS 1994:1512) shall also apply to the modification of contractual terms relating to consumers.
A condition whereby a pledge or other security interest shall be forfeited in the event of non-fulfilment of the undertaking in respect of which it was given, shall be null and void.
Where, in order to prevent competition, one party has stipulated that the other party shall not engage in a certain type of business or shall not take up employment with a person conducting such a business, such an undertaking shall not binding on the person giving it to the extent that the undertaking is more extensive than may be considered reasonable. (SFS 1976:185).
Chapter 4 - General Provisions
Where, pursuant to this Act, the validity of a contract or other legal act is conditional on the fact that the party in respect of whom the act was performed neither knew nor should have known of certain circumstances, or was otherwise in good faith, account shall be taken of those circumstances of which he was aware or should have been aware at the time the act became known to him. However, where justified by the circumstances, account shall also be taken of the knowledge he acquired, or should have acquired, after such time, but before his actions were decisively affected by the legal act.
Where, pursuant to this Act, any person is obliged to provide notice to another party on pain that an agreement shall otherwise be concluded, or that an offer shall otherwise be deemed accepted, or that a legal act performed by him or on his behalf shall become binding upon him, and where such notice has been submitted for dispatch at a post office or a telegraph office or has otherwise been dispatched in an expedient manner, any delay or non-arrival of such notice shall not be deemed to constitute non-performance of the notification obligation of the sender.
The provisions of sections 7, 13 and 18 shall apply to the revocation of offers, acceptances, and grants of agency.
This Act repeals Chapter 1, section 1, and Chapter 9, section 9 of the Commercial Code, sections 2 and 3 of the Usury Act of 14 June 1901, and all other laws or statutory provisions which are incompatible with the provisions of this Act.
Entry into force and transitional provisions
This Act shall enter into force on 1 January 1916.
This Act shall enter into force on 1 July 1975.
This Act shall enter into force on 1 July 1976.
The new provisions shall also apply to legal acts undertaken prior to the entry into force of the Act.
This Act shall enter into force on 1 January 1978
The former wording of section 27 shall continue to apply to the question of public notice which has been issued or for which implementation commenced prior to the entry into force of the Act.
This Act shall enter into force on 1 January 1982.
A matter pending with the Chief Executive Authority at the time of the entry into force of the Act shall continue to be administered by the Chief Executive Authority, however not after than the end of 1982.
This Act shall enter into force on 1 July 1987.
The former wording of section 31 shall apply to a legal action commenced prior to the entry into force of the Act.
This Act shall enter into force on 1 January 1989.
- This Act shall enter into force on 1 January 1995.
- The new provisions shall also apply to legal actions commenced prior to the entry into force of the Act.
- Cases pending in court at the time of the entry into force of the Act shall be adjudicated pursuant to former provisions.