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Contract for Services – Part 2: Warranty Obligations

It may be difficult to discriminate between a contract for services of the Swiss Civil Code a work contract. Making this distinction, however, is very important. It is so because either contract generates quite different warranty obligations. This article reveals which of these obligations arise from the contract for services.

Swiss Trade Organisation

Liability for Proper Performance

Liability for the proper performance of the contract is governed by article 398 of the Swiss Civil Code, whereby the contractor is liable to the same extent as the employee under the contract of service. And it is job and industry related liability that is meant here. Hence, it depends on the type of contract. You become liable when you fail to meet your obligation to ensure the proper performance of the contract. Proper performance is understood as carrying out a contract with necessary diligence and attention. Proper performance obliges the contractor to respect and safeguard the interests and legally protected rights of the customer. This includes the obligation to provide information and keep it confidential. The obligation to ensure proper performance can survive the term of the contract.

Liability When Outsourcing the Work to Third Parties

Article 399 of the Swiss Civil Code addresses the issue of liability where a third party is used to perform a job. If this takes place in an unauthorised manner (see the first article), it is the contractor who is liable for such a third party’s actions. If the outsourcing is legal, the contractor is liable only where lacking in diligence when selecting and instructing the third party. In both cases the contractor can raise claims directly against such a third party. Things look different when resorting to associates. The contractor’s not being allowed to outsource the contract to a third party does not mean at all that no associates as defined in article 101 of the Swiss Civil Code may be hired. It is not allowable only if it is contractually agreed who personally is going to provide the service.

Reporting

The customer can at any time demand account from the contractor. This involves the latter’s obligation to provide information. In addition, the contractor must hand over to the customer everything the contractor may receive for the latter. If the contractor fails to deliver any funds on time, the contractor has to pay interest on them as stipulated in article 400 of the Swiss Civil Code.

 Right to Withdraw at Any Time

Either party to the contract for services is entitled to terminate it at any time. If this takes place at a wrong time, the withdrawing party, pursuant to article 404 of the Swiss Civil Code, is liable for damages. With this right, the circumstance is meant to be taken into account that contracts for services often involve very sensitive and personal transactions. Medical examinations, legal assistance or tax consulting are only examples for that.

 

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