Material Amendment to a Contract as Privative Novation

Keywords: public procurement, substantial modification, novation, indirect effect, Rome I, invalidity

Abstract: The main interest of this article is a legal regime of a contract for work concluded before 1.1.2014 (the Contract). First of all, the authors deal with time applicability of the legislation effective upon 1.1.2014, i.e. of the Act no. 89/2012, the civil code (the CC) in relation to the Contract and they address the issue of retroactivity. The crucial question is thus if and how an amendment to the Contract (after 1.1.2014) affects its legal regime. The authors conclude that if the amendment to the Contract means privative novation, i.e. replacement of an original obligation with a new one, the Contract will be newly governed by the CC. As an example of privative novation may serve a substantial modification to the public Contract concluded under the Act no. 137/2006. Based on the interpretation compliant with EU law, the authors come to a conclusion that the substantial modification to the public Contract demonstrates the will of the parties to renegotiate the Contract resulting in privative novation under Section 1902 of the CC. Furthermore, regarding Rome I the authors argue that an international Contract may, after its privative novation takes place, be governed by a different legal system than the parties originally intended. The aim of this article is thus also to provide a viable solution for the unintended and undesirable consequences of the privative novation.