It should be borne in mind that, as a matter of principle, the Polish legislature has adopted the view that legal relationships involving continuous obligations which bind the parties in perpetuity \u2013 that is, indefinitely and without any possibility of termination \u2013 should not operate in legal turnover.<\/p>\n\n
That premise is reflected in Article 3651<\/sup>, introduced into the Polish Civil Code in 2001, which provides as follows: \u201cAn obligation of a continuous nature and concluded for an indefinite term expires upon notice of termination given by the debtor or the creditor, subject to contractual, statutory or customary notice periods, and in the absence of such periods, immediately upon notice.\u201d<\/p>\n\n This provision does not apply to obligations that are not continuous in nature, such as contracts for specific work, sale agreements, exchange agreements or construction contracts, which are performed through the completion of a particular act or the carrying out of specified works. Nor does it apply to obligations with a defined temporal horizon, such as lease or tenancy agreements concluded for a fixed term, finance leases, or property insurance contracts (although each of these may provide for termination in specified circumstances).<\/p>\n\n In many cases, the ability to give notice of termination, or otherwise bring a continuous obligational relationship to an end, arises directly under statute. As a rule, the Polish Civil Code provides one mechanism or another for effectively terminating a continuous obligation, whether by notice of termination \u2013 for example, in the case of indefinite-term lease and tenancy agreements, loan agreements, agency agreements or bank account agreements \u2013 or in another form (for example, by demanding the return or collection of property entrusted for safekeeping under the provisions governing deposit agreements).<\/p>\n\n Business practice is, however, more varied and extends beyond the framework set by the Civil Code or other statutes. Thus, there are many relationships arising from so-called innominate contracts, i.e. contracts structured differently from nominate contracts, namely those regulated in the Civil Code or other legislative acts. Innominate contracts may also combine elements of various nominate contracts without being capable of classification under any single category. Examples include various framework agreements implemented through individual orders, mandates or separate agreements, cooperation agreements, agreements setting special terms for sale or supply arrangements between parties, and similar instruments.<\/p>\n\n For a variety of reasons, parties to such contracts may fail to specify either their duration or a mechanism for termination. In that event, the aforementioned Article 3651<\/sup> of the Civil Code will apply. Although the terminating party may encounter difficulties in determining whether customary notice periods exist for a given type of contract and, if so, what those periods are, the provision nevertheless permits the conclusion that, in the absence of such periods, the contract is dissolved immediately upon notice of termination. In contentious cases, the parties may of course seek to reach a compromise on that issue.<\/p>\n\n The provisions of other statutes governing nominate contracts capable of assuming a continuous character do not always specify a notice period for termination, as is the case, for example, under the Banking Law in relation to bank guarantees. It is generally accepted that Article 3651<\/sup> of the Civil Code applies where the parties have neither specified the duration of the guarantee nor provided for its termination.<\/p>\n\n It is widely accepted that Article 3651<\/sup> of the Civil Code is a mandatory provision (ius cogens<\/em>), which means that the parties cannot exclude its application to a given legal relationship by agreement; the consequence of such an attempt would be the invalidity of the relevant clause and potentially even of the contract as a whole. Any complete exclusion of its application may arise only by operation of law and, in my view, must do so expressly rather than merely as a matter of possible interpretation.<\/p>\n\n Accordingly, this provision performs an important protective function, especially in relation to natural persons, who do not always enter into contracts or other legal relationships of potentially unlimited duration with full awareness of their implications.<\/p>\n\n At the same time, it should be remembered that the inability to create a durable, non-terminable obligation may in some cases give rise to doubts stemming from the very nature of the obligation itself. This may be so, for example, in the case of confidentiality obligations or obligations arising under a settlement agreement to refrain from certain acts \u2013 obligations which may be of \u201clifetime\u201d significance to one party, while imposing no corresponding detriment on the other over the same period.<\/p>\n\n The legislature, however, either failed to perceive this aspect or chose to sacrifice that value in favour of a uniform rule that does not permit implied exceptions.<\/p>\n\n There may also be a need, particularly in financial relationships, to preserve the durability of a given obligational relationship. One way of addressing this issue may be to introduce a period during which termination by one or both parties is excluded (and would therefore be ineffective), that is, to specify the earliest date on which notice of termination may be served. As a rule, that possibility was confirmed by the Polish Supreme Court in its judgment of 13 June 2013, case no. V CSK 391\/12. At the same time, the Supreme Court pointed to the possible invalidity of such a clause where, owing to the [excessive \u2013 author\u2019s note] length of the period during which termination is not permitted, or other circumstances, the contractual provision infringes the principle that contracts must remain capable of termination on notice.<\/p>\n\n In some cases, the solution may be to define the circumstances in which termination of the contract is permissible, or to introduce a lengthy notice period (sometimes measured in years) \u2013 but in every such case this would amount only to \u201crelative\u201d durability. Depending on the circumstances, such an arrangement may adequately meet the parties\u2019 needs, for example by improving a company\u2019s balance sheet or ensuring stable financing, but it is not \u201cperpetual\u201d; at some point \u2013 however remote \u2013 each party will retain the right to terminate the contract effectively<\/p>\n\n In the second part of this article, I discuss the institution of perpetual bonds, which responds to the need for continuity in financial relationships, yet is not free from risk for either party.<\/p>\n","protected":false},"excerpt":{"rendered":" It should be borne in mind that, as a matter of principle, the Polish legislature has adopted the view that legal relationships involving continuous obligations which bind the parties in perpetuity \u2013 that is, indefinitely and without any possibility of termination \u2013 should not operate in legal turnover. That premise is reflected in Article 3651, […]<\/p>\n","protected":false},"author":33,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3886","post","type-post","status-publish","format-standard","hentry","category-bez-kategorii"],"acf":[],"yoast_head":"\n