The contract according to Bulgarian law

Concluding a contract leads to a contractual obligation between the two parties. These types of obligations are regulated by specific law area – contractual law.

Conclusion and effect

A contract is a bilateral transaction consisting of two declarations of intent (offer and acceptance) that must be linked to each other and match in their contents. The general rules regarding the contract in the Bulgarian law of obligations are to be found in the Bulgarian Obligations and Contracts Act (OCA). According to Article 8 of this Act, the contract is an agreement between two or more persons to enter into, to regulate or to dissolve a legal relationship. Thus, rights and obligations for the contracting parties arise. The parties shall exercise their rights in their own interests. They may not exercise their rights in contradiction to the interests of the general public. As provided in Article 9 of the Bulgarian Obligations and Contracts Act (OCA), the parties may freely determine the content of the contract as long as it complies with the law and the good moral standards. According to Article 12 of the Act the contracting parties must act in good faith during the conduct of negotiations and the conclusion of a contract. If these norms are violated, the right of compensation arises.

Conclusion of the contract

The contract is the parties’ agreement on the occurrence of specific legal consequences. To conclude a contract, there must be two matching declarations of intent, defined as offer and acceptance. The offer is a declaration of intent with sufficiently determined content, targeted on the emergence of specific legal consequences. It is made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. The acceptance by the counterparty is a declaration of intent, with which the party agrees with the content and the targeted legal consequences of the offer. The offer is sufficiently determined if it is possible to be accepted by simply saying “yes” to it; it must contain all essential elements of the prospective contract. Additional details such as terms, conditions that differ from concessionary law regulations must be negotiated expressly and precisely. The Bulgarian Obligations and Contracts Act (OCA) does not provide a specific form for the offer – the offer is, thus, an informal declaration of intent and may be delivered in written form as well as verbally. The electronic offer features specifics regulated in the Electronic Document and Electronic Signature Act (Bulg. It is classified as a written offer and it comes into effect only if the addressee of the electronic statement is a person who, by virtue of a law, is obliged to receive electronic statements or which, on the grounds of unambiguous circumstances, can be considered agreed to receive the statement in electronic form. Only the declaration of acceptance given by such person is binding. Regarding electronic declarations, a distinction between Author and signatory of the electronic statement is to be made (Art. 4 of the Electronic Document and Electronic Signature Act). Author of the electronic statement is the individual indicated in the statement as its author. Signatory of the electronic statement is the person on whose behalf the electronic statement is made/produced. The author may not be a legal person due to the fact that legal persons do not possess an own will. The Signatory is the person that obtains rights and obligations by making the declaration of intent. Author and Signatory may as well be one and the same person.

Binding force of the offer

The offer is binding upon the one who made it until the deadline of the offer expires. The deadline of the offer is measured by the time usually required to deliver an acceptance under normal circumstances. The offer may be withdrawn effectively and if the announcement of the withdrawal arrives before or at the same time as the offer does, it becomes void. If there is no deadline provided and the offer is not immediately accepted by the attendant the offer lapses; if the party that has to declare the acceptance of the offer is absent, the deadline is measured by the time usually required to deliver an acceptance under normal circumstances. If the withdrawal of the acceptance had been delivered before or at the same time as the acceptance, the acceptance becomes ineffective. If the acceptance delivered subsequently proves that it has been send off in time, the conclusion of the contract is effective unless the offering party informs the accepting party immediately of the acceptance’s delay.

Conclusion

According to Article 14 of the law of obligations and contracts, the contract is concluded, in the moment that the offering party receives the acceptance. The contract remains concluded, if one of the contracting parties dies or if a reason for incapacitation occurs after the receipt of the acceptance. The contract is considered to be concluded at the place where the offer has been submitted. If the offer contains general conditions, the acceptance of the contract turns only valid with the written agreement to the general conditions. If there are discrepancies between registered agreements and the general conditions, the former ones are effective although the latter ones are not erased.

Colourable transactions (pseudo agreements made by the parties to hide their real arrangement) are regulated by Article 17 of the law of obligations and contracts. The provisions regarding colourable transactions may only be applied, if the relevant preconditions are given. Rights that have been acquired by third parties in good faith due to colourable transactions remain in force unless they involve land/property rights that have been acquired after bringing an action for declaration of the colourable transaction.

Particular form of several contracts

Contracts regarding the transfer of ownership or the creation of property rights on real estate may only be concluded by notarial deed.

The pre-contract

A pre-contract regarding the conclusion of a final contract that requires a notarial certification must be concluded in writing. The pre-contract must contain agreements concerning the essential elements of the final contract. Each party of the pre-contract may claim for the conclusion of the final contract. In this case, the contract applies as concluded on the date of the judgement’s entry into force.

In the interpretation of the contract the common contractual intention of the parties is significant. The individual agreements are interpreted in the wider context and in accordance with the purpose of the contract, the usual business practice and good faith.

Effects of the contract

According to Article 20a of the law of obligations and contracts, contracts are legally binding on those who concluded them. The contracts may only be modified, denounced, dissolved or annulled by mutual consent of the parties or according to legal requirements. Only in the cases provided by law the contract effects operations between the contracting and third parties. If third parties hinder the performance of the contract, they must pay damages. The contract may be determined in favour of a third party. The agreement in favour of the third party may not be cancelled if the performance has been claimed towards the promisor or the stipulator. The stipulator may reserve the right to cancel the agreement or to replace the third party. The promisor that promised an obligation or a performance of a third party is obligated to pay damages to the contracting party if the third party does not attend its duties or does not perform as promised.

Article 24 of the law of obligations and contracts provides that, if contracts concerning the transfer of land, the establishment or transfer of another real right to a specific (individually characterized) object are the matter, the transfer or establishment becomes effective with the conclusion of the contract. The surrender of the object is not required. If contracts concerning transfer of ownership of items determined by genre are the matter, the property is transferred when the items are determined by the parties’ agreement and in default of such agreements when the items are surrendered.

The effectiveness or termination of a contract may be predicated on a henceforth, uncertain event. If the party that benefits from the absence of the event prevented it intentionally, the compliance of the condition is assumed. The compliance of the condition is retroactive.