Disproportionate curtailment

When concluding contracts, it may happen that one of the contracting parties finds itself in a situation where its performance is not commensurate with what the other party provides. It is for these cases that the Civil Code provides in § 1793 the possibility of seeking protection through the institute of disproportionate curtailment.

What is disproportionate curtailment?

Disproportionate curtailment occurs when the performance of one of the parties is grossly disproportionate to what the other party has provided. The abbreviated party can then demand the cancellation of the contract and the return of everything to its original state, if the other party does not complete what was abridged. However, this institute is not applicable in all cases. For example, it does not apply to contracts concluded on commodity exchanges, when trading investment instruments or during auctions.

Principles of disproportionate curtailment

The institute of disproportionate curtailment is built on several key principles:

1. Objective disparity: There must be a gross disparity in mutual performance.


2. Subjective conditions: The aggrieved party must not know or must not have known about the value of his performance, and at the same time the advantaged party must know or must have known about the gross disproportion.

Disproportionate curtailment applies to all paid legal actions, whether named (purchase agreement, lease) or unnamed (future contract agreement). It does not apply to, for example, gratuitous legal actions, unilateral actions or bold contracts.

Cancellation of the contract due to disproportionate curtailment is only possible through a court decision. Only the abridged party has the right to challenge the contract and must do so within a one-year statute of limitations from the conclusion of the contract. A unilateral notification of a disproportionate curtailment to the other party is therefore not sufficient.

Conclusion

If you find yourself in a situation where you suspect that you have been shortchanged in the contract, it is important to contact an expert who will help you assess the situation and possibly initiate legal action. As an experienced lawyer, I am ready to provide you with all the necessary legal assistance and protection of your rights according to the current provisions of the Civil Code.