The Contract Law is one of the most important branches of the international laws that promotes trading activities and is based on economic relations between countries. As an EU member state, Latvia has also started to amend its legislation in order to line it up with the EU directives, thus facilitating the free movement of capital, goods and services and also labor. However, Latvia has kept certain particularities regarding the conclusion of contracts between companies.
When signing a contract with a Latvian company, foreign investors must know that an offer followed by an acceptance represents a binding agreement. The contract is valid even if the party making the offer has not received the acceptance, according to Latvian laws.
When it comes to unfulfilling a contract, the Contract Law in Latvia allows certain exceptions, such as major force and accidents, that can lead to the termination of a contract without any penalties. Also if certain activities in the contract cannot be honored by one of the parties, the law may provide legal grounds for the contract to remain unfulfilled. Usually, purchase and lease contract can be cancelled due to major damages.
The Latvian Civil Law does not contain specific types of contracts, it only contains different types of regulations regarding activities companies may undertake, which is why the country has begun the adhering process to international conventions that allows the modernization of the Contract Law.
In 1999, Latvia adopted the Consumer Protection Act and four consumer contracts were enabled:
- the distance contract,
- the doorstep sale,
- the time-sharing contract,
- the consumer credit contract.
Separate legislation was enabled in order to classify the rent, land lease and work contract. The law on intellectual property also contains special provisions about contracts. One of the recent types of contracts enabled by the Latvian Civil Code is the concession contract. This type of contract was enabled by the introduction of the Concession Act in2000.
The Latvian Contract Law was amended in July 2009. The main purpose of the new amendments was the harmonization of the domestic legislation with the European laws on contracts.
Among these, the Latvian Contract Law adopted the Principles of European Contract Law (PECL), the UNIDROIT Principles of International Commercial Contracts (PICC) and the Draft Common Frame of Reference.
For complete details about the Contract Law and its newest provisions, you can contact our law firm in Latvia.
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