¹ A contract concluded in the parties' absence takes effect from the time acceptance is sent.

² Where express acceptance is not required, the contract takes effect from the time the offer is received.

¹ The validity of a contract is not subject to compliance with any particular form unless a particular form is prescribed by law.

² In the absence of any provision to the contrary on the significance and effect of formal requirements prescribed by law, the contract is valid only if such requirements are satisfied.

¹ The terms of a contract may be freely determined within the limits of the law.

² Clauses that deviate from those prescribed by law are admissible only where the law does not prescribe mandatory forms of wording or where deviation from the legally prescribed terms would contravene public policy, morality or rights of personal privacy.

¹ A contract is void if its terms are impossible, unlawful or immoral.

² However, where the defect pertains only to certain terms of a contract, those terms alone are void unless there is cause to assume that the contract would not have been concluded without them.

¹ Where there is a clear discrepancy between performance and consideration under a contract concluded as a result of one party's exploitation of the other's straitened circumstances, inexperience or thoughtlessness, the person suffering damage may declare within one year that he will not honour the contract and demand restitution of any performance already made.

² The one-year period commences on conclusion of the contract.

¹ Parties may reach a binding agreement to enter into a contract at a later date.

² Where in the interests of the parties the law makes the validity of a contract conditional on observance of a particular form, the same applies to the agreement to conclude a contract.

¹ A party induced to enter into a contract by the fraud of the other party is not bound by it even if his error is not fundamental.

² A party who is the victim of fraud by a third party remains bound by the contract unless the other party knew or should have known of the fraud at the time the contract was concluded.

¹ Where the party acting under error, fraud or duress neither declares to the other party that he intends not to honour the contract nor seeks restitution for the performance made within one year, the contract is deemed to have been ratified.

² The one-year period runs from the time that the error or the fraud was discovered or from the time that the duress ended.

³ The ratification of a contract made voidable by duress or fraud does not automatically exclude the right to claim damages.

The special provisions governing the authority of agents and governing bodies of companies and partnerships and of registered and other authorised agents are unaffected.

¹ The following provisions apply to contracts relating to goods and services intended for the customer's personal or family use where:

a.

the supplier of the goods or services acted in a professional or commercial capacity; and

b.

the consideration from the buyer exceeds 100 francs.

² These provisions do not apply to legal transactions that are entered into by financial institutions and banks within the framework of existing financial services contracts in accordance with the Financial Services Act of 15 June 2018⁹.¹⁰

^2bis For insurance policies, the provisions of the Insurance Policies Act of 2 April 1908¹¹ apply.¹²

³ In the event of significant change to the purchasing power of the national currency, the Federal Council shall adjust the sum indicated in para. 1 let. b accordingly.

A customer may revoke his offer to enter into a contract or his acceptance of such an offer if the transaction was proposed:

a.¹⁴

at his place of work, on residential premises or in their immediate vicinity;

b.

on public transport or on a public thoroughfare;

c.

during a promotional event held in connection with an excursion or similar event;

d.¹⁵

by telephone or by a comparable means of simultaneous verbal communication.

The customer has no right of revocation:

a.

if he expressly requested the contractual negotiations;

b.

if he declared his offer or acceptance at a stand at a market or trade fair.

¹ The supplier must inform the customer in writing or in another form that may be evidenced by text of the latter's right of revocation and of the form and time limit to be observed when exercising such right, and must provide his address.¹⁸

² Such information must be dated and permit identification of the contract in question.

³ The information must be transmitted in such a manner that the customer is aware of it when he proposes or accepts the contract.¹⁹

¹ Any person who unlawfully causes damage to another, whether wilfully or negligently, is obliged to provide compensation.

² A person who wilfully causes damage to another in an immoral manner is likewise obliged to provide compensation.

¹ A person claiming damages must prove that damage occurred.

² Where the exact value of the damage cannot be quantified, the court shall estimate the value at its discretion in the light of the normal course of events and the steps taken by the person suffering damage.

³ The costs of treating animals kept as pets rather than for investment or commercial purposes may be claimed within appropriate limits as a loss even if they exceed the value of the animal.²⁶

¹ The court determines the form and extent of the compensation provided for damage incurred, with due regard to the circumstances and the degree of culpability.

^1bis Where an animal kept as a pet rather than for investment or commercial purposes has been injured or killed, the court may take appropriate account of its sentimental value to its owner or his dependants.²⁷

² Where damages are awarded in the form of periodic payments, the debtor must at the same time post security.

¹ Where the person suffering damage consented to the harmful act or circumstances attributable to him helped give rise to or compound the damage or otherwise exacerbated the position of the party liable for it, the court may reduce the compensation due or even dispense with it entirely.

² The court may also reduce the compensation award in cases in which the damage was caused neither wilfully nor by gross negligence and where payment of such compensation would leave the liable party in financial hardship.

¹ Where a person has acted in self-defence, he is not liable to pay compensation for damage caused to the person or property of the aggressor.

² A person who damages the property of another in order to protect himself or another person against imminent damage or danger must pay damages at the court's discretion.

³ A person who uses force to protect his rights is not liable in damages if in the circumstances the assistance of the authorities could not have been obtained in good time and such use of force was the only means of preventing the loss of his rights or a significant impairment of his ability to exercise them.

¹ When determining fault or lack of fault and capacity or incapacity to consent, the court is not bound by the provisions governing criminal capacity nor by any acquittal in the criminal court.

² The civil court is likewise not bound by the verdict in the criminal court when determining fault and assessing compensation.

¹ In the event of damage caused by an animal, its keeper is liable unless he proves that in keeping and supervising the animal he took all due care or that the damage would have occurred even if all due care had been taken.

² He has a right of recourse if the animal was provoked either by another person or by an animal belonging to another person.

³ ...³¹

¹ A person in possession of a plot of land is entitled to seize animals belonging to another which cause damage on that land and take them into his custody as security for his claim for compensation or even to kill them, where justified by the circumstances.

² He nonetheless has an obligation to notify the owner of such animals without delay or, if the owner is not known to him, to take the necessary steps to trace the owner.

¹ The owner of a building or any other structure is liable for any damage caused by defects in its construction or design or by inadequate maintenance.

² He has a right of recourse against persons liable to him in this regard.

¹ A person who is at risk of suffering damage due to a building or structure belonging to another may insist that the owner take the necessary steps to avert the danger.

² Orders given by the police for the protection of persons and property are unaffected.

¹ A person who has enriched himself without just cause at the expense of another is obliged to make restitution.

² In particular, restitution is owed for money benefits obtained for no valid reason whatsoever, for a reason that did not transpire or for a reason that subsequently ceased to exist.

¹ A person who has voluntarily satisfied a non-existent debt has a right to restitution of the sum paid only if he can prove that he paid it in the erroneous belief that the debt was owed.

² Restitution is excluded where payment was made in satisfaction of a debt that has prescribe or of a moral obligation.

³ The provisions of federal debt collection and bankruptcy law governing the right to the restitution of payments made in satisfaction of non-existent claims are unaffected.

There is no right of restitution where the recipient can show that he is no longer enriched at the time the claim for restitution is brought, unless he alienated the money benefits in bad faith or in the certain knowledge that he would be bound to return them.

¹ The recipient is entitled to reimbursement of necessary and useful expenditures, although where the unjust enrichment was received in bad faith, the reimbursement of useful expenditures must not exceed the amount of added value as at the time of restitution.

² He is not entitled to any compensation for other expenditures, but where no such compensation is offered to him, he may, before returning the property, remove anything he has added to it provided this is possible without damaging it.

An obligor is not obliged to discharge his obligation in person unless so required by the obligee.

Where no time of performance is stated in the contract or evident from the nature of the legal relationship, the obligation may be discharged or called in immediately.

Performance of the obligation must be made and accepted during normal business hours on the date stipulated.

Where the agreed time limit for performance is extended, in the absence of an agreement to the contrary, the new time limit runs from the first day following expiry of the previous time limit.

¹ Unless the terms or nature of the contract or the circumstances indicate that the parties intended otherwise, performance may be rendered before the date on which the time limit expires.

² However, the obligor is not entitled to apply a discount unless that discount has been agreed or is sanctioned by custom.

¹ Pecuniary debts must be discharged in legal tender of the currency in which the debt was incurred.

² A debt expressed in a currency other than the national currency of the place of payment may be discharged in that national currency at the rate of exchange that applies on the day it falls due, unless literal performance is required by inclusion in the contract of the expression 'actual currency' or words to that effect.

The obligee is in default if he refuses without good cause to accept performance properly offered to him or to carry out such preparations as he is obliged to make and without which the obligor cannot render performance.

¹ Where an obligation is due, the obligor is in default as soon as he receives a formal reminder from the obligee.

² Where a deadline for performance of the obligation has been set by agreement or as a result of a duly exercised right of termination reserved by one party, the obligor is automatically in default on expiry of the deadline.

¹ A person who, acting in his own name, has entered into a contract whereby performance is due to a third party is entitled to compel performance for the benefit of said third party.

² The third party or his legal successors have the right to compel performance where that was the intention of the contracting parties or is the customary practice.

³ In this case the obligee may no longer release the obligor from his obligations once the third party has notified the obligor of his intention to exercise that right.

Where an employer has taken out liability insurance and his employee has contributed at least half of the premiums, the employee has sole claim to the policy benefits.

¹ Where two persons owe each other sums of money or performance of identical obligations, and provided that both claims have fallen due, each party may set off his debt against his claim.

² The debtor may assert his right of set-off even if the countervailing claim is contested.

³ A time-barred claim may be set off provided that it was not time-barred at the time it became eligible for set-off.

A surety may refuse to satisfy the creditor to the extent that the principal debtor has a right of set-off.

A person who has undertaken an obligation in favour of a third party may not set off that obligation against his own claims against said party.

¹ Where the debtor is bankrupt, his creditors may set off their claims, even if they are not due, against the claims that the adjudicated bankrupt holds against them.

² The exclusion or challenge of set-off in the event of the debtor's bankruptcy is governed by the provisions of debt collection and bankruptcy law.

All claims prescribe after ten years unless otherwise provided by federal civil law.

The following prescribe after five years:

1.

claims for agricultural and commercial rent and other rent, interest on capital and all other periodic payments;

2.

claims in connection with delivery of foodstuffs, payments for board and lodging and hotel expenses;

3.⁴⁷

claims in connection with work carried out by tradesmen and craftsmen, purchases of retail goods, medical treatment, professional services provided by advocates, solicitors, legal representatives and notaries, and work performed by employees for their employers.

Claims for damages or satisfaction arising from an injury or death in breach of contract prescribe three years from the date on which the person suffering damage became aware of the damage, but in any event twenty years after the date on which the harmful conduct took place or ceased.

The prescriptive periods laid down under this Title may not be altered by contract.

¹ When computing prescriptive periods, the date on which the prescriptive period commences is not included and the period is not deemed to have expired until the end of its last day.

² In other respects the provisions governing computation of time limits for performance also apply to prescription.

The prescriptive period is interrupted:

1.

if the debtor acknowledges the claim and in particular if he makes interest payments or part payments, gives an item in pledge or provides surety;

2.⁵⁶

by debt enforcement proceedings, an application for conciliation, submission of a statement of claim or defence to a court or arbitral tribunal, or a petition for bankruptcy.

¹ Where the prescriptive period for one person who is jointly and severally liable for a debt or jointly liable for indivisible performance is interrupted, it is likewise interrupted for all other co-obligors, provided the interruption is due to an act by the creditor.

² Where the prescriptive period for the principal debtor is interrupted, it is likewise interrupted for the surety, provided the interruption is due to an act by the creditor.

³ However, where the prescriptive period for the guarantor is interrupted, it is not interrupted for the principal debtor.

⁴ An interruption effective against an insurer is also effective against the debtor and vice-versa, provided there is a direct claim against the insurer.

¹ Debtors become jointly and severally liable for a debt by stating that each of them wishes to be individually liable for performance of the entire obligation.

² Without such a statement of intent, debtors are joint and severally liable only in the cases specified by law.

¹ A contract is conditional if its binding nature is made dependent on the occurrence of an event that is not certain to happen.

² The contract takes effect as soon as this condition precedent occurs, unless the parties clearly intended otherwise.

¹ Until such time as the condition precedent occurs, the conditional obligor must refrain from any act which might prevent the due performance of his obligation.

² A conditional obligee whose rights are jeopardised is entitled to apply for the same protective measures as if his claim were unconditional.

³ On fulfilment of the condition precedent, dispositions made before it occurred are void to the extent that they impair the effect of the condition precedent.

¹ A creditor into whose possession a promised object has been delivered before the condition precedent occurred may, on fulfilment of the condition precedent, keep any benefits obtained from it in the interim.

² If the condition precedent fails to occur, he is obliged to return such benefits.

If the condition consists of an act by one of the parties and that act need not be carried out in person, it may also be carried out by the party's heirs.

A condition is deemed fulfilled where one of the parties has prevented its fulfilment by acting in bad faith.

Where a condition is attached with the intention of encouraging an unlawful or immoral act or omission, the conditional claim is void.

¹ The parties are free to determine the amount of the contractual penalty.

² The penalty may not be claimed where its purpose is to reinforce an unlawful or immoral undertaking or, unless otherwise agreed, where performance has been prevented by circumstances beyond the debtor's control.

³ At its discretion, the court may reduce penalties that it considers excessive.

Where legal provisions or a court judgment require a claim to be assigned to another person, the assignment is effective towards third parties without need for any particular form or even for a statement of intent by the former creditor.

¹ The assignment of a claim includes all preferential and accessory rights except those that are inseparable from the person of the assignor.

² The assignor is bound to surrender to the assignee the legal document pertaining to the debt together with all available evidence thereof and to furnish him with all information necessary to assert the claim.

³ Arrears of interest are presumed assigned with the main debt.

¹ The accession of the debt acquirer to the debt relationship in lieu of and with the release of the previous debtor is effected by means of a contract between the debt acquirer and the creditor.

² An offer to enter into the contract may consist of notification of the creditor that the debt is to be assumed. Notification must be made either by the debt acquirer or, on his authority, by the previous debtor.

³ The creditor's acceptance may be express or implied by the circumstances and is presumed once the creditor unreservedly takes receipt of a payment from the debt acquirer or consents to some other act performed by him in the capacity of debtor.

¹ The creditor may declare his acceptance at any time, but the debt acquirer and the former debtor may set the creditor a time limit for acceptance and where this expires without communication from the creditor, he is deemed to have refused the offer.

² If the creditor agrees some other debt assumption arrangement before the offer has been accepted and the new prospective debt acquirer has also made an offer to the creditor, the party that made the previous offer is no longer bound thereby.

¹ The rights that are accessory to the debt remain unaffected by the change of debtor save to the extent that they are inseparable from the person of the previous debtor.

² However, pledges and sureties provided by third parties remain in place in favour of the creditor only provided the pledgor or surety has consented to the assumption of the debt.

¹ Any defences arising from the debt relationship are available to the new debtor as they were to the former.

² The new debtor may not invoke the defences personally available to the old debtor against the creditor, unless otherwise provided in the contract with the creditor.

³ Where the debt acquirer has defences arising against the debtor from the legal relationship underlying the assumption of debt, these may not be invoked against the creditor.

¹ The buyer has an obligation to pay the price in accordance with the terms of the contract and to accept the sale object provided it is offered to him by the seller as contractually agreed.

² Unless otherwise provided by agreement or custom, such acceptance must take place immediately.

¹ Where the buyer places a firm order without indicating the sale price, the price is presumed to be the average current market price at the place of performance.

² Where the price is based on the weight of the goods, the weight of the packaging (tare) is deducted.

³ The foregoing does not apply to special commercial customs whereby the gross weight of certain resale merchandise is reduced by a set amount or percentage or the price is based on the gross weight including packaging.

¹ The price falls due as soon as the property passes into the buyer's possession, unless some other juncture is agreed.

² Regardless of the provision governing default on expiry of a specified time limit, interest accrues on the sale price even if no reminder is issued where such practice is customary or the buyer may derive fruits or other benefits from the purchased object.

¹ A right of pre-emption may be exercised on the sale of the immovable property or any other legal transaction economically equivalent to a sale (pre-emption event).

² In particular, the following are not pre-emption events: allocation to an heir in the division of an estate, forced sale, or acquisition in performance of public duties.

¹ The seller must inform persons with a right of pre-emption of the conclusion and content of any contract of sale entered into.

² Where the contract of sale is terminated after the right of pre-emption has been exercised or if necessary permission is refused for reasons pertaining to the person of the buyer, such termination or refusal has no effect on the person to whom the right of pre-emption accrues.

³ Unless the pre-emption agreement provides otherwise, the person with the right of pre-emption may purchase the property on the conditions agreed by the seller with the third party.

A person wishing to exercise his right of pre-emption must give notice of his intention within three months to the seller or, if it is entered in the land register, to the owner. This time limit commences on the day on which the person with the right of pre-emption became aware of the conclusion and content of the contract of sale.

¹ In a sale on approval or inspection, the buyer is free to accept or refuse the object.

² Until it is accepted, the seller remains its owner even if it has passed into the buyer's possession.

¹ Where the object is to be inspected on the premises of the seller, he is released from his obligation if the buyer fails to accept the object within the agreed or customary time limit.

² In the absence of any such time limit the seller may, after an appropriate interval, call on the buyer to declare whether he accepts the object, and the seller is released from his obligation if the buyer fails to make such declaration immediately on request.

¹ Where the object has been delivered to the buyer prior to inspection, the sale is deemed to have been approved if the buyer neither declares that he rejects the object nor returns it within the agreed or customary time limit or, in the absence of any such time limit, immediately on demand by the seller.

² The sale is similarly treated as completed, if the buyer pays the whole or part of the price without reservation or if he deals with the property otherwise than was necessary for its inspection.

¹ At a compulsory auction, a contract of sale is concluded when the official auctioneer knocks the object down to the highest bidder.

² In the case of a voluntary auction that has been publicly announced and is open to all bidders, a contract of sale is concluded when the seller accepts the bid of the highest bidder.

³ Unless the seller has expressed some other intention, the auctioneer is deemed to have the authority to knock the object down to the highest bidder.

¹ Any interested party may within ten days bring a claim for avoidance in respect of an auction whose outcome has been influenced by unlawful or immoral means.

² In the case of a compulsory auction, the avoidance claim must be brought before the supervisory authority, and in all other cases before the court.

¹ The successful bidder must pay in cash unless the auction terms and conditions provide otherwise.

² The seller may immediately withdraw from the transaction if payment is not tendered in cash or in accordance with the auction terms and conditions.

¹ Sale at compulsory auction is without warranty, apart from special assurances given or where the bidders are intentionally deceived.

² The successful bidder acquires the object in the condition and with the attendant rights and encumbrances indicated in the public registers or the lot description and/or those that exist by operation of law.

³ In sales at voluntary public auction, the seller has the same liability as in any other sale, but in the lot description he may disclaim any warranty obligation with the exception of liability for intentional deceit.

¹ The successful bidder for a chattel acquires title to it as soon as it is knocked down to him, whereas ownership of immovable property is not transferred until the entry is made in the land register.

² The official auctioneers immediately notify the land registry of the sale at auction by reference to the formal auction record.

³ The provisions governing acquisition of ownership at compulsory auction are reserved.

The cantons may enact other provisions governing sale at public auction within the bounds of federal law.

Leases are contracts in which a landlord or lessor grants a tenant or lessee the use of an object in exchange for rent.

¹ The landlord or lessor is required to make the object available on the agreed date in a condition fit for its designated use and to maintain it in that condition.

² Clauses to the contrary to the detriment of the tenant or lessee are void if they are set out:

a.

in previously formulated general terms and conditions;

b.

in leases for residential or commercial premises.

¹ If a report was drawn up on the return of the object at the end of the previous lease, the landlord or lessor must on request make this document available for perusal by the new tenant or lessee when the object is handed over to him.

² Similarly, the new tenant or lessee has the right to be informed of the amount of rent paid under the previous lease.

The landlord or lessor bears all taxes and charges in connection with the leased object.

¹ Where the tenant of residential or commercial premises furnishes security in the form of cash or negotiable securities, the landlord must deposit it in a bank savings or deposit account in the tenant's name.

² In residential leases, the landlord is not entitled to ask for more than three months' rent by way of security.

³ The bank may release such security only with the consent of both parties or in compliance with a final payment order or final decision of the court. On expiry of one year following the end of the lease, the tenant or lessee may request that the security be returned to him by the bank if no claim has been brought against him by the landlord or lessor.

⁴ The cantons may enact further provisions.

¹ The tenant or lessee must use the object with all due care.

² Where the lease relates to immovable property, the tenant must show due consideration for others who share the building and for neighbours.

³ If, despite written warning from the landlord or lessor, the tenant or lessee continues to act in breach of his duty of care and consideration such that continuation of the lease becomes unconscionable for the landlord or lessor or other persons sharing the building, the landlord or lessor may terminate the contract with immediate effect or, for leases of residential and commercial premises, subject to at least 30 days' notice ending on the last day of a calendar month.

⁴ However, leases of residential and commercial premises may be terminated with immediate effect if the tenant intentionally causes serious damage to the property.

¹ On learning of defects which he himself is not obliged to remedy, the tenant or lessee must inform the landlord or lessor.

² Failure to notify renders the tenant or lessee liable for any damage incurred by the landlord or lessor as a result.

¹ The tenant or lessee must tolerate works intended to remedy defects in the object or to repair or prevent damage.

² The tenant or lessee must permit the landlord or lessor to inspect the object to the extent required for maintenance, sale or future leasing.

³ The landlord or lessor must inform the tenant or lessee of works and inspections in good time and take all due account of the latter's interests when they are carried out; all claims of the tenant or lessee for reduction of the rent (Art. 259d) and for damages (Art. 259e) are reserved.

The tenant or lessee must remedy defects which can be dealt with by minor cleaning or repairs as part of regular maintenance and, depending on local custom, must do so at his own expense.

¹ The landlord or lessor may renovate or modify the object only where conscionable for the tenant or lessee and the lease has not been terminated.

² In carrying out such works, the landlord or lessor must give due consideration to the tenant or lessee's interests; all claims of the tenant or lessee for reduction of the rent (Art. 259d) and for damages (Art. 259e) are reserved.

¹ The tenant or lessee may renovate or modify the object only with the written consent of the landlord or lessor.

² Once such consent has been given, the landlord or lessor may require the restoration of the object to its previous condition only if this has been agreed in writing.

³ Where at the end of the lease the object has appreciated significantly in value as a result of renovations or modifications to which the landlord or lessor consented, the tenant or lessee may claim appropriate compensation for such appreciation, subject to any written agreements providing for higher levels of compensation.

¹ Where after concluding the contract the landlord alienates the object or is dispossessed of it in debt collection or bankruptcy proceedings, the lease passes to the acquirer together with ownership of the object.

² However, the new owner may:

a.

serve notice to terminate a lease on residential or commercial premises as of the next legally admissible termination date if he claims an urgent need of such premises for himself, his close relatives or in-laws;

b.

serve notice to terminate a rental agreement in respect of other objects as of the next legally admissible termination date unless the contract allows for earlier termination.

³ If the new owner terminates sooner than is permitted under the contract with the existing landlord or lessor, the latter is liable for all resultant losses.

⁴ The provisions governing compulsory purchase are unaffected.

Where the landlord or lessor grants a third party a limited right in rem and this is tantamount to a change of ownership, the provisions governing alienation of the object are applicable mutatis mutandis.

¹ The parties to a lease may agree to have it entered under priority notice in the land register.

² The effect of such entry is that every future owner must allow the property to be used in accordance with the lease.

¹ Where the parties have expressly or tacitly agreed to a limited duration, the lease comes to an end on expiry thereof without any need for notice to be given.

² If the lease is tacitly continued, its duration becomes indefinite.

¹ At the end of the lease, the tenant or lessee must return the object in a condition that accords with its contractually designated use.

² Any clause whereby the tenant or lessee undertakes to pay compensation on termination of the lease is void except insofar as such compensation relates to possible damage.

¹ When the object is returned, the landlord or lessor must inspect its condition and immediately inform the tenant or lessee of any defects for which he is answerable.

² If the landlord or lessor fails to do so, he forfeits his claims save in respect of defects not detectable on customary inspection.

³ Where the landlord or lessor discovers such defects subsequently, he must inform the tenant or lessee immediately.

¹ As security for rent for the past year and the current six-month period, a landlord of commercial premises has a special lien on chattels located on the leased premises and either used as fixtures or required for the use of the premises.

² The landlord's special lien also extends to property brought onto the premises by a sub-tenant to the extent that he has not paid his rent.

³ Goods not subject to attachment by creditors of the tenant are not subject to the lien.

¹ The rights of third parties to objects which the landlord knew or should have known do not belong to the tenant and to stolen, lost, missing or otherwise mislaid objects take precedence over the landlord's special lien.

² Where the landlord learns only during the lease that objects brought onto the premises by the tenant are not the latter's property, his lien on them is extinguished unless he terminates the lease as of the next admissible termination date.

¹ Where the tenant wishes to vacate the premises or intends to remove the objects located thereon, the landlord may, with the assistance of the competent authority, retain such objects as are required to secure his claim.

² Items removed secretly or by force may, with police assistance, be brought back onto the premises within ten days of their removal.

Rents are unfair where they permit the landlord to derive excessive income from the leased property or where they are based on a clearly excessive sale price.

In particular, rents are not generally held to be unfair if:

a.

they fall within the range of rents customary in the locality or district;

b.

they are justified by increases in costs or by additional services provided by the landlord;

c.

in the case of a recently constructed property, they do not exceed the range of gross pre-tax yield required to cover costs;

d.

they serve merely to balance out a rent decrease previously granted as part of a reallocation of funding costs at prevailing market rates and they are set out in a payment plan made known to the tenant in advance;

e.

they serve merely to balance out the inflation on the risk capital;

f.

they do not exceed the levels recommended in master agreements drawn up by landlords' and tenants' associations or organisations representing similar interests.

¹ Within 30 days of receiving notice of a rent increase, the tenant may challenge it before the conciliation authority as unfair within the meaning of Articles 269 and 269a.

² Paragraph 1 also applies where the landlord makes other unilateral amendments to the lease to the detriment of the tenant, in particular by reducing the services provided or adding new accessory charges.

Without prejudice to the right to challenge the initial rent, a party may argue before the conciliation authority only that the rent increase or reduction requested by the other party is not justified by a corresponding change in the index.

Without prejudice to the right to challenge the initial rent, the tenant may not challenge periodical rent increases.

¹ Notice of termination may be challenged where it contravenes the principle of good faith.

² On request, reasons for giving notice must be stated.

¹ Notice of termination served by the landlord may be challenged in particular where it is given:

a.

because the tenant is asserting claims arising under the lease in good faith;

b.

because the landlord wishes to impose a unilateral amendment of the lease to the tenant's detriment or to change the rent;

c.

for the sole purpose of inducing the tenant to purchase the leased premises;

d.

during conciliation or court proceedings in connection with the lease, unless the tenant initiated such proceedings in bad faith;

e.

within three years of the conclusion of conciliation or court proceedings in connection with the lease in which the landlord:

1.

was largely unsuccessful,

2.

withdrew or considerably reduced his claim or action,

3.

declined to bring the matter before the court,

4.

reached a settlement or some other compromise with the tenant;

f.

because of changes in the tenant's family circumstances which do not give rise to any significant disadvantage to the landlord.

² Paragraph 1 let. e. is also applicable where the tenant can produce documents showing that he reached a settlement with the landlord concerning a claim in connection with the lease outside conciliation or court proceedings.

³ Paragraph 1 let. d. and e. are not applicable where notice of termination is given:

a.

because the landlord urgently needs the property for his own use or that of family members or in-laws;

b.

because the tenant is in default on his payments (Art. 257d);

c.

because the tenant is in serious breach of his duty of care and consideration (Art. 257f para. 3 and 4);

d.

as a result of alienation of the leased premises (Art. 261);

e.

for good cause (Art. 266g);

f.

because the tenant is bankrupt (Art. 266h).

¹ The tenant may request the extension of a fixed-term or open-ended lease where termination of the lease would cause a degree of hardship for him or his family that cannot be justified by the interests of the landlord.

² When weighing the respective interests, the competent authority has particular regard to:

a.

the circumstances in which the lease was contracted and the terms of the lease;

b.

the duration of the lease;

c.

the personal, family and financial circumstances of the parties, as well as their conduct;

d.

any need that the landlord might have to use the premises for himself, his family members or his in-laws and the urgency of such need;

e.

the conditions prevailing on the local market for residential and commercial premises.

³ Where the tenant requests a second extension, the competent authority must also consider whether the tenant has done everything that might reasonably be expected of him to mitigate the hardship caused by the notice of termination.

¹ No extension is granted where notice of termination is given:

a.

because the tenant is in default on his payments (Art. 257d);

b.

because the tenant is in serious breach of his duty of care and consideration (Art. 257f para. 3 and 4);

c.

because the tenant is bankrupt (Art. 266h);

d.

in respect of a lease expressly concluded for a limited period until refurbishment or demolition works begin or the requisite planning permission is obtained.

² As a general rule, no extension is granted where the landlord offers the tenant equivalent residential or commercial premises.

¹ A lease may be extended by up to four years in the case of residential premises and by up to six years for commercial premises. Within these overall limits, one or two extensions may be granted.

² Where the parties agree to an extension of the lease, they are not bound by a maximum duration and the tenant may waive a second extension.

¹ Either party may ask the court to modify the lease in line with changed circumstances when deciding on the lease extension.

² Where the lease is not varied in the decision on the lease extension, it remains in force during the extension period, subject to other means of variation envisaged by law.

Unless the decision on extension or the extension agreement stipulates otherwise, the tenant may terminate the lease:

a.

by giving one month's notice expiring at the end of a calendar month in cases where the extension does not exceed one year;

b.

by giving three months' notice expiring on an admissible termination date in cases where the extension exceeds one year.

The provisions governing usufructuary leases of residential and commercial premises also apply to objects made available together with such premises for the use and enjoyment of the tenant.

¹ Usufructuary leases relating to agricultural enterprises or to agricultural land and buildings are governed by the Federal Act of 4 October 1985¹⁰⁹ on Agricultural Leases, insofar as it contains special provisions.

² In other respects the Code of Obligations applies with the exception of the provisions governing leases of residential and commercial premises.¹¹⁰

¹ The lessee must pay the rent and, where applicable, the accessory charges at the end of each year of the lease but not later than when the lease expires, save where another payment date is stipulated by agreement or local custom.

² Article 257a applies to accessory charges.

¹ Where, having accepted the property, the lessee is in arrears with payments of rent or accessory charges, the lessor may set a time limit of at least 60 days for payment and notify him that in the event of non-payment the lessor will terminate the lease on expiry of that time limit.

² In the event of non-payment within the time limit the lessor may terminate the usufructuary lease with immediate effect or, for leases of residential and commercial premises, subject to at least 30 days' notice ending on the last day of a calendar month.

¹ The lessee must use the leased object with due care in accordance with its intended use and in particular must ensure that its long-term productivity is sustained.

² Where the usufructuary lease relates to immovable property, the tenant must show due consideration for others who share the building and for neighbours.

¹ The lessee must carry out the normal maintenance of the leased object.

² In accordance with local custom, he must carry out minor repairs and replace inexpensive equipment and tools which have become useless as a result of age or wear and tear.

¹ If, despite written warning from the lessor, the lessee continues to act in breach of his duty of care, consideration or maintenance such that continuation of the usufructuary lease becomes unconscionable for the lessor or other persons sharing the building, the lessor may terminate the lease with immediate effect or, for leases of residential and commercial premises, subject to at least 30 days' notice ending on the last day of a calendar month.

² However, leases of residential and commercial premises may be terminated with immediate effect if the tenant intentionally causes serious damage to the property.

¹ Where performance of the contract becomes unconscionable for the parties for good cause, they may terminate the usufructuary lease by giving the legally prescribed notice expiring at any time.

² The court determines the financial consequences of early termination, taking due account of all the circumstances.

¹ Where the lessee becomes bankrupt after taking possession of the property, the lease ends on commencement of bankruptcy proceedings.

² However, where the lessor has received sufficient security for the current year's rent and the inventory, he must continue the lease until the end of the lease year.

In the event of the death of the lessee, his heirs and the lessor may terminate the contract by giving the legally prescribed notice expiring on the next admissible termination date.

¹ The borrower may make use of the loaned object only for the purpose stipulated in the contract or, in the absence of any stipulation, for its normal purpose or the purpose dictated by its nature.

² He is not entitled to grant use of the object to a third party.

³ A borrower acting in breach of these provisions is liable even for accidental damage unless he can prove that the object would have been affected in any event.

¹ The borrower bears the ordinary costs of maintenance and, in the case of loaned animals, in particular the costs of feeding them.

² He is entitled to reimbursement of extraordinary expenses he has been obliged to incur for the lender's benefit.

Persons who have jointly borrowed a single object are jointly and severally liable for it.

¹ Where the loan for use is open-ended, it ends as soon as the borrower has made use of the object as agreed or on expiry of the period in which such use could have been made of it.

² The lender is entitled to reclaim the object before that time if the borrower uses it for a purpose contrary to the agreement, if he damages it, if he permits a third party to use it or if unforeseen developments occur which leave the lender in urgent need of the object.

Where the contract stipulates neither the purpose nor the duration of the loan, the lender may reclaim the loaned object whenever he sees fit.

The loan for use ends on the death of the borrower.

The borrower's claim for delivery and the lender's claim for acceptance of the fixed-term loan prescribe six months after the date on which the other party defaults.

¹ The lender may refuse to hand over the fixed-term loan if the borrower becomes insolvent after entering into the contract.

² The lender has the right to refuse delivery even if insolvency occurred before the contract was concluded but he only subsequently became aware of it.

¹ By means of an individual employment contract, the employee undertakes to work in the service of the employer for a limited or unlimited period and the employer undertakes to pay him a salary based on the amount of time he works (time wage) or the tasks he performs (piece work).

² A contract whereby an employee undertakes to work regularly in the employer's service by hours, half-days or days (part-time work) is likewise deemed to be an individual employment contract.

¹ Except where the law provides otherwise, the individual employment contract is not subject to any specific formal requirement.

² It is deemed to have been concluded where the employer accepts the performance of work over a certain period in his service which in the circumstances could reasonably be expected only in exchange for salary.

³ Where an employee performs work in good faith for the employer under a contract which is subsequently found to be invalid, both parties must discharge their obligations under the employment relationship as if the contract had been valid until such time as one party terminates the relationship on grounds of the invalidity of the contract.

The employee must carry out the contractually assumed tasks in person, unless otherwise required by agreement or the circumstances.

¹ The employee must carry out the work assigned to him with due care and loyally safeguard the employer's legitimate interests.

² He must use the employer's machinery, work tools, technical equipment, installations and vehicles in the appropriate manner and treat them and all materials placed at his disposal for the performance of his work with due care.

³ For the duration of the employment relationship the employee must not perform any paid work for third parties in breach of his duty of loyalty, in particular if such work is in competition with his employer.

⁴ For the duration of the employment relationship the employee must not exploit or reveal confidential information obtained while in the employer's service, such as manufacturing or trade secrets; he remains bound by such duty of confidentiality even after the end of the employment relationship to the extent required to safeguard the employer's legitimate interests.

¹ The employee is accountable to his employer for everything, and in particular sums of money, he receives from third parties in the performance of his contractual activities and must hand it over to the employer immediately.

² He must likewise immediately hand over to the employer all work produced in the course of his contractual activities.

¹ If more hours of work are required than envisaged under the employment contract or provided for by custom, standard employment contract or collective employment contract, the employee is obliged to perform such overtime to the extent that he is able and may conscionably be expected to do so.

² In consultation with the employee, the employer may compensate him within an appropriate period for the overtime worked by granting him time off in lieu of at least equal length.

³ Where the overtime is not compensated by time off in lieu and unless otherwise agreed in writing or under a standard employment contract or collective employment contract, the employer must compensate the employee for the overtime worked by paying him his normal salary and a supplement of at least one-quarter thereof.

¹ The employer is entitled to issue general directives and specific instructions regarding the performance of the work and the conduct of employees in his business or household.

² The employee must comply in good faith with the employer's general directives and specific instructions.

¹ The employee is liable for any damage he causes to the employer whether wilfully or by negligence.

² The extent of the duty of care owed by the employee is determined by the individual employment contract, taking due account of the occupational risk, level of training and technical knowledge associated with the work as well as the employee's aptitudes and skills of which the employer was or should have been aware.