LEGAL CONSEQUENCES OF THE INVALIDITY OF CONTINUING CONTRACTS

Abstract

The invalidity of contract in Croatian law, as well as in Swiss, Austrian, and German law, in principle has ex tunc effect. One of the legal consequences of the invalidity of contract is the obligation of restitution that arises when one of the parties provides the other with an act of performance in fulfilment of an obligation under an invalid contract, while the rules on unjustified enrichment are also to be applied to the
obligation relationship between the parties. According to a legal standpoint found in Swiss, Austrian, and German law, in relation to continuing contracts, in cases where the provision of a continuing obligation has already begun, the effect of invalidity of a contract is to be limited to effect only from now on. Under this view, invalidity of a continuing contract, that is a contract under which a continuous obligation relationship is established between the parties, has ex nunc effect, therefore there is no unwinding of the continuous obligation relationship. This standpoint of Swiss, Austrian, and German law, as well as the various theoretical foundations on which it is based is analysed in the paper. The legal consequences of invalidity of contract under Croatian law are discussed, especially in relation to the obligation of restitution. The paper examines whether it is possible and necessary under Croatian law de lege lata to apply the comparative law doctrine on the limitation of the effect of invalidity of continuing contracts.