Swiss Code of Obligations
The Swiss Code of Obligations (OR; Obligationenrecht) constitutes Part Five of the Swiss Civil Code (ZGB; Zivilgesetzbuch), serving as the primary statutory source for Swiss private law on obligations, including contracts, torts, and unjust enrichment, as well as commercial law topics such as legal entities, partnerships, the commercial register, and negotiable instruments.[1] Enacted by the Swiss Federal Assembly on 30 March 1911 as a revision of the earlier federal Code of Obligations, it entered into force on 1 January 1912, unifying and modernizing rules that previously varied across Swiss cantons.[2][1] The origins of the Code trace back to the mid-19th century, when the 1848 Swiss Federal Constitution and subsequent 1874 revisions empowered the federal government to harmonize civil and commercial law amid growing economic integration and industrialization.[3] An initial Federal Code of Obligations was drafted in the 1860s and 1870s, drawing from cantonal codes like that of Zurich, the French Code civil, the Austrian Allgemeines bürgerliches Gesetzbuch (ABGB), and emerging German proposals; it was adopted on 14 June 1881 and became effective on 1 January 1883.[1][3] The 1911 version, prepared as part of the broader Swiss Civil Code project under the 1874 Constitution's mandate (Article 64), integrated the obligations provisions into a comprehensive national civil code while expanding coverage to reflect contemporary needs in trade and business.[3] Further revisions occurred in 1936 (effective 1 July 1937) to address corporate and accounting matters, and a significant revision entered into force on 1 January 2023, modernizing corporate law provisions on company formation, governance, capital requirements, and accounting (with transition periods until 2025), with ongoing amendments addressing modern issues like consumer protection and electronic signatures.[1][4] Structurally, the Code is divided into five chapters: general rules on the formation, performance, and extinction of obligations (Articles 1–183); specific types of contracts such as sales, leases, and mandates (Articles 184–551); forms of commercial enterprises and legal entities, including general partnerships (Articles 552–620), limited liability companies (Articles 772–827), and stock corporations (Articles 620–763); the commercial register (Articles 927–963); and negotiable instruments like bills of exchange and promissory notes (Articles 965–1186).[1] It emphasizes principles of contractual freedom, good faith (Treu und Glauben; Article 2 ZGB), and pacta sunt servanda, supplemented by judicial discretion where gaps exist (Article 1 ZGB), which has made it a stable and flexible framework for both domestic and international transactions.[1] The Code's balanced approach—rooted in 19th-century liberal codification but adaptable through federal legislation—has influenced private law reforms abroad, notably in Turkey's 1926 Civil Code and Obligations Code, as well as in parts of Asia and Africa.[3][1]Introduction
Purpose and Scope
The Swiss Code of Obligations (CO), formally known as Part Five of the Swiss Civil Code (SR 220), serves as the federal statute that governs obligations arising from contracts, torts, and unjust enrichment, as well as regulations for certain business entities such as companies and cooperatives.[5] Enacted on March 30, 1911, and entering into force on January 1, 1912, it forms an integral component of Switzerland's private law framework, integrated within the broader Swiss Civil Code to provide cohesive rules for civil transactions.[2] The primary purpose of the CO is to regulate legal relationships stemming from contractual agreements, unlawful acts causing damage, and instances of unjust enrichment, thereby promoting fairness, predictability, and good faith in civil and commercial interactions across Switzerland.[5] By establishing uniform principles for the formation, performance, and extinction of obligations, the code ensures that parties can rely on consistent legal standards in their dealings, fostering economic stability and trust in business practices. This objective is rooted in the code's emphasis on principles such as freedom of contract and liability for misconduct, which apply generally unless overridden by specific provisions.[6] In terms of scope, the CO addresses non-familial obligations, deliberately excluding matters of family law, which are governed separately under the Swiss Civil Code's provisions on marriage, parentage, and inheritance.[5] It encompasses a broad array of topics, including specific rules on agency relationships, mandates, and suretyship, alongside general provisions (Articles 1–183), contractual obligations (Articles 184–551), rules for companies and cooperatives (Articles 552–926), business registry and accounting requirements (Articles 927–964), and negotiable instruments (Articles 965–1186).[6] Historically, the CO was enacted to unify the disparate cantonal laws prevailing before federal codification, creating a single national framework that enhances commercial reliability and uniformity in private law application throughout Switzerland.[5]Position Within Swiss Legal System
The Swiss Code of Obligations (Obligationenrecht, OR), enacted on 30 March 1911 as Part Five of the Swiss Civil Code (Zivilgesetzbuch, ZGB), entered into force on 1 January 1912 and serves as the foundational federal statute for private law obligations in Switzerland.[2] It establishes the core rules for contractual and non-contractual liabilities, forming the backbone of Swiss private law alongside the ZGB's provisions on persons, family, inheritance, and property.[7] This integration ensures a cohesive framework for civil matters, with the OR addressing obligations arising from agreements, torts, and specific business structures. As a federal law under Article 122 of the Swiss Federal Constitution, the Code holds hierarchical supremacy over cantonal legislation in substantive private law, mandating uniform application throughout Switzerland's 26 cantons to promote legal certainty and equality. While cantons retain authority to regulate civil law only where explicitly reserved by federal provisions (per Article 5 ZGB), the OR's comprehensive scope leaves minimal room for such variations, limiting cantonal influence primarily to procedural elements like court organization.[2] This structure reflects Switzerland's federalist system, where national legislation prevails to harmonize private obligations nationwide. The Code interacts closely with other federal statutes to form a integrated legal ecosystem. It complements the Swiss Code of Civil Procedure (Zivilprozessordnung, ZPO) of 19 December 2008, which governs the litigation and enforcement processes for obligations, including debt collection and execution of judgments.[8] Regarding criminal dimensions, the OR aligns with the Swiss Penal Code (Strafgesetzbuch, StGB) through mechanisms like incidental civil claims in criminal proceedings, allowing victims of obligation-related offenses to seek compensation concurrently.[9] However, the Code's scope is confined to private law, explicitly excluding public law obligations such as those involving state entities or administrative duties.[7] For cases with international elements, the Federal Act on Private International Law (PILA) of 18 December 1987 determines the Code's applicability, particularly through choice-of-law rules in Articles 116–123 that permit parties to select governing law for contracts while defaulting to the law of the closest connection (often Swiss law for domestic ties).[10] Enforcement of OR-based remedies, including specific performance (Erfüllung) under Article 97 or damages (Schadenersatz) under Articles 41 and 97, occurs via civil courts under the ZPO, typically through summary debt enforcement proceedings that culminate in executable titles if uncontested.[11]History
Origins and Enactment
The origins of the Swiss Code of Obligations trace back to 19th-century codification efforts in Switzerland, spurred by the need to harmonize disparate cantonal laws following the Napoleonic era and the establishment of the federal state in 1848. Prior to unification, Switzerland's 26 cantons operated under a patchwork of legal systems, including adaptations of the French Code Civil in French- and Italian-speaking regions, the Austrian Civil Code in some German-speaking areas, and local codes like the Zurich Civil Code of 1853–1856. This fragmentation hindered interstate commerce and mobility, prompting early attempts at federal legislation, such as the 1881 Code of Obligations, which addressed general and specific obligations but proved insufficient for broader unification. The 1911 Code built on these foundations, drawing structural and substantive influences from the French Code Civil of 1804 for its systematic approach to contracts and the German Bürgerliches Gesetzbuch (BGB) of 1900 for detailed provisions on obligations, while incorporating Swiss customary practices and Roman law principles to suit the federal context.[12][13] Eugen Huber, a prominent Swiss jurist and professor, played the central role as primary drafter, leveraging his extensive comparative analysis of cantonal laws conducted between 1886 and 1893 under mandate from the Federal Council. Influenced by Roman law traditions and Swiss local customs, Huber aimed for a code that was accessible and practical, emphasizing clarity over abstract terminology. His work integrated elements from foreign codes while prioritizing national adaptation, ensuring the Code reflected Switzerland's bilingual and federal character. Huber's preliminary studies formed the basis for subsequent drafts, marking a shift from earlier partial unifications like the 1889 Debt Enforcement and Bankruptcy Law toward comprehensive federal private law.[12][14] The drafting process commenced formally with the establishment of expert commissions in the late 1880s, including a key federal commission around 1887–1888 to evaluate and revise existing laws and Huber's appointment to lead in 1892. His first full draft of the integrated Civil Code, incorporating the Obligations section, was published in 1900 and underwent rigorous review by an expert commission from 1900 to 1904, involving legal scholars and cantonal representatives. Parliamentary debates on the revised drafts occurred from approximately 1903 to 1907, addressing concerns over federal overreach and regional differences, before the Federal Assembly approved the final version on March 30, 1911. This enactment as Part Five of the amended Swiss Civil Code (Zivilgesetzbuch, ZGB) entered into force on January 1, 1912, driven primarily by the motive to unify obligations law across cantons and facilitate economic integration in a federal state.[12] The Code's initial scope was deliberately limited to obligations—encompassing contracts, torts, and related liabilities—to distinguish it from property law provisions in the ZGB (Articles 641–977), allowing for modular implementation and easier adaptation. This separation underscored the Code's focus on dynamic commercial relations rather than static ownership rules, promoting legal certainty for transactions across cantonal borders without overhauling inheritance or real property regimes immediately.[12][15]Major Revisions and Amendments
The Swiss Code of Obligations underwent its second major revision in 1936 through the Federal Act on the Revision of Titles 24-33, which entered into force on 1 July 1937. This update significantly expanded company law provisions, including the introduction of the limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) as a new corporate form to provide businesses with greater flexibility amid the economic challenges of the post-Great Depression era. The changes aimed to foster recovery by modernizing regulations on commercial entities and aligning them with evolving economic needs, thereby supporting stability and growth in corporate structures.[13][16] During the 1980s and 1990s, several amendments were made to harmonize the Code with emerging EU directives, particularly in areas of accounting standards and securities regulation. A prominent example is the 1991 revision of Title 26 on stock corporations, adopted by Parliament on 4 October 1991 and effective in mid-1992, which enhanced shareholder protections, improved disclosure requirements, and aligned reporting practices more closely with European Community standards to facilitate international trade and investment. These updates strengthened governance mechanisms, such as mandatory general meetings and better information rights for investors, without overhauling the entire framework.[17][18][19] In 2005, partial amendments via the Federal Act on Electronic Signatures modernized aspects of contract law by clarifying provisions on form requirements under Article 12, enabling greater accommodation for electronic transactions where handwriting is not explicitly mandated, while bolstering consumer protection through reinforced rules on unfair terms in general contracts. These changes reflected broader adaptations to digital commerce and equitable dealings, ensuring contracts could be concluded electronically with one click in many cases, subject to existing good faith principles.[20] The 2023 company law reform represented one of the most comprehensive updates to the Code, entering into force on 1 January 2023 with a two-year transition period until 1 January 2025 for companies to revise their articles of association. This revision primarily targeted Articles 620-762, introducing simplified corporate structures like conditional capital increases without nominal value shares, measures to promote gender diversity on boards (including disclosure requirements under Article 696 if no women are represented), and provisions for fully electronic shareholder meetings to enhance efficiency and accessibility. The reforms aimed to increase flexibility, improve corporate governance, and adapt to contemporary business practices while maintaining Swiss legal stability.[21][22][23] Also effective from 1 January 2023, new due diligence obligations were incorporated via Articles 964j-964r, focusing on supply chain responsibilities for conflict minerals (such as tin, tantalum, tungsten, and gold from high-risk areas) and child labor. These provisions require affected companies—those processing, importing, or trading such materials above specified thresholds—to conduct risk analyses, implement mitigation strategies, and publish annual reports on compliance, with penalties for non-adherence enforced by the State Secretariat for Economic Affairs. The additions promote ethical sourcing and transparency, drawing inspiration from international standards like the OECD Due Diligence Guidance.[24][25][26] In June 2024, the Swiss Federal Council initiated consultations on proposed enhancements to non-financial reporting under Articles 964a-964c, seeking to expand disclosures on environmental, social, and governance matters for large companies and align more closely with EU regulations such as the Corporate Sustainability Reporting Directive. However, as of November 2025, the Federal Council has suspended the ongoing legislative amendments relating to ESG reporting obligations. These proposals aimed to bolster sustainability accountability without imposing undue burdens on smaller entities.[27][28][29][30]Structure and Contents
General Provisions (Articles 1-183)
The General Provisions of the Swiss Code of Obligations, encompassing Articles 1 to 183, establish the foundational framework for all obligations arising from contracts, torts, and unjust enrichment, applicable across subsequent sections of the Code. These provisions emphasize the autonomy of parties in creating legal relationships while imposing limits to ensure fairness, good faith, and public policy compliance. They outline the prerequisites for valid obligations, including capacity, formation, and interpretation, as well as rules governing performance, remedies for breach, and mechanisms for extinguishing claims, such as prescription. This section serves as the universal groundwork, influencing all forms of obligations without delving into specific contract types or corporate structures.[31] Central to these provisions is the principle of freedom of contract, codified in Article 1, which allows parties to freely conclude contracts and determine their content, provided they do not contravene mandatory laws, public policy, or morality. Contracts require mutual intent, which may be express or implied, and must reflect a genuine agreement on essential terms. Complementing this is the doctrine of pacta sunt servanda, embedded in Article 2, which mandates that valid agreements are binding and must be performed in good faith, with courts empowered to supply secondary terms if parties fail to address them. Hidden reservations or simulations intended to deceive third parties are invalid, ensuring transparency in contractual dealings. Article 2 further reinforces good faith as a overarching duty, prohibiting any abuse of rights in the exercise or enforcement of obligations.[31][6] Formation of obligations is governed by Articles 1 to 11, which detail the mechanics of offer and acceptance. An offer must be sufficiently definite and irrevocable until the specified deadline or a reasonable time elapses, after which acceptance binds the parties into a contract. No specific form is required unless stipulated by law or the parties themselves, though certain contracts demand writing for validity, with amendments similarly formalized under Article 12 to prevent informal alterations. Interpretation of contracts follows Article 18, where courts discern the parties' true intent, disregarding literal errors or ambiguities, and considering objective factors such as common usage and good faith; simulated agreements do not shield against claims by third-party creditors. Customs and practices play a role in filling gaps, promoting equitable and predictable outcomes.[31] Capacity to enter obligations is addressed in Articles 12 to 19, restricting minors under 18 and incapacitated persons from binding themselves without representation, with capacity assessed at the time of the act. Legal representatives, such as parents or guardians, act on behalf of those lacking full capacity, ensuring protection while allowing necessary transactions. Representation and agency rules in Articles 32 to 40 extend this framework, stipulating that agents bind principals when acting within disclosed authority, with unauthorized acts requiring ratification to become effective. Agents must adhere to instructions and exercise due care, facing personal liability for excesses unless excused; revocation of agency follows specific procedures to safeguard ongoing relations. These provisions collectively prevent abuse while facilitating commercial agency, including the mandate relationship detailed later in Articles 394 to 418, which formalizes consensual representation for specific tasks.[31][6] Obligations from unlawful acts, or torts, are outlined in Articles 41 to 61, imposing liability for intentional or negligent damage causing harm to others. Compensation covers material losses, such as property damage or medical costs, and non-material harms like pain or reputational injury, with causation and fault as essential elements. Employers bear vicarious liability for employee torts under Article 55, unless they prove adequate supervision, extending responsibility to safeguard third parties. Unjust enrichment, covered in Articles 62 to 67, requires restitution when one party benefits at another's expense without legal ground, such as mistaken payments; the enriched party must return the value, adjusted for any counter-performance, to restore equity. Claims in both tort and enrichment contexts are subject to shorter limitation periods; since the 2020 revision, typically three years from knowledge of the facts (relative period), with absolute limits of 20 years for personal injury or death claims and 10 years for others.[31] Performance of obligations is regulated in Articles 77 to 163, mandating fulfillment at the agreed time, place, and manner, with debtors bearing the burden unless excused. Payments must occur in Swiss francs or equivalent legal tender at the creditor's domicile, and partial performance is accepted if not prejudicial. Non-performance triggers remedies under Article 97, including damages or specific performance, presuming fault unless rebutted, while delay on monetary debts incurs 5% annual default interest from Article 104. Extinction occurs through various modes, such as payment, novation (replacing the obligation with a new one), set-off against reciprocal claims, or release. Prescription periods, detailed in Articles 127 to 142, generally bar claims after 10 years from accrual, or 5 years for recurring obligations like rent or interest; interruptions via acknowledgment or judicial action reset the clock, but debtors must invoke prescription as a defense. These rules ensure timely enforcement while balancing stability in legal relations.[31][6]| Prescription Period | Applicable Claims | Start of Period |
|---|---|---|
| 10 years (general) | Most obligations | From due date or accrual |
| 5 years | Rent, interest, services, commercial debts | From end of year in which claim arose |
| 3 years (relative, post-2020 revision) | Torts, unjust enrichment (from knowledge) | From awareness of harm and perpetrator |
| 20 years (absolute, for personal injury/death); 10 years (for others) | Torts | From the tortious act |