Obligations law is a key branch of civil law, and hiring a lawyer specializing in obligations law can be crucial for the proper resolution of property-related legal issues, contractual relations, damages, and so on. According to the legislation of the Republic of Serbia, the primary source of obligations law is the Law on Obligations (ZOO), which thoroughly regulates the rights and duties of parties in different types of obligations.
One of the key principles of obligations law is the freedom of contract, meaning that the parties are free to agree on the terms of their obligations, provided that these terms do not contradict the law, good morals, or public order.
The Law on Obligations of the Republic of Serbia (ZOO) regulates numerous issues relevant to this field, such as:
● Contract law
● Liability for damage
● Unjust enrichment
● Rights and obligations arising from obligations
● Execution of obligations from obligations relationships
● Termination of obligations
● Statute of limitations
● Named contracts
Contract Law
Contract law is an integral part of obligations law and defines the rules governing contractual relationships between legal and natural persons. Consulting with an obligations lawyer is essential to ensure that a contract is concluded in accordance with legal regulations and to protect the clients’ interests. Contracts represent the largest and most significant source of obligations. This topic is specifically elaborated in the field of Contract Law, which can be accessed through the following link.
Damage Compensation
Damage is one of the most common sources of obligations. According to the general definition, damage refers to the reduction of someone’s property (material damage) and the prevention of its increase (lost profit), as well as causing physical or psychological pain or fear (non-material damage). From this definition, we can conclude that there are three types of damage: material damage, lost profit, and non-material damage.
The Law on Obligations regulates liability for damage in detail, defining the conditions under which the obligation to compensate for damage arises. A lawyer specializing in obligations law can provide legal support in proving liability and achieving fair compensation. The person who caused the damage is responsible unless they can prove that the damage occurred without their fault. There are situations where liability exists even without fault. This applies if the damage is caused by the use of items or activities that pose an increased risk of harm to the environment or if such liability is provided by law.
The law recognizes two forms of fault: intent and negligence. Whether the damage is caused intentionally or due to negligence, the responsible party must compensate for the damage.
There is a group of persons who cannot be held liable for damage, such as those suffering from mental illness, developmental disabilities, or other reasons that prevent them from reasoning, as well as those who caused damage through someone else’s fault, in which case the responsible party is the person who caused their condition.
Non-material Damage
For physical pain endured, mental pain due to a decrease in life activity, disfigurement, injury to reputation, honor, freedom, or personal rights, death of a close relative, and fear, the court, if it finds that the circumstances of the case, especially the intensity and duration of pain and fear, justify it, will award fair monetary compensation, independent of the compensation for material damage or in its absence.
In cases of violation of personal rights, the court may order the responsible party, at their own expense, to publish the judgment or a correction, or to retract a statement that caused the violation, or take any other action that serves the purpose of the compensation.
When deciding on a request for compensation for non-material damage, as well as its amount, the court will consider the significance of the violated good, the purpose of the compensation, and ensure that it is not granted for purposes incompatible with its nature and social function.
In cases of death, the court may award fair monetary compensation for emotional pain to immediate family members (spouse, children, and parents). Such compensation may also be awarded to siblings if there was a lasting communal life with the deceased.
In cases of particularly severe disability, the court may award fair monetary compensation for emotional pain to the spouse, children, and parents.
In cases of death, bodily injury, or health impairment, compensation is generally awarded in the form of a life annuity, either for life or for a specific period.
The monetary annuity awarded as compensation for damage is paid monthly in advance, unless the court orders otherwise.
The creditor has the right to request security for the payment of the annuity unless this is not justified by the circumstances of the case. If the debtor fails to provide the security ordered by the court, the creditor may request that a lump sum be paid instead of the annuity, with the amount determined based on the annuity amount and the expected duration of the creditor’s life, with appropriate interest deducted.
For serious reasons, the creditor may also request, immediately or later, a lump sum instead of the annuity. If someone causes bodily injury or damages another’s health, they are obligated to reimburse the costs of treatment and other necessary expenses, as well as lost earnings due to incapacity for work during treatment. If the injured party loses earnings due to complete or partial incapacity to work, or if their needs are permanently increased, or their further development and progress are destroyed or reduced, the responsible party is obliged to pay the injured person a monetary annuity as compensation.
The right to compensation for non-material damage in the form of a monetary annuity due to the death of a close person or due to bodily injury or health impairment cannot be transferred to another person. The amounts of compensation due can be transferred to another person if the compensation amount is determined by a written agreement of the parties or a final court decision.
Whoever damages another’s honor or disseminates false statements about someone’s past, knowledge, abilities, or anything else, knowing or reasonably should know they are false, thereby causing material damage, is obligated to compensate the damage. There will be no liability for compensation if the person making the false statement did not know it was false and if they or the recipient of the statement had a legitimate interest in it.
In cases of death, the court may award fair monetary compensation for emotional pain to the immediate family members (spouse, children, and parents) of the deceased. Such compensation may also be awarded to siblings if they had a lasting communal life with the deceased. In cases of particularly severe disability of a person, the court may award their spouse, children, and parents fair monetary compensation for their emotional pain.
Inheritance and Assignment of Claims for Non-material Damage
Claims for non-material damage pass to heirs only if they have been recognized by a final court decision or written agreement. Under the same conditions, these claims may be subject to assignment, set-off, and enforcement.
Thus, if a claim for non-material damage has not been recognized by a final court decision or written agreement during the injured party’s lifetime, this claim cannot be passed on to their heirs.
Responsibility of minors and their parents for the damage caused
A minor under the age of seven is not liable for damage they cause. A minor between the ages of seven and fourteen is not liable for damage, unless it is proven that they were capable of reasoning when the damage occurred. A minor who has reached the age of fourteen is liable according to the general rules on liability for damage.
Parents are responsible for the damage caused by their child under the age of seven, regardless of their fault. They are relieved of responsibility if there are grounds for excluding liability according to the rules of liability irrespective of fault. They are not liable if the damage occurred while the child was entrusted to another person and that person is responsible for the damage. Parents are responsible for damage caused by their minor child who has reached the age of seven, unless they prove that the damage occurred without their fault. If both the parents and the child are liable for the damage, their liability is joint.
For damage caused by a minor under the supervision of a guardian, school, or other institution, the guardian, school, or institution is liable, unless they prove that they exercised supervision in the manner required or that the damage would have occurred even with careful supervision. The law also foresees special liability for parents in cases where the duty of supervision over a minor does not lie with the parents but with another person; the injured party has the right to seek compensation from the parents if the damage resulted from poor upbringing, bad examples, or immoral habits given by the parents, or if the damage can otherwise be attributed to the parents’ fault.
Proceedings for damage compensation
One of the fundamental principles of contract law is the obligation to restore the injured party to the state they were in before the damage occurred. Engaging a lawyer for contractual law is essential in the proceedings for compensation. The responsible party is obliged to restore the situation to what it was before the damage occurred. If restoring the prior state does not fully eliminate the damage, the responsible party must provide compensation in money for the remaining damage. When restoring the previous state is not possible, or the court deems it unnecessary, the responsible party will be ordered to pay the injured party an appropriate amount of money as compensation for the damage.
Unjust enrichment
Unjust enrichment is an institute applied in situations when someone makes a payment they are not obligated to make, when they pay the same debt twice, or when the basis for the payment has since disappeared. Unjust enrichment is a legal institute regulated by contract law, and a lawyer specializing in contract law can provide key advice to protect the rights of the injured party.
It is important to note that a person whose property has been diminished cannot demand the return of the amount paid, even if they knew they were not obligated to make the payment, unless they reserved the right to seek a return or paid to avoid enforcement. Additionally, one cannot demand what has been given or done in the performance of a natural obligation or moral or social duty.
Termination of obligations
The methods of termination of obligations specified by the Law on Obligations are:
- Fulfillment of obligation: The obligation ends when it is fully fulfilled.
- Set-off (compensation): A debtor can offset a claim they have against a creditor with what the creditor owes them, provided both claims are in money or other interchangeable items of the same kind and quality, and both are due.
- Debt release: The obligation ends when the creditor declares to the debtor that they will not seek fulfillment and the debtor agrees. No specific form is required for the validity of this agreement unless the transaction from which the obligation arose required a specific form.
- Novation: The obligation ends when the creditor and debtor agree to replace an existing obligation with a new one that has a different subject or legal basis.
- Confusion: The obligation ends when the same person becomes both the creditor and the debtor.
- Impossibility of fulfillment: The obligation ends when its fulfillment becomes impossible due to circumstances for which the debtor is not liable.
- Expiration of time, termination: A long-term debt relationship with a specific duration ends when the period expires unless it was agreed or determined by law that the debt relationship continues indefinitely if not timely terminated.
- Death: The obligation ends upon the death of the debtor or creditor only if it arose with regard to personal characteristics of the parties or the personal ability of the debtor.
Prescription
Prescription ends the right to demand fulfillment of an obligation. Prescription occurs when the time prescribed by law during which the creditor could demand fulfillment of the obligation has elapsed. Prescription of claims is a key aspect regulated by contract law, defining the periods within which claims can be realized. A contract lawyer can assist in taking timely legal steps to avoid issues with the prescription of claims.
The court does not consider prescription if the debtor has not invoked it. This essentially means that the debtor must always invoke the prescription and raise the objection of prescription, as failure to do so will result in the debtor being obliged to pay the owed amount.
Prescription begins to run the day after the creditor had the right to demand fulfillment of the obligation unless the law prescribes otherwise for specific cases. If the obligation consists of something not to be done, omitted, or endured, prescription begins to run the day after the debtor acts contrary to the obligation. Prescription ends when the last day of the legally prescribed time period expires.
Legal services we provide:
- We provide oral and written legal advice.
- We offer detailed legal analysis of situations and advisory services regarding the choice of contracts that should be concluded.
- On behalf and for the account of the client, we conduct negotiations, striving to achieve the most favorable outcome for the client.
- We draft all types of contracts (most common contracts in practice include: sale contracts, lease agreements, loan agreements, gift contracts, exchange contracts, construction contracts, transportation contracts, forwarding contracts, lifetime maintenance contracts, contracts for the transfer and distribution of assets during life, employment contracts, business cooperation contracts, storage contracts), and we prepare contracts based on the client’s needs in Serbian and English.
- We initiate legal and other proceedings concerning the protection of the client’s interests.
- A contract lawyer represents clients in all proceedings before courts or arbitration related to disputed obligations, unfulfilled contracts, damage compensation, or misunderstandings regarding contract interpretation.
Frequently Asked Questions
The obligation for compensation is considered due from the moment the damage occurred. The claim for compensation of damage expires in three years from the time the injured party became aware of the damage and the person who caused it. In any case, this claim expires five years from when the damage occurred. Therefore, the law specifies both subjective and objective prescription periods for damage claims. The subjective period is calculated from the day the injured party learns about the damage and is three years, while the objective period is five years from the day the damage occurred, regardless of whether the injured party learned of the damage (within this period, the right to damage compensation will expire).
When damage is caused by a criminal offense, and a longer prescription period is prescribed for criminal prosecution, the claim for damage compensation against the responsible party expires when the time for the prescription of criminal prosecution expires. The interruption of the prescription of criminal prosecution also interrupts the prescription of the claim for damage compensation.
If the person responsible for the damage does not want to voluntarily compensate the injured party, the injured party can enforce their rights by filing a lawsuit for damage compensation before the expiration of the statute of limitations. The injured party is entitled to compensation for ordinary damage as well as for lost profits. The amount of compensation is determined based on the prices at the time the court decision is made unless the law specifies otherwise.
The amount of ordinary damage is determined based on the value of the destroyed or damaged item. When assessing lost profits, the potential profit that could reasonably have been expected under the usual course of events or based on special circumstances is considered, and whose realization was prevented by the wrongful act or omission of the responsible party. When the item is destroyed or damaged by a criminal act committed with intent, the court may determine the amount of compensation based on the value the item had for the injured party. The court will, taking into account circumstances that occurred after the damage, award compensation in an amount sufficient to return the injured party’s material situation to the state it would have been in had the wrongful act or omission not occurred. The court may, considering the material situation of the injured party, obligate the responsible party to pay a lesser amount than the damage if it was not caused by intent or gross negligence and the responsible party is in poor financial condition, which would lead to hardship if they had to pay full compensation.
The Law on Obligations specifies that claims expire in ten years, unless another prescription period is prescribed by law (general period). Therefore, the law provides a general statute of limitations that applies if no other (special) period is specified. Claims for periodic payments that are due annually or at shorter specified intervals (periodic claims), whether related to incidental periodic claims such as interest, or claims for support, expire three years from the due date of each individual payment. Mutual claims of legal entities arising from contracts for the trade of goods and services, as well as claims for reimbursement of expenses incurred in connection with such contracts, expire in three years. Claims for rent, whether payable periodically or in one lump sum, expire in three years. Claims for damage compensation expire three years from when the injured party learned of the damage and the responsible party. In any case, this claim expires five years from when the damage occurred. If the damage is caused by a criminal offense, and a longer statute of limitations period is prescribed for criminal prosecution, the claim for damage compensation expires when the statute of limitations for criminal prosecution expires. The interruption of the statute of limitations for criminal prosecution also interrupts the statute of limitations for the claim for damage compensation. Claims for the provision of electricity, heating energy, gas, water, chimney services, and maintenance services, as well as radio, telephone, and postal services, are subject to a one-year statute of limitations.