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Contracts in Romania

by Vlad Cuc

When entering a commercial contract or another type of contractual relation with another entity, specific rules of law have to be applied. The requirements listed below are to be taken into account when concluding commercial contracts per the Romanian law including: sale/purchase pre-contracts and final contracts, rental/lease agreements, mortgage contracts, cession contracts, leasing, service providing, construction contracts, insurance contracts, commission agreements, transportation contracts etc.

Our team of Romanian lawyers can present the provisions that have to be included in a contract in Romania, depending on its nature; businessmen or any other party signing a contract can receive legal advice and legal representation when drafting a specific type of agreement in this country. 

What are the elements of a Romanian contract?

Per the stipulations of the Romanian law, a contract must contain certain elements: obligations of the parties for the fulfillment of the contract, delivery and quality conditions of goods and/or services, terms, payment methods and payment guarantees, payment instruments and price insurance, contractual risk, as well as method of solving eventual litigations arising from the contract

Other required elements include the full name and identification details of the parties (for legal entities these include headquarter address and registration number) and name of the person signing the contract (when representing a legal entity). In case of partial or total non-fulfillment, besides the penalties established by the parties through the contract, there is the possibility of requesting “interest-damages” or compensations; our Romanian law firm can present more information concerning this matter.  

The following payment methods are acceptable: payment order (bank transfer), check, bills of exchange (in certain conditions expressly mentioned by the law), factoring. In case of non-fulfillment, the contracting parties are able to start trials for the recuperation of their respective debt. The creditor will be able (after a definitive decision from a judge) to execute the following assets: liquidities (including funds in bank accounts), dues, products, debts or other patrimonial values. This procedure is done through a Legal Executor (Bailiff) after the judge’s decision is emitted.

The Romanian Contract Law contains vast legislative dispositions. There are an important number of exceptional requirements (e.g. the method of authentication, written form, accordance with dispositions regarding each separate type of contract etc.) and important general dispositions that directly influence business relationships with Romanian partners.

What are the regulations for employment contracts in Romania? 

A special category of contracts that can be signed in Romania refer to employment contracts. These types of agreements are regulated by the Employment Law (the Labor Code). According to the Romanian legislation on the matter, the employment contract has to be signed in a written form and must contain specific elements. 

Businessmen who want to open a company in Romania should observe the regulations of the above mentioned law when hiring employees and it is also important to know that the rules of law stipulate particular requirements when hiring foreign workforce; however, our team of Romanian lawyers can provide in-depth information concerning such regulations. Some of the basic elements of an employment contract in Romania are presented below: 

  • the identification details of the company hiring an employee and the identification details of the employee;
  • the duration of the contract (it can be signed on a determined or undetermined period of time);
  • the salary and the type of contractual relation established between the employer and the employee (part-time, full-time, project based contract, etc);
  • the vacation days the employee is entitled to and the trial period;
  • depending on the nature of the job, the employment contract can contain confidentiality provisions;
  • the trial period is established based on the position the employee will have in the company (executive or management positions). 

What are the trial periods for employment contracts in Romania? 

As we mentioned above, an employment contract in Romania should include provisions with regards to the number of days in which the employee is an probationary period (or a trial period). The period of time is influenced by specific factors, as per the regulations of the Labor Code. Currently, the following apply: 

  • a period of 90 days in the case of employment contracts signed with persons who will have an executive position within the company;
  • a period of 120 days in the case of the employees hired for management positions;
  • in the case of fixed term contracts, the probationary period is of 5 days, if the contract is signed for a 3 months period;
  • for a fixed term contract with a duration between 3 and 6 months, the probationary period is of 15 days;
  • fixed term contracts signed for a period of more than 6 months must include a trial period of 30 days;
  • fixed term contracts signed for management positions (with a duration longer than 6 months) must have a trial period of 45 days. 

What are the types of contracts available for the Romanian construction sector? 

Investors who are involved in the construction sector in Romania should know that there is no specific type of contract with regards to this field of activity. However, when referring to large construction projects, such as infrastructure projects, companies involved must draft and sign the standardized forms stipulated by the local legislation; our law firm in Romania can present the main types of contracts that are available in this case. 

In the case in which the construction project refers to a project that is publicly funded, there are two types of contract models that have to be drafted. Such agreements were created by the Ministry of Regional Development, Public Administration and European Funds, following the regulations of the European Commission

What does a real estate sale contract contain in Romania? 

Contracts in Romania can also be signed when dealing with the sale of real estate property, for commercial or residential purposes; our Romanian lawyers can present the characteristics of each type of contract and it is also necessary to know that prior to signing a sale contract it is highly recommended to perform the due diligence procedures. 

In the case of a commercial real estate sale contract, the document must provide information on the parties that will enter the contract (the seller and the buyer), the object of the contract (in this case, the commercial property), with details referring to the property itself, the property’s cadastral number and the price at which the property is sold. 

At the same time, the agreement must also present the means of payment agreed by the parties, and the deadline at which the buyer must conclude the transaction. It must also include clauses related to the termination of the contract and other similar provisions. Please address to our Romanian law firm for in-depth information on other provisions referring to this type of contract; our lawyers in Romania can assist with advice on any types of contracts that are prescribed under the local legislation.  

International contracts in Romania

As the Romanian Civil Code allows the parties to establish the content of a contract, it is obvious that in the case of an international contract, they could choose the applicable law in the contract.

The Law stipulates the applicable law must be expressly mentioned or result in a clear manner from its content or circumstances. There are two methods for the parties to express their will: an explicit choice (through the actual mentioning of this information in the contract or annex) or a tacit choice. The elements used for deducting an eventual tacit choice of the parties are the following:

  • using legal notions or institutions specific only to a certain Legal System.
  • reference to a procedure used only in a certain country can place the contract in that Legal System;
  • signing the Contract in a certain language can indicate a choice of the parties, however this is not regarded as highly relevant;
  • choosing a specific Court of Law in a state is not regarded as highly relevant. 

If the parties have not expressly or tacitly designated an applicable jurisdiction governing the contract, the Court will have to make a decision in this sense, based on objective criteria.

The main criteria is applying the law of the state which the contract has stronger ties with. This is a more recent solution, an influence of the Anglo-Saxon law (the notion regarded as “proper law”). For example, a contract is stronger related to the law of the state where the debtor has – on the date the contract is enforced – his/her/its legal domicile/headquarters.

The secondary criteria will be applying the law of the location where the contract is signed. In the case the contract is signed by parties through correspondence, it is considered to be signed in the state of the party which has initiated the offer to contract, offer which was accepted.