Register of contracts and the resulting new responsibilities for entrepreneurs

JUDr. Jakub Vozáb, PhD. 08.06.2016

In accordance with the new Act no. 340/2015 Coll., On special conditions for the effectiveness of some contracts, the disclosure of these contracts and agreements Registry (registry law contracts) must be from July 1, 2016, each in their own interest to pay increased attention to the ownership structure of contractors. The Act introduces a new general rule that every contract concluded with the Czech Republic, local government units and other public legal persons, including companies with majority state-owned or self-governing territorial unit (hereinafter collectively referred to as "legal persons of public administration ') must be mandatorily published in the register of contracts, which is publicly accessible. Consequences of a breach of this obligation are then very crucial. If the contract is not published, never shall not take effect and if it is not published or within three months of its conclusion is true, that was abolished from the beginning, if not closed (§ 6 and 7 of the registry agreements).

The effectiveness of these sanction mechanisms, however, will apply to contracts concluded as from 1 7th 2017 (§ 9 of the registry agreements). The law therefore imposes a duty to disclose the contract from 1st 7th 2016, the failure to fulfill the obligations for contracts concluded in the period from 1 7th 2016 to 30. 6. 2017 does not affect the effectiveness of these agreements, nor can it lead to their removal from the start.

The new legislation is intended to ensure transparency in the management of public resources, the registry contracts should be available free of charge on the Internet at https://smlouvy.gov.cz.

What you need to publish

Private contracts, grant agreements or refundable financial assistance and metadata least to the extent of identifying the Parties, the definition of a contract price, and if it does not have a contract, so the value of a contract if it can be identified and the date of signing.

Contracts must be in an open format, ie. in a format that can appear freely and free applications available.

It must be a format that is machine-readable and machine lets you search and can be further processed electronically.

Information that can not be provided either by the law on free access to information, eg. Trade secrets or personal data protected by law, etc., It is possible before sending the contract to obliterate such publication. Blackening. However illegibility must not be detrimental to the fulfillment of conditions of machine-readable format the rest of the contents of the contract, which must be published.

Exceptions necessity publications

In general requirement for publication, there are a number of exceptions, or the law provides that certain specific contracts concluded with a legal entity of public administration come into effect regardless of the publication in the register of contracts. To achieve legal effects of such specific contracts, it is not necessary publishing contracts in the registry. These exceptions include e.g.:

• A contract with a natural person acting outside the scope of its business activities; this does not apply if the transfer of ownership of legal entities of public administration to tangible immovable
• Technical patterns, instructions, drawings, project documentation, models, methods of calculating unit prices, designs and calculations
• Contracts whose performance is carried out mainly outside the Czech Republic
• A contract concluded on a commodity exchange, a regulated market or a regulated European market, auction or auction, or another similar process, with which is associated a specific kind of transition or transfer of ownership
• Contract with the amount of the value of the subject of a maximum of CZK 50,000 without VAT
• A contract concluded with the author or performer in relation to the copyrighted work or artistic performance,
• A contract concluded with municipalities that do not perform extended powers, or contributory organizations established by the communes or legal persons, which have such municipalities themselves or with other such communities the majority participation
• A contract concluded in order to prevent or mitigate harm threatened immediately in connection with an emergency threatening the life, health, property or the environment

Who should publish a contract?

Legal person, public administration or other Contracting Party shall contract the Ministry of Interior as the registry administrator of contracts to be published without undue delay, but not later than 30 days after the conclusion of the contract. The administrator will publish a contract through the registry agreements promptly after receipt; publishing contract through the registry contracts is normally carried out automatically.

The contract takes effect earlier than the publication of the registry agreements. Furthermore, after the law states that unless a publication with the expiry period of 3 months from the date of conclusion of the contract, then, the contract is canceled from the beginning, as if it had never been closed. The consequence of failure publications is that the Party does not achieve the intended legal effect of a contract and therefore no binding effect or enforceability of the contractual arrangements.

It is therefore for the parties to ensure the publication of a contract in the register of contracts in accordance with the law if they want to achieve legal effects of the contract. The law does not admit to any party to ensure the publication of a contract, ie as a legal entity of public administration, and the second party to the contract to the closing.

How to publish a contract?

Treaty is required to publish without undue delay, within 30 days of signing the contract.

For publication will either need to fill out an electronic form which will be available on the Public Administration Portal, or metadata, along with a contract to send in the prescribed format to a special mailbox data Interior Ministry set up for this purpose. To use the electronic form within the Public Administration Portal, will be enough standard office computer with an Internet connection and access data to the data box from which the form is submitted.

Following the publication of the contract sends the registry administrator contracts confirm the data box of the sender and also to all those Parties.

Publish a contract can either sending instructions via the data box of one of the parties, or whether the representation on the basis of registered empowerment. For the purposes of adjustment or cancellation of authorization will be available a simple electronic form.

Application Interface Description Information system registry contracts

Description of the technical security and the publishing contracts can be found HERE.

Once a data message can be sent to just one instruction to perform the operation. In Annex data messages can be precisely prescribed one attachment type XML.

If the data in the Annex to the report shall be found no XML corresponding to the name of a defined operation, the entire instruction rejected as unknown.

If the sender is inserted into a data message other attachments that are not listed in XML messages (eg. Cover letter in PDF or anything else), the registry contracts will ignore other attachments.

Interface of the contracts is ready to receive the following:

• Publication record
• Modification record
• Adding attachments
• Denial of access to record
• Authorization of publication
• Cancellation of authorization of publication

Treaty as such (in the words of the law „an electronic image of the text content of the agreement in open and machine readable format“) must be attached as an appendix to the data message and must have one of the allowed formats: pdf, doc, docx, rtf, odt, txt.

Methodical instructions for the application of the law on the register of contracts, which are used for basic orientation in the field and provides basic answers to frequently asked questions can be found HERE.

Recommendations for contracts concluded since July 1, 2016

• When entering into any contract with a partner of public authorities to examine whether there is a contract subject to the mandatory publication under the Act on the registry contracts.
• The Treaty is ideally need only publish once, and potentially publish the contract by either party, therefore it is advisable to arrange that Party shall ensure publication of the contract and negotiate a deadline to meet such an obligation to protect the other party. Possibly also negotiate penalties for infringements.
• It is necessary to deal with the term of the contract, and eventually it contracted to build on the date of publication of the contract in the registry contracts, respectively, on the effective date of the contract, which is dependent upon the date of publication. According to adjust the contractual agreements.
• The publication of a contract can develop complications, while the contract is effective and can fulfill it soon after publication in the registry agreements, unless postponed effectiveness of the contract even at a later time. In the case of non-disclosure agreements, the effects of the abolition of the law in the absence of any other agreement until 3 months after conclusion of the contract, while in the meantime it is possible to publish the contract and so bring about the legal effects of the contract. Therefore it is necessary to take into account the risk of a possible postponement of the date of the agreement at a later time and investigate whether the period of 3 months after the conclusion of the contract can not be altered conditions of the contract and, if necessary to adapt the contractual agreements regarding price, performance subject , date of performance and more. * NB. These consequences will apply fully to the contracts concluded from 1 7th 2017, see above. *

Recommended Contract Clauses (contractual arrangements):

• Declaration confirming the application of the law on the registry agreements for the contract:

The Parties acknowledge that this agreement is subject to conditions and restrictions pursuant to the Act no. 340/2015 Coll., On special conditions for the effectiveness of some contracts, the disclosure of these contracts and registry agreements (hereinafter the „Act on the register of contracts“). Parties are under the law on the register of contracts must send this agreement to the Ministry of Interior for publication through the registry agreements without undue delay, but not later than thirty (30) days from the conclusion of this agreement.

• Follow the contractual clauses regarding the validity and effectiveness of the contract:

Example 1: This Agreement is effective upon signature of the last Party and the effectiveness of the publication of the Ministry of Interior of the Czech Republic through the registry agreements pursuant to Act no. 340/2015 Coll., On special conditions for the effectiveness of some contracts, the disclosure of these contracts and agreements register.

Example 2: This Agreement is effective upon signature of the last Party and efficiency expiration of thirty (30) days after publication thereof by the Ministry of Interior of the Czech Republic through the registry agreements pursuant to Act no. 340/2015 Coll., On special conditions for the effectiveness of some contracts, disclosure of such contracts and registry agreements.

Example 3: This Agreement is effective upon signature of the last contracting parties and effective on the first day of the calendar month following the publication of this contract by the Ministry of Interior of the Czech Republic through the registry agreements pursuant to Act no. 340/2015 Coll., On special conditions for the effectiveness of some contracts, the disclosure of these contracts and registry contracts.

• Follow the contractual clauses regarding the obligation of one party to ensure the publication:

Example 1: The Parties agree that … eg. Client etc. … Sending the contract to the Ministry of Interior for publication through the registry agreements without undue delay, but not later than fifteen (15) days from the conclusion of this agreement. This does not affect the right … eg. The Contractor's like. … Send this agreement to the publication of the Ministry of Interior through the registry agreements independently of the above arrangements, especially if you … eg. Client etc. … Is in default in meeting the above responsibilities.

Example 2: The Parties agree that … eg. Client etc. … Sending the contract to the Ministry of Interior for publication through the registry agreements without undue delay, but not later than fifteen (15) days from the conclusion of this agreement. Otherwise responsible … for example. Contractor etc. … For any damage due to the fact that this agreement has become timely efficiency, or possibly that with the expiry of the statutory period this contract shall be canceled from the beginning. This does not affect the right … eg. The Contractor's like. … Send this agreement to the publication of the Ministry of Interior through the registry agreements independently of the above arrangements, especially if you … eg. Client etc. … Is in default in meeting the above responsibilities.

Example 3: Any State Party in accordance with the provisions of § 5 para. 2, first sentence of the Act on the register of contracts authorized to submit this agreement to the Ministry of Interior for publication through the registry agreements.

• Contractual clauses relating to the performance deadline:

Example 1: The Parties agree that … eg. The date of commencement of the implementation of the work / completion date of the works, etc.. … Shall be automatically extended by the corresponding number of days late … eg. Client's like. … With the fulfillment of the obligation to send this agreement to the Ministry of Interior to publish through registry agreements pursuant to Art. … thereof.

• Contractual clauses relating to termination of the contract:

Example 1: The Parties agree that this contract expires expiry of the deadline set for the submission thereof to the Ministry of Interior for publication through the registry agreements pursuant to Art. … Thereof. (If the parties want to tying contract expired before the expiry of the statutory period to the latest publication of the contract in the registry contracts)

Example 2: The Parties agree that … for example. Contractor etc. … In the case of the expiration of the deadline set for the submission thereof to the Ministry of Interior for publication through the registry agreements pursuant to Art. … This contract is entitled to withdraw from this agreement. (If either party wants to keep the option to tying contract expired before the expiry of the statutory period to the latest publication of the contract in the registry contracts)