Agreements That Are Contrary To Good Morals

Freedom of contract is generally regarded as private autonomy and its guarantee in the state regulation of economic and social affairs. Freedom of contract means that a person is free to decide whether, with whom and under what conditions he concludes a contract. Treaties most directly express individual freedom and the right to self-determination. In the context of a free organization of their lives, people conclude contracts to establish employment relationships and freedom of contract allows free enterprise and good governance of economic relations.*16 4 If the contract is contrary to morality, the judge or arbitrator has no discretion. He must consider the contract to be inconclusive, regardless of the intention and knowledge of the parties. This follows from the generality of the values involved and from the fact that the judge or arbitrator plays the role of guardian of these fundamental values. In the application of general clauses or principles of private law, constitutional values, which at the same time guarantee and restrict freedom of contract, constitute the highest measure. The case of the guarantee of family members under German judicial practice is a good illustration of the simultaneous application of the principle of good faith and the general clause on morality. The security was provided by a family member of the debtor who, in objective circumstances and as the creditor knew, was indeed unable to honour the commitments made himself, since he had not yet received training and was not unaware of any income.

The Constitutional Court found that, in the circumstances described above, the claim against the guarantor was immoral and declared that the guarantee contract was unregistented. In these circumstances, the guarantor`s liability constitutes a violation of individual freedoms within the meaning of the Basic Law (Article 2 of the Fundamental Law). Fundamental freedoms guarantee private autonomy in determining social, economic and legal activity. If the parties to the negotiation are unequal and the treaty places an excessive burden on the weaker party, the private autonomy of the person is not sufficiently guaranteed. The civil courts have a constitutional obligation to assess, when establishing the nullity of contracts when settling claims, whether contracts are not concluded for immoral reasons and with bad intentions. The nullity of a contract as a legal consequence is proportionate to the objective of restoring the freedom of contract violated.*20 Challenging compliance with legislation that limits freedom of contract is not a common practice. For example, the compatibility of compensation schemes with the Constitution has not yet been questioned. Article 25 of the Constitution guarantees the right of everyone to be compensated for moral and material damage caused by illegal acts of a person.

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