Serbian Law on Contracts and Torts (Zakon o obligacionim odnosima) in brief
Zakon o obligacionim odnosima (ZOO): what it covers, current citation, limitation periods, termination of contracts, damages and default interest.
What the Law on Contracts and Torts (Zakon o obligacionim odnosima) covers and whom it applies to
Zakon o obligacionim odnosima is the basic statute of civil and commercial law in Serbia. It governs obligations, meaning relations in which one party owes something to another: from contracts, from causing damage, from unjust enrichment, from managing another's affairs without authority and from unilateral declarations. It applies to everyone: individuals, sole traders and companies. The same rules apply to commercial contracts, with some stricter provisions, for example shorter periods for complaints about goods.
Most of its rules are default rules. The parties are free to arrange their relations as they wish, within the limits of mandatory rules, public policy and good customs (Art. 10). The law therefore most often applies to whatever the contract leaves unregulated. For consumer contracts, Zakon o zaštiti potrošača (Consumer Protection Act) is consulted first, and the ZOO applies on a subsidiary basis.
The law was adopted in 1978 and is still in force. Official citation: Zakon o obligacionim odnosima (Sl. list SFRJ, Nos. 29/78, 39/85, 45/89 - Yugoslav Constitutional Court decision and 57/89, Sl. list SRJ, No. 31/93, Sl. list SCG, No. 1/2003 - Constitutional Charter and Sl. glasnik RS, No. 18/2020). The latest amendment is the Act amending the ZOO of March 2020 (No. 18/2020). It supplemented Art. 29 and amended Art. 90 (for consent to, or a power of attorney for, a contract that must be solemnised or made as a notarial deed, a certified signature is enough) and Art. 455 (a contract for the sale of real estate must be concluded in the form required by the special law on real estate transactions, or it is null and void).
How the law is structured
The law has more than 1,100 articles in four parts:
- Part One, General Part: basic principles, creation of obligations (contract, causing damage, unjust enrichment, management without authority, unilateral declaration), effects of obligations, termination of obligations (performance, set-off, limitation), various types of obligations and change of creditor or debtor.
- Part Two, Contracts: sale, exchange, loan, lease, contract for work, construction, carriage, licence, deposit, mandate, commission, agency, brokerage, freight forwarding, travel, insurance, pledge, suretyship, banking transactions (deposit, current account, credit, letter of credit, bank guarantee) and settlement.
- Part Three: applicable law in case of conflict of laws.
- Part Four: transitional and final provisions.
For everyday situations, the most read sections are the general rules on contracts (Art. 26-153), on damage (Art. 154-209), on limitation (Art. 360-393) and on sale (Art. 454 onwards).
The most searched provisions
Conclusion of a contract (Art. 26). A contract is concluded when the parties agree on its essential elements. Written form is a condition only where the law expressly requires it.
Void and voidable contracts (Art. 103 and 111-117). A contract contrary to mandatory rules, public policy or good customs is void. A contract concluded with a defect of consent (threat, material mistake, fraud) or with a person of limited capacity is voidable; its annulment must be sought within the period in Art. 117.
Gross disparity and usurious contracts (Art. 139 and 141). Where there is an obvious disproportion between the parties' performances, the injured party may seek annulment within one year. A usurious contract, by which someone exploits another's need or inexperience for a disproportionate benefit, is void.
Termination for non-performance (Art. 124-126). The party faithful to the contract chooses between demanding performance and terminating, and in either case may claim damages.
Basis of liability for damage (Art. 154). Whoever causes damage to another must compensate it, unless they prove it occurred without their fault. Liability for damage from a dangerous thing or dangerous activity is strict.
Scope of compensation (Art. 189, 192 and 200). Both actual loss and lost profit are compensated. An injured party who contributed to the damage receives proportionally less. Fair monetary compensation may be awarded for physical pain, mental anguish and fear.
Deposit and contractual penalty (Art. 79-80 and 270). Kapara confirms that the contract has been concluded. A contractual penalty is agreed for non-performance or delay, but cannot be agreed for monetary obligations.
Default interest (Art. 277). Default interest runs on every monetary obligation the debtor is late with, without any special agreement.
Defects in a purchased item (Art. 478-500 and 508-515). A buyer who notified the seller of a material defect in time may demand repair or replacement, a price reduction, or termination, together with damages (Art. 488). For legal defects, for example a third party's right to the item, the buyer's right expires one year after learning of the third party's right (Art. 515).
Limitation (Art. 360-393). Limitation ends the right to demand performance through the courts. The periods are set out in the list above.
Limitation under the Law on Contracts and Torts: when a debt becomes time-barred
People usually look up limitation of debts (zastarelost, zastarevanje duga) when an old invoice or a demand letter arrives, or when someone has owed them money for years. Work through three steps.
1. When the period starts. Limitation begins to run on the first day after the day on which the creditor was entitled to demand performance, in other words from the due date (Art. 361).
2. Which period applies. The general period is ten years (Art. 371). Shorter periods take precedence: three years for periodic claims such as interest and maintenance, counted from the due date of each instalment (Art. 372); three years for claims between legal entities under contracts for the sale of goods and services, separately for each delivery (Art. 374); and one year for electricity, heating, gas, water, chimney sweeping and waste collection supplied to a household, and for telephone and postal services (Art. 378). A debt established by a final court judgment becomes time-barred after ten years, even where a shorter period applied to the original debt (Art. 379).
3. Whether the period was interrupted. Limitation is interrupted when the debtor acknowledges the debt, expressly or indirectly, for example by a part payment, paying interest or giving security (Art. 387), and when the creditor files a lawsuit or takes another step against the debtor before a court or other competent authority (Art. 388). After an interruption the period starts again, and the time that ran before does not count (Art. 392). A demand letter sent by post does not interrupt limitation.
You can estimate the last date for filing a claim with our statute of limitations calculator (Do kada mogu da tužim?). The calculator does not take interruption or suspension into account, so if the debt was acknowledged or proceedings were brought, the period has to be worked out separately.
Where to read the official text
The official consolidated text is in the Legal Information System of the Republic of Serbia: Zakon o obligacionim odnosima at pravno-informacioni-sistem.rs. Because the law is old and its language is archaic in places, it helps to read each article together with the heading above it, which says in one line what the article is about. Where a limitation period or a complaint period depends on dates, it is worth checking the calculation for the specific case with a lawyer.
Sources
- Obligations Act (Zakon o obligacionim odnosima, Sl. list SFRJ No. 29/78 ... Sl. glasnik RS No. 18/2020), Art. 29, 90, 277, 360-392 and 455
- Act Amending the Obligations Act (Sl. glasnik RS No. 18/2020), Art. 1-4 (paragraf.rs)
- Default Interest Act (Zakon o zateznoj kamati, Sl. glasnik RS No. 119/2012), Art. 3, 4, 6 and 7
- Default interest calculator, Legal Information System of the Republic of Serbia
What to do
- The general limitation period for claims is ten years, unless the law sets a different period (Art. 371).
- Periodic claims, such as interest and maintenance, become time-barred three years after each instalment falls due (Art. 372). Rent is also time-barred after three years (Art. 375).
- Mutual claims of legal entities under contracts for the supply of goods and services are time-barred after three years (Art. 374).
- Damages claims are time-barred three years after the injured party learned of the damage and of the person who caused it, and in any case five years after the damage occurred (Art. 376). For damage caused by a criminal offence, the limitation period for prosecution applies if it is longer (Art. 377).
- Household bills for electricity, heating, gas, water, chimney-sweeping and cleaning services, as well as telephone services, are time-barred after one year (Art. 378).
- Claims established by a final court decision or settlement are time-barred after ten years (Art. 379).
- Annulment of a voidable contract may be sought within one year of learning of the ground, and no later than three years after the contract was concluded (Art. 117).
- Annulment for gross disparity (prekomerno oštećenje) may be sought within one year of concluding the contract (Art. 139).
- The buyer notifies the seller of visible defects within eight days of inspection, and of hidden defects within eight days of discovering them; the seller is not liable for hidden defects that appear more than six months after delivery, unless a longer period was agreed (Art. 481 and 482).
- The rights of a buyer who notified the seller of the defect in time expire one year after the notice was sent (Art. 500).
FAQ
When does a debt become time-barred under the Law on Contracts and Torts?
The general period is ten years (Art. 371), but shorter periods apply to many claims: three years for interest, rent, damages and claims between legal entities from the supply of goods and services, and one year for household utility bills (Art. 372-378). Limitation does not operate by itself in proceedings: the court does not take it into account unless the debtor invokes it (Art. 360).
What interrupts the limitation period?
The period is interrupted when the debtor acknowledges the debt, for example by a statement, part payment, payment of interest or giving security (Art. 387), and by filing a lawsuit or another step taken by the creditor before a court or competent authority (Art. 388). An ordinary reminder sent to the debtor does not interrupt it.
Is an oral contract valid?
As a rule, yes. A contract is concluded when the parties agree on its essential elements (Art. 26), and a special form is required only where the law prescribes it, as with real estate transfers. The problem with an oral contract is proof, not validity.
How is a contract terminated when the other party does not perform?
If the deadline is not an essential element of the contract, the creditor must give the debtor an appropriate additional period, and only if the obligation is still not performed may the creditor terminate by a statement (Art. 124-126). If the deadline is an essential element, the contract terminates by operation of law. In both cases a claim for damages remains.
What is a deposit (kapara) and is it returned?
Kapara is an amount given as a sign that the contract has been concluded (Art. 79). When the contract is performed, it is returned or counted towards the price. If the party that gave it is responsible for non-performance, the other party may keep it; if the party that received it is responsible, the other party may, among other options, claim back double the amount (Art. 80).
What is the default interest rate?
The ZOO only lays down the obligation: a debtor who is late with a monetary obligation also owes default interest (Art. 277). The rate is set by a separate statute, Zakon o zateznoj kamati (Default Interest Act, Sl. glasnik RS No. 119/2012). For a debt in dinars the rate is the National Bank of Serbia key policy rate plus eight percentage points a year, and for a debt in euros the European Central Bank reference rate plus eight percentage points (Art. 3 and 4). Interest is calculated as simple interest, without adding interest to the principal, and the applicable rates are published by the National Bank of Serbia (Art. 6 and 7).
Do I still have to pay a time-barred debt?
Limitation does not extinguish the debt itself, only the creditor's right to enforce it through the courts (Art. 360). The court does not apply limitation on its own motion: the debtor must invoke it in the proceedings, otherwise the court will award even a time-barred debt. If the debtor pays a time-barred debt anyway, they cannot ask for it back, even if they did not know it was time-barred (Art. 367). A creditor whose claim is secured by a pledge or mortgage can still be paid from the encumbered asset after limitation, if they hold it or their right is registered, but not for time-barred interest (Art. 368). A written acknowledgment or a part payment before the period expires interrupts limitation, and the period starts again (Art. 387 and 392).