How Norwegian Businesses Should Negotiate with Czech Partners:

Are you a Norwegian company signing a commercial contract with a Czech partner? Be aware: a business approach that builds trust in Oslo can create massive legal risk in Prague. This article provides specific answers from an English-speaking lawyer in Prague to protect your investment. As a leading Czech law firm in Prague, European Union, ARROWS explains the critical legal differences you cannot afford to ignore.

Need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "Mgr. Vojtěch Sucharda", an expert on the subject.

Why your Norwegian business culture is a liability in the Czech Republic

For Norwegian executives, business is often built on consensus and trust. Your negotiating style is collaborative, direct, and efficient, aimed at a "win-win" outcome. Norwegian law itself supports this, by considering not just the final text but also the parties' behaviour, negotiation history, and market practices. A "handshake deal" or an agreement confirmed over email feels binding.

This is your first and most dangerous mistake in the Czech Republic.

The Czech business and legal culture is fundamentally different. It prioritizes extreme precision, formalism, and textual literalism. Czech communication can be more reserved and indirect, where a partner may seem agreeable to avoid confrontation. But in the end, they will rely only on the exact wording of the final signed smlouva (contract).

A Norwegian executive believes the "relationship" is the contract. A Czech executive knows that only the text is the contract. This cultural gap, where your focus on relationship-building can be seen as a vulnerability, creates a landscape of legal traps.

Our lawyers at ARROWS are experts in bridging this cultural and legal gap. If you are unsure about your partner's expectations, contact us at office@arws.cz.

Believing an Email or verbal agreement is a valid contract

What do you need to comply with? In Norway, an oral agreement or a short email confirmation can be a binding contract. In the Czech Republic, this assumption is a legal time bomb.

While the Czech Civil Code is modern, it imposes strict formal requirements for certain types of contracts. The most critical example for companies expanding abroad is an agency agreement.

Imagine this real-life scenario: A Norwegian tech company agrees via email for a Czech sales agent to represent them. The agent builds a client list over 12 months, then resigns to join a competitor, taking the entire client database.

The Norwegian company’s lawsuit to stop them will fail. A Czech court will find that no valid agency agreement ever existed because it was not in the mandatory written form. The emails and verbal understandings are legally worthless. This is a total loss of your market entry.

The Dangers of Informal Agreements

Risks and penalties	How ARROWS helps
Contract is Void: Your entire agreement (e.g., agency, exclusive license) is deemed legally non-existent. You have no right to sue for breach of contract, resulting in total loss of investment or expected revenue.	Contract Drafting: We ensure your agreements meet all formal requirements of the Czech Civil Code. Need a contract prepared? Contact us at office@arws.cz.
Loss of Recourse: Your Czech partner violates your verbal terms (e.g., takes your clients). You have no legal power to stop them or claim damages.	Legal Opinion: We analyze your business relationships to identify and fix invalid agreements before a dispute arises. Get tailored legal solutions by writing to office@arws.cz.
No Protection for Trade Secrets: An informal NDA or a confidentiality clause in a void contract offers zero protection for your know-how or client lists. This relates to your obchodní tajemství (trade secrets).	Drafting Documentation: We draft robust, enforceable NDAs and contracts that protect your trade secrets. For immediate assistance, write to us at office@arws.cz.

Misunderstanding the punitive power of the Smluvní Pokuta

How can you avoid legal risk? If you only read one part of your Czech contract, read this one. The single most dangerous term for foreign companies is the smluvní pokuta (contractual penalty).

In Norway, penalty clauses may be scrutinized by courts for "reasonableness" or good business practice. You may be used to clauses that reflect a "genuine pre-estimate of loss". The Czech smluvní pokuta is not this. It is a powerful, punitive tool designed to force compliance.

Here is what you must understand:

1. It is payable for the breach itself, not for the damage caused.
2. It is enforceable even if the other party suffered zero financial damage.
3. The debtor is liable even if they were not at fault (e.g., their own supplier was late, a tree fell on the cargo).

A 10-day delay in a non-critical delivery, which caused your partner no financial harm, could trigger a €100,000 penalty if that is what the contract says.

While recent Czech Supreme Court rulings allow a court to moderate (reduce) an "unreasonably high" penalty, this is a complex, expensive, and uncertain legal battle. You cannot sign a dangerous clause and assume a judge will save you later.

Our lawyers are ready to assist you in reviewing your penalty clauses to ensure they are balanced and not a financial time bomb. Email us at office@arws.cz.

Assuming your B2B purchase includes a "warranty"

What do you need to comply with? This is a subtle but critical mistake. When you buy machinery or goods, you assume a warranty is included. In Czech B2B law, you must be very precise about what you are assuming.

Contact our experts:

The Czech Civil Code makes a clear distinction in B2B contracts:

1. Liability for Defects (práva z vadného plnění): This is your statutory right. It covers defects that existed at the moment the risk passed (e.g., at delivery), even if you only discovered them later.

2. Quality Warranty (záruka za jakost): This is optional and contractual. It is a separate promise from the seller that the goods will retain specific features for a set period (e.g., 24 months).

In Czech B2B contracts, there is no automatic warranty. While a 2-year guarantee is standard in consumer law, it does not automatically apply to B2B.

Imagine you purchase €1 million in custom machinery from a Czech supplier under a Smlouva o dílo (Contract for Work). The contract is silent on a "quality warranty." The machine works perfectly for eight months, then a major component fails.

You have no claim. The failure occurred eight months after delivery, so it was not a "defect at handover." And because no quality warranty was explicitly written into the contract, the supplier has no further obligation.

We provide full contract review to ensure the warranty you think you have is the warranty you actually have in your contract. Get tailored legal solutions by writing to office@arws.cz.

FAQ – Legal tips about Czech Contracts

• Is an English-language contract valid in a Czech court?

 Yes, parties are free to choose the contract language. However, if a dispute goes to a Czech court, an official, certified translation into Czech will be required for the proceedings. This can cause delays and disputes over "meaning." We often draft bilingual contracts to prevent this. Need assistance? Contact us at office@arws.cz.

• My partner and I just agreed on terms in an email. Is that a binding contract?

This is extremely risky. While simple agreements can be formed this way, many key contracts (like agency agreements or contracts for real estate) are legally void if not in a specific written form. Do not risk your business on an email. Get formal contract drafting by writing to office@arws.cz.

• Can I limit my company's liability in a Czech contract?

Yes. This was a legally "grey" area for years, but Czech law now explicitly permits B2B parties to contractually limit or even waive the right to claim damages, except for damage caused deliberately. How this clause is drafted is critical. For immediate assistance, write to us at office@arws.cz.

Ignoring your Czech partners Obchodní Rejstřík

How can you avoid legal risk? Before you sign any contract, you must conduct basic due diligence. The most important tool for this is the Obchodní rejstřík (Commercial Register), the official, public database of all Czech companies.

You must check three critical things:

1. Legal Existence: Does this company actually exist?

2. Signing Authority (Jednatel): Who has the legal right to sign for the company? The register might state "the CEO" or it might state "any two directors jointly."

3. Insolvency/Liquidation: Is the company in active insolvency or liquidation proceedings?

This is not a formality. Imagine you negotiate a €2 million contract with the "Head of Procurement" in Prague. You both sign. When the Czech partner defaults, you go to court. Their lawyer simply shows the Obchodní rejstřík , which proves only the jednatel (CEO) had sole signing authority.

A Czech court will declare your contract invalid. You have no rights.

This basic check is free, but a full legal and financial due diligence is essential to protect your investment. We provide full corporate due diligence and legal opinions on your partners' standing. Get certainty by writing to office@arws.cz.

Failing to Activate Your Datová Schránka (Data Box)

What do you need to comply with? This is the most dangerous compliance trap for any foreign company with a Czech legal entity (like an s.r.o. or branch office).

The Datová schránka (Data Box) is a mandatory, government-provided digital mailbox.

Here is the trap:

1. It's Automatic and Mandatory: When you register a Czech company, a Data Box is automatically created for you. This is the only channel the government (tax office, courts, labour inspectorate) will use to communicate with you.

2. The Lost Letter: Access details are mailed to the director's registered address. If you are a director based in Oslo, this letter is often lost, ignored, or never arrives. But the Data Box is still active.

3. The "Fictional Delivery" Rule: This is the danger. A document (e.g., a tax audit notice, a court summons) is sent to your Data Box. If you do not open it, the law considers it legally delivered and read 10 days after it was sent.

You can miss a court date and have a default judgment entered against you. You can miss a tax deadline and incur massive fines from the Financial Administration. This can all happen while you are in Oslo, completely unaware, because you never checked the Data Box you didn't even know you had.

This is not optional. Our lawyers can act as your legal representative, manage your Data Box, and ensure you meet all Czech compliance obligations. Do not hesitate to contact our firm – office@arws.cz.

How do you handle disputes between Norway and the Czech Republic?

For disputes between the Czech Republic (an EU member) and Norway (an EFTA member), the rules are clear and predictable. They are governed by the Lugano Convention (2007).

It is vital to distinguish between two concepts that are often confused:

1. Choice of Law: Which country's law will be used to interpret the contract (e.g., Czech or Norwegian law).

2. Choice of Jurisdiction: Which country's courts will hear the dispute (e.g., Prague or Oslo).

Your most powerful tool for managing cross-border risk is a Choice-of-Court Agreement (a jurisdiction clause). The Lugano Convention gives these clauses strong legal effect, providing you with certainty.

For many B2B deals, International Arbitration is a better choice than public court proceedings. Arbitration (e.g., at the Prague Arbitration Court or in Vienna) is confidential, flexible, and judgments are often easier to enforce.

As an international law firm operating from Prague, European Union, ARROWS is perfectly positioned to handle this. Our ARROWS International network, built over 10 years and active in 90 countries, gives us the platform to manage complex cross-border litigation and arbitration.

For strategic advice on drafting dispute resolution clauses, contact us at office@arws.cz.

Protecting Your Business in a Dispute

Risks and penalties	How ARROWS helps
Forced to Litigate in the Czech Republic: A dispute arises, but your contract is silent on jurisdiction. The default rule  may force you to sue your Czech partner in their home court, incurring high translation and travel costs.	Contract Review: We draft clear, enforceable choice-of-court agreements  to control where disputes are heard. Need legal help? Contact us at office@arws.cz.
Default Judgment: You miss an official summons sent to your Datová schránka. The Czech court rules against your company without you ever presenting your case.	Representation before Authorities: We act as your legal representative in the Czech Republic, managing all official communications. Get legal solutions by writing to office@arws.cz.
Unenforceable Judgment: You win a case in a Norwegian court, but struggle to have the judgment recognized and enforced against your partner's assets in the Czech Republic.	Legal Analysis: We advise on the best dispute strategy (court vs. arbitration) to ensure any judgment is easily enforceable under the Lugano Convention. Email us at office@arws.cz.

What’s the next step? How ARROWS protects Norwegian clients

The legal and cultural differences between Norway and the Czech Republic are complex, but they are predictable and manageable with the right local partner.

As a leading Czech law firm in Prague, EU, ARROWS understands the specific needs of Norwegian and other foreign clients. We combine deep local expertise with an international, business-first mindset. Our lawyers support over 250 limited liability companies and 150 joint-stock companies, offering the speed and high-quality service you expect.

We provide the complete legal support you need to operate safely:

• Contract drafting and review to eliminate dangerous ambiguities.
• Drafting internal company policies (e.g., for trade secret protection).
• Professional training for your management on Czech compliance.
• Full representation in court or before public authorities.

Don't let a simple, preventable contractual mistake jeopardize your successful entry into the Czech Republic. For a consultation on your commercial agreements, contact our expert team today at office@arws.cz.

FAQ – Most common legal questions about Czech commercial contracts

1. What is the Smlouva o dílo (Contract for Work)?
This is a specific and very common contract type under the Czech Civil Code, used for manufacturing, construction, repairs, or the creation of intangible work (like software). It has its own specific rules regarding price, performance, and defect liability. To ensure your "Contract for Work" is correctly drafted, write to us at office@arws.cz.

2. How do I protect my company's trade secrets in the Czech Republic?
Czech law protects obchodní tajemství (trade secrets), but the law requires you to prove you took "reasonable measures" to protect them. A simple NDA is often not enough. We recommend combining strong contractual clauses with robust internal employee policies. For a review of your trade secret protection, contact us at office@arws.cz.

3. My Czech partner is in the Obchodní rejstřík. Is that enough to trust them?
No. The Commercial Register (Obchodní rejstřík) only proves they are a legal entity and shows who has the authority to sign. It does not prove their financial health, business reputation, or if they are in debt. We provide comprehensive legal and financial due diligence on Czech partners. Get tailored legal solutions by writing to office@arws.cz.

4. What happens if my contract is silent on an issue? Does "good faith" apply?
This is a major risk. Unlike Norwegian law's focus on "reasonableness" and "good business practices", Czech B2B contract law is far more literal. While a general principle of "good morals" exists, it is not a safety net for a poorly drafted contract. You should never rely on implied terms. Need legal help? Contact us at office@arws.cz.

5. We are a foreign investor. Are there special rules for us?
Generally, foreign investors have the same rights as Czech entities. However, the Czech Republic does have a Foreign Investments Screening Act 40 that applies to investments in strategic sectors (e.g., critical infrastructure, technology). We can provide a legal opinion on whether your investment requires screening. For immediate assistance, write to us at office@arws.cz.

6. What is the Lugano Convention?
It is the key international treaty governing jurisdiction and the enforcement of judgments in all civil and commercial matters between EU states (like the Czech Republic) and EFTA states (like Norway). It provides a clear, stable, and predictable legal framework for your cross-border business. Our lawyers are ready to assist you – email us at office@arws.cz.

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