Table of Contents

Definition of Law (Public Private) ........................................................................................................ 6

The Law of Persons................................................................................................................................ 6
Code of Obligations / Companies........................................................................................................... 7
Limited Liability Companies:............................................................................................................... 7
Joint Stock Corporation................................................................................................................... 7
Limited Liability Company................................................................................................................ 7
Unlimited Liability Companies:............................................................................................................ 7
Partnership in Collective Names...................................................................................................... 7
Limited Partnership.......................................................................................................................... 7
Property.................................................................................................................................................. 7
Types of property................................................................................................................................ 7
Types of ownership............................................................................................................................. 8
Joint Ownership............................................................................................................................... 8
Tenancy in Common....................................................................................................................... 8
Flying Freehold................................................................................................................................ 8
Time Share...................................................................................................................................... 8
Charges on Property........................................................................................................................... 8
Charges on REAL PROPERTY....................................................................................................... 8
Contracts................................................................................................................................................ 9
Components of an enforceable contract:.......................................................................................... 10
Contracts voided or avoided.............................................................................................................. 10
Warranties given in case of transfer of goods:..................................................................................11
Essential hospitality contract clauses: receiving products and services........................................12
Remedies and consequences:...................................................................................................... 12
Preventing breach of contract:....................................................................................................... 12
Credit Sales, Cash Sales, Hire Purchase, Leasing...............................................................................12
Purchase contract general remarks184............................................................................................ 12
Credit sale by installment CO226a (Long-term Credit sales).........................................................12
Different types of leasing................................................................................................................... 13
Car leasing.................................................................................................................................... 13
Disadvantages of Leasing............................................................................................................. 13
E-Commerce......................................................................................................................................... 13
Issues about E-contracts................................................................................................................... 13
EU and E-commerce......................................................................................................................... 14
Misleading advertising................................................................................................................... 14
Data protection.............................................................................................................................. 14
Specific requirements about E-contracts include:..........................................................................14
Unfair terms in consumer contracts............................................................................................... 14
Payments....................................................................................................................................... 14
The EU and E-Commerce:................................................................................................................ 14
Directives on misleading advertising ............................................................................................ 14
Consumer rights to:....................................................................................................................... 14
Commercial Rental Agreements........................................................................................................... 14
Leases: Step 1, obligations of the 2 parties.......................................................................................14
Leases: Step 2, problems that can occur.......................................................................................... 15
Leases: Step 3, end of the lease agreement.....................................................................................15
Extension of lease......................................................................................................................... 15
Termination of lease: .................................................................................................................... 15
Premature termination of lease...................................................................................................... 15
1- At the beginning............................................................................................................................ 15
Lessor must:.................................................................................................................................. 15
Lessee must:................................................................................................................................. 15
Comminatory period:..................................................................................................................... 15
2- During the Lease........................................................................................................................... 16
Defects in object ........................................................................................................................... 16
Subsequent defects....................................................................................................................... 16
Serious defects the tenant may after suitable time limit for repair:................................................16
Medium defects............................................................................................................................. 16
Pressure on lessor to do something/repair........................................................................................ 16
Lessee must:................................................................................................................................. 16
Right of retention........................................................................................................................... 17
Subletting 262................................................................................................................................ 17
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At the end of the lease agreement.................................................................................................... 17

Premature Termination of the Lease................................................................................................. 17
Accommodation Contracts.................................................................................................................... 18
Yield management:........................................................................................................................... 18
Is it legal?...................................................................................................................................... 18
Fair practices:................................................................................................................................ 18
Reducing no-shows:...................................................................................................................... 19
Management Contracts........................................................................................................................ 19
The 2 parties involved are:................................................................................................................ 19
The operator.................................................................................................................................. 19
The owner...................................................................................................................................... 19
Advantages of management contracts for operator:......................................................................19
Disadvantages for operator:.......................................................................................................... 19
Types of management contracts:...................................................................................................... 19
Category 1..................................................................................................................................... 19
Category 2:.................................................................................................................................... 19
Franchise Agreements.......................................................................................................................... 20
Services offered by franchisor:.......................................................................................................... 20
Different types of fees....................................................................................................................... 20
Monthly fees: ................................................................................................................................ 20
Advertising fees............................................................................................................................. 20
Training fees.................................................................................................................................. 20
EU and the Hospitality Industry Laws and Regulations........................................................................20
Regulations in Place regarding......................................................................................................... 20
Laws in Place regarding ................................................................................................................... 20
Overall Benefits of the EU................................................................................................................. 21
Civil Liability.......................................................................................................................................... 21
Definitions......................................................................................................................................... 21
Civil Liability................................................................................................................................... 21
Tort................................................................................................................................................ 21
Duties and Obligations of a Hotel Manager.......................................................................................21
Duties of CARE............................................................................................................................. 21
Different Types of Liability................................................................................................................. 21
Fault Based Liability .................................................................................................................. 21
Contractual Liability....................................................................................................................... 22
Statutory Liability in Switzerland.................................................................................................... 22
What has a Injured Party to Prove?.................................................................................................. 22
Liability of Hoteliers........................................................................................................................... 22
Hoteliers are responsible for ......................................................................................................... 22
Liability for Valuables..................................................................................................................... 22
Parking in Switzerland and Corresponding Liability..........................................................................23

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Code of Obligations
Definition of Law (Public Private) ........................................................................................................ 6
The Law of Persons................................................................................................................................ 6
Code of Obligations / Companies........................................................................................................... 7
Limited Liability Companies:............................................................................................................... 7
Joint Stock Corporation................................................................................................................... 7
Limited Liability Company................................................................................................................ 7
Unlimited Liability Companies:............................................................................................................ 7
Partnership in Collective Names...................................................................................................... 7
Limited Partnership.......................................................................................................................... 7
Property.................................................................................................................................................. 7
Types of property................................................................................................................................ 7
Types of ownership............................................................................................................................. 8
Joint Ownership............................................................................................................................... 8
Tenancy in Common....................................................................................................................... 8
Flying Freehold................................................................................................................................ 8
Time Share...................................................................................................................................... 8
Charges on Property........................................................................................................................... 8
Charges on REAL PROPERTY....................................................................................................... 8
Contracts................................................................................................................................................ 9
Mutual agreement 1..................................................................................................................... 9
Time limit: 3, 5.............................................................................................................................. 9
Telephone contract 4 (2).............................................................................................................. 9
In absentia 5................................................................................................................................ 9
Receipt of goods which were not ordered 6 (a)............................................................................9
Displaying goods with prices shown 7 (3)....................................................................................9
Offer without obligation 7(1)......................................................................................................... 9
Sending of price lists 7(2)............................................................................................................. 9
Revocation to offer/counter offer 9............................................................................................... 9
Nullity 20...................................................................................................................................... 9
Unconscionability 21.................................................................................................................... 9
Fraud and deception 28............................................................................................................... 9
Material error 23, 24..................................................................................................................... 9
Material duress 29....................................................................................................................... 9
Door to door sales 40 (a-f)........................................................................................................... 9
Tort 41.......................................................................................................................................... 9
Liability of shop owner 55,............................................................................................................ 9
Liability for animals 56................................................................................................................. 9
Liability of company owner 58...................................................................................................... 9
Unjust enrichment 62................................................................................................................... 9
Components of an enforceable contract:.......................................................................................... 10
Contracts voided or avoided.............................................................................................................. 10
Warranties given in case of transfer of goods:..................................................................................11
Warranty of clean title (seller is allowed to sell the product) Article 192/193..............................11
Warranty on defects in goods sold Article 210...........................................................................11
Detected Faults have to be reported immediately Article 201...................................................11
Seller must pay damages if he is responsible CO97..................................................................12
Creditor can impose a time period in that seller has to fix damage CO107................................12
No time limit is required when performance would not be useful anymore CO108....................12
Essential hospitality contract clauses: receiving products and services........................................12
Remedies and consequences:...................................................................................................... 12
Preventing breach of contract:....................................................................................................... 12
Credit Sales, Cash Sales, Hire Purchase, Leasing...............................................................................12
Purchase contract general remarks184............................................................................................ 12
Credit sale by installment CO226a (Long-term Credit sales).........................................................12
Different types of leasing................................................................................................................... 13
Car leasing.................................................................................................................................... 13
Disadvantages of Leasing............................................................................................................. 13
E-Commerce......................................................................................................................................... 13
Issues about E-contracts................................................................................................................... 13
EU and E-commerce......................................................................................................................... 14
Misleading advertising................................................................................................................... 14
Data protection.............................................................................................................................. 14
Specific requirements about E-contracts include:..........................................................................14
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Unfair terms in consumer contracts............................................................................................... 14

Payments....................................................................................................................................... 14
The EU and E-Commerce:................................................................................................................ 14
Directives on misleading advertising ............................................................................................ 14
Consumer rights to:....................................................................................................................... 14
Commercial Rental Agreements........................................................................................................... 14
Leases: Step 1, obligations of the 2 parties.......................................................................................14
Leases: Step 2, problems that can occur.......................................................................................... 15
Leases: Step 3, end of the lease agreement.....................................................................................15
Extension of lease......................................................................................................................... 15
Termination of lease: .................................................................................................................... 15
Premature termination of lease...................................................................................................... 15
Duration/rental relationship can be definite or indefinite (time) 255...........................................15
Non performance or imperfect performance of the contract at the time of the transfer of the
object 258.................................................................................................................................. 15
Suitable conditions for use 256.................................................................................................. 15
Lessee needs to pay rent 257.................................................................................................... 15
Deposit laws 257 (e).................................................................................................................. 15
Care and consideration (careful usage of the accommodation) 257 (f)......................................15
repairs107,109........................................................................................................................... 15
Termination of the contract 259 a b........................................................................................... 15
Lesson or suppress rent 259 d................................................................................................... 15
Deposit of the rent 259 g............................................................................................................ 15
Lodge rent 259 g-I...................................................................................................................... 15
Damages and interest 259 e...................................................................................................... 15
Extension 272............................................................................................................................ 15
273 ............................................................................................................................................ 15
1- At the beginning............................................................................................................................ 15
Lessor must:.................................................................................................................................. 15
Lessee must:................................................................................................................................. 15
Comminatory period:..................................................................................................................... 15
2- During the Lease........................................................................................................................... 16
Defects in object ........................................................................................................................... 16
Subsequent defects....................................................................................................................... 16
Serious defects the tenant may after suitable time limit for repair:................................................16
Medium defects............................................................................................................................. 16
Pressure on lessor to do something/repair........................................................................................ 16
Lessee must:................................................................................................................................. 16
Right of retention........................................................................................................................... 17
Subletting 262................................................................................................................................ 17
At the end of the lease agreement.................................................................................................... 17
5 impossible cases- 272 (a)....................................................................................................... 17
Time allowed- 273(2)(a) 273(2)(b)-30 days or 60 days..............................................................17
Termination of lease 266 CO..................................................................................................... 17
Premature Termination of the Lease................................................................................................. 17
Accommodation Contracts.................................................................................................................... 18
Yield management:........................................................................................................................... 18
Is it legal?...................................................................................................................................... 18
Fair practices:................................................................................................................................ 18
Reducing no-shows:...................................................................................................................... 19
Management Contracts........................................................................................................................ 19
The 2 parties involved are:................................................................................................................ 19
The operator.................................................................................................................................. 19
The owner...................................................................................................................................... 19
Advantages of management contracts for operator:......................................................................19
Disadvantages for operator:.......................................................................................................... 19
Types of management contracts:...................................................................................................... 19
Category 1..................................................................................................................................... 19
Category 2:.................................................................................................................................... 19
Franchise Agreements.......................................................................................................................... 20
Services offered by franchisor:.......................................................................................................... 20
Different types of fees....................................................................................................................... 20
Monthly fees: ................................................................................................................................ 20
Advertising fees............................................................................................................................. 20
Training fees.................................................................................................................................. 20
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EU and the Hospitality Industry Laws and Regulations........................................................................20

Regulations in Place regarding......................................................................................................... 20
Laws in Place regarding ................................................................................................................... 20
Overall Benefits of the EU................................................................................................................. 21
Civil Liability.......................................................................................................................................... 21
Definitions......................................................................................................................................... 21
Civil Liability................................................................................................................................... 21
Tort................................................................................................................................................ 21
Duties and Obligations of a Hotel Manager.......................................................................................21
Duties of CARE............................................................................................................................. 21
Different Types of Liability................................................................................................................. 21
Fault Based Liability .................................................................................................................. 21
The injured Party has to prove Article 41
............................................................................21
Contractual Liability....................................................................................................................... 22
Statutory Liability in Switzerland.................................................................................................... 22
Head of Family Article 333......................................................................................................... 22
Keeper of Animal Article 56........................................................................................................ 22
The EMPLOYER Article 55
............................................................................................... 22
Also responsible for Damage to a Client Article 101 ..............................................................22
The OWNER of BUILDINGS and STRUCTURES Article 58 ..................................................22
What has a Injured Party to Prove?.................................................................................................. 22
Liability of Hoteliers........................................................................................................................... 22
Hoteliers are responsible for ......................................................................................................... 22
THEFT Article 487..................................................................................................................... 22
DESTRUCTION Article 487....................................................................................................... 22
DETERIORATION Article 487................................................................................................... 22
Liability for Valuables..................................................................................................................... 22
If NOT Deposited with In-Keeper ONLY liable if Fault Article 488-1 .......................................22
If DEPOSIT was REJECTED by Hotel Total Liability Article 488-2 .....................................22
Personally kept Valuables are Treated as other EFFECTS (1000 CHF Limit Article 488-3.......22
Liability end when HOTEL was not informed Immediately of LOSS Article 489.........................22
They restaurant OWNER takes the EFFECTS and GIVES a RECEIPT Article 472..................22
Parking in Switzerland and Corresponding Liability..........................................................................23
Hotel deposit-ordinary personal effects 487............................................................................23
Ditto 487 ................................................................................................................................. 23
None could have deposit contract 472.......................................................................................23

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Definition of Law (Public Private)

As a manager, knowing some basics of law in order to prevent problems (prevention philosophy)
STEM (select, teach, educate, manage)
Is an action ethical ?: Is it legal, does it hurt anyone, is it fair, am I being honest, would I care if it
happens to me, would I publish my actions, what if everyone did it

The sources of law:

Customary (customs) (laws that are not written down) Gewohnheitsrecht

Written (constitutions, statutes, executive orders, international treaties)
Jurisprudence (judges laws) (laws that are build on previous cases and rulings)
Authors (specialists, who know a lot about the topics)
European

Public law (state vs. individual) how the state is organized:

Constitutional (Interpretations of Constitution e.g. freedom of religion, human rights)

Criminal/Penal Law (Deals with all aspects of crime, Strafrecht)
o No one can be punished unless they have committed an act the law expressly forbids
o Felonies, Misdemeanors, Contraventions (small crimes against rules)
Administrative describes the principles that apply to government agencies, bureaus, boards
and commissions (protects citizens against arbitrary administrative acts e.g. building permits,
F&B licenses, taxes)
Procedural (deals with the procedure used in civil and criminal matters)
o Can a wife testify against her husband
o Must a witness take an oath
o Can children give evidence in court
o How do you serve a summons on a witness
Private law (private vs. private):
Succession law (inheritage (Erbrecht))
Law of property
Family law
Law of persons (when is a person a legal person, entering contracts
Code of Obligations
National, international, comparative law (laws of different countries)

The Law of Persons

Physical persons: civil capacity = enjoyment + exercise of civil rights
E.g. right of life, privacy, integrity (no one can harm you physically or mentally), right to inherit,
protection of picture and voice, equality, equality between men and woman, Age, sexual orientation,
disability, race or ethnic origin
Exercise of civil rights is determined by age and/or discretion
(To have discretion = ability to sign, legal in terms of the law, you can be punished)

Supervision (in case of limited exercise of civil rights):

Guardian (if you dont have the right to enter into contracts or agreements)
Trustee (acts on your behalf, the person with a trustee can still sign agreements and
contracts, but needs some help)
Legal advisor

Legal persons: associations and foundations referred to in the law of persons (companies in the
Code of Obligations)
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Associations: minimum of 3 persons, articles of association have to be stated (aim, fund,

obligatory organs board of directors), non-economic aim, doesnt need to be registered in the
register of commerce e.g. soccer, kindergarten
Foundations: assets set aside for particular purpose (EHL), supervisory body (e.g. State),
non-economic aim, must be registered in Register of Commerce e.g. EHL, Red Cross,
museums

Code of Obligations / Companies

Limited Liability Companies:
Joint Stock Corporation
A common name
Capital Stock divided into Shares
Shareholders have NO liability for debts (besides their shares)
Incorporation by registration in the ROC (Chamber of Commerce)
Certification by a public NOTARY
3 or more shareholders at the day of incorporation
3 obligatory bodies
o Board of Directors
o General Meeting
o Auditors
Limited Liability Company
Predetermined Share Capital
A own Name
Certification by a public NOTARY
Right of every Partner depends on his/ her value of Share
Every Associate is personally, jointly and severally LIABLE for debts of the company, BUT
ONLY to the extent of registered CAPITAL not paid up.
Management by associate or delegated person
2 obligatory bodies
o General Meeting
o Directors

Unlimited Liability Companies:

Partnership in Collective Names
Compulsory registration at the ROC (Chamber of Commerce)
Partnership Contract
Assets of Partners --- Business is directly owned by Partners
Partners are only liable for debts originating from the partnership
BUT therefore JOINT, SEVERAL and SUBSIDUARY LIABLE on all open ASSETS
Limited Partnership
Compulsory registration at the ROC (Chamber of Commerce)
2 TYPES of Partners
o Active (TOTALLY LIABLE)
o Silent (ONLY Liable for the AMOUNT Contributed silently)

Property
Types of property

Personal=chattel: moveable property (e.g. cars, chairs, computers)

Real: immoveable (ownership noted in the Land Register e.g. Land, houses, forest, mines),
possible of Retention of Title possible (sale on Credit, Bank Loan)
Property can be:
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Tangible (any movable good)

Intangible (Brand Name/ Royalties = Marktwert)
Fungible (being easily to replace, everyday good)
NON-Fungible (impossible to replace; e.g. an antique, set aside good)

Difference between possession and ownership

Possession: leased, rented, borrowed, stolen you can use the property, but cannot freely
dispose of it (e.g. sell)
Ownership: property belongs to you, therefore you can sell it, inherit, destroy it

Types of ownership
Sole Ownership (you own alone)
Joint Ownership
A number of persons from a community under statute or under a contract
Every person has a right in the property as a WHOLE, not in certain parts
Statute of Contract regulates the Management
Separation/ Share by Liquidating (Sale) or Terminating the Community
Joint Ownership
A number of persons from a community under statute or under a contract
Every person has a right in the property as a WHOLE, not in certain parts
Statute of Contract regulates the Management
Separation/ Share by Liquidating (Sale) or Terminating the Community
Tenancy in Common
Each owner owns a SHARE of the thing as a whole
Each owner can dispose on his share as they wish
Property managed JOINTLY
Major decisions have to be made UNANIMOUSLY e.g. sale
Flying Freehold
Type of Common Property
Each co-owner has the right to the exclusive use and disposal of certain premises
Community of co-owners have to statute the rules of management
Time Share
Each person involved bought the right to spend a set period once a year in a holiday property
for 3 years or longer
EU Time-Share Regulation
o 10 day cooling-off period after contract is made
o Exact address and payment information required
o accurate description and completion date for the property, price to be paid

Charges on Property
A charge/lien (Pfandrecht) is a right that a creditor has on an object securing his or her right against
the debtor or a third party
Charges on CHATTELS (personal/moveable goods e.g. cars)
Right of Retention (to keep a good; e.g. the car)
The right of the creditor to keep an object belonging to the debtor
A Connection between the OBJECT and the DEBT has to be detectable
Charges on REAL PROPERTY
Mortgages
o Contract between the lender (bank) and the borrower
o A charge registered on a property to secure a personal loan. Thereby the debt is
enforceable against any asset of the borrower
o ONE BUILDING can be used as SECRITY for a NUMBER of DEBTS
o ALWAYS tied to an INTEREST-RATE
o USUALLY no TOTAL Mortgages possible, certain % of needed money has to be
available in CASH
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Restricted Property Rights - Servitudes = right of usage

Servitudes: Right of way
Personal Servitudes
Life tenancy, licenses (right to stay in a place for a life time, cant be transferred)
building rights (right to built on property (even if not owner), and right to receive
compensation when giving property back to owner)
right of residency
Transfer of Real Property
Capital gain tax
Succession taxes
Taxes on gifts; stamp duty tax
Mortgages = charge registered on a property as a security for a personal loan interest rate
(same building can be used as security for number of loans, order of priority)
Property in Switzerland --- RESTRICTIONS for FOREIGNERS
Authorization/ PERMIT required for NON-RESIDENTS
ALSO for the creation of COMPANIES
Limitation on number of PERMITS (holiday homes)
Also permit required if a person wants to acquire property for the purpose of following their
own line of business (e.g. a foreign hotel chain)
Business establishment 10 year ban on resale
Possibly entry in land registry
PERMIT (valid 3 years) follows certain procedure, only possible to obtain BEFORE Property
is ACQUIRED!!!
In SWITZERLAND zoning and construction restrictions/ permits have to be obtained
Restrictions on purchase/sale of land
Authorization requirement for non-residents, including companies
Limitation in number of permits
Zoning restrictions
Building/construction permits
In Switzerland:
Permanent business establishment- 10 year ban on resale, if permit subject to conditions they are
entered on Land Register, Certain procedures to be followed to obtain permits, permit to be obtained
before transaction complete, permits valid 3 years

Contracts
Mutual agreement 1
Time limit: 3, 5
Telephone contract 4 (2)
In absentia 5
Receipt of goods which were not ordered 6 (a)
Displaying goods with prices shown 7 (3)
Offer without obligation 7(1)
Sending of price lists 7(2)
Revocation to offer/counter offer 9
Nullity 20
Unconscionability 21
Fraud and deception 28
Material error 23, 24
Material duress 29
Door to door sales 40 (a-f)
Tort 41
Liability of shop owner 55,
Liability for animals 56
Liability of company owner 58
Unjust enrichment 62

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Contract definition (US): An agreement or promise made between two or more parties that the
courts will enforce.
Contract definition (CH): For a contract to be concluded a manifestation of the parties mutual
consent is required Art. 1
Freedom of contract: to conclude, to choose the parties, to establish terms/conditions and penalties
in case of breach
Form of contracts: written, oral, tacit Art.1 (2)
Contracts have to fulfill: Legal purpose (be in accordance with local laws), intention to be legally
bound, capacity (only eligible (berechtigte) people can make contracts; e.g. No children)

Components of an enforceable contract:

In Switzerland: offer + acceptance = Contract
In UK, Ireland, US also Consideration
Offer: a proposal to perform an act or to pay an amount that, if accepted, constitutes a legally
valid contract
o Face-to-face or at-a-distance
o With or without a time limit
o In absentia: e.g. displaying goods with corresponding prices, sending a price list, offer
without obligation
o In CH an offer with or without time limit is binding for a certain period of time
o In UK an offer is only binding if an deposit is made
Acceptance: unconditional agreement to the precise terms and conditions of an offer does
not have to be expressly stated
Consideration (only in US, Ireland, UK): payment exchanged for the promise contained in
the contract
Offer or invitation to treat
Good in a Window:
CH = Offer
Common Law Countries = Invitation to Treat (stage
before offer)
Consumer protection: contracts concluded under unusual circumstances (e.g. door-to-door sales,
receipt of goods which were not ordered)
Offer in Switzerland
Face to face (persons are present)
Telephone
Presence of another person
o thereby the offer is only VALID as long as the persons/ call is present
With time limit
o offeror is bound to the given limit of time-span
In Absentia
o Displayed good with price tag
o Offer w.o. obligation
o Sending price list
o Counter offer
Offer in Common Law Countries
Time limit only enforceable if deposit is made by the buyer
Contractual terms: expressed or implied (not specifically agreed by implied by statute, common or
customary law)
Contracts under unusual circumstances
Door to Door Sales CO40a-f
Receipt of Goods that were not ordered CO6a

Contracts voided or avoided

Nullity: impossible, illegal, immoral the contract never existed, no time limit to bring action,
anyone can bring the action CO20
Annulment: there are time limits, only the injured party can bring the action, the contract can
exist for a period of time
Unconscionability i.e. intoxication: contract signed during moment of weakness, ignorance
CO21
- 10 -

Fraud and deceptions CO28

Material error: e.g. code error on a ordering form CO23,24
Material duress: e.g. black mail CO29
Lesson 8: Contracts (continued)

Warranty for defects 201 buyer (or receiver) needs to check visibility and function and take immediate
action if wrong 210 automatic warranty of 1 year. If nothing specifically mentioned CO199
Warranty CO192/193 The seller guarantees to the buyer that he has the right to sell the property as
he has the right to sell the property as he has the right to the object.

Warranties given in case of transfer of goods:

Transfer of title and passing of risks and benefits

Warranty of clean title : The seller guarantees to the buyer that he has the right to sell
the property as he has the right to the object
Warranty for defects : time limit, visible or functioning defect
Delivery dates
Issue: When does transfer of risks and benefits occur ? (on taking possession, on conclusion of
contract, depending on fungible or non-fungible type of good)
Class of Goods
CH fungible
Non fungible
France
Germany
GB non
fungible
fungible

Title passes
on taking possession
on taking possession
on conclusion
on taking possession
on conclusion

Risks and benefits

on taking possession
on conclusion
on conclusion
on taking possession
on conclusion

when goods become fungible when goods become fungible

Non fungible: specific items that might have been set aside (2nd hand car)
Fungible: goods that can be easily replaced
Romalpa clause:
Reservation of title clause by seller. The seller may stipulate in contract the intention to retain
ownership of goods until contract fulfilled, even if buyer is in possession. Usually condition is that the
buyer has to pay for goods before title passes
GB Warranty & defects
Sale of Goods act
Section 12 assumption the seller has the right to sell the goods, otherwise full refund or price paid
Section 13 implied condition as to description e.g. tinned fresh fruit salad
Section 14 implied condition as to satisfactory quality and fitness to use
Quality of goods implies fit for purpose
Free from minor defects, Safe durable
Warranties Switzerland
Warranty of clean title (seller is allowed to sell the product) Article 192/193
Warranty on defects in goods sold Article 210
o 1 year
o If less or more, to be specified in writing
o 1 year even if discovered later
Detected Faults have to be reported immediately Article 201
o If not Acceptance of Faults
o Visible Check = Immediately
o Functioning Check = Later (at home), BUT UPON RECEPTION
Delivery Dates
Deadline and Specification for delivery has to be obeyed
Breach of Contract
- 11 -

Articles 97/107/108

Seller must pay damages if he is responsible CO97

Creditor can impose a time period in that seller has to fix damage CO107
No time limit is required when performance would not be useful anymore CO108
Essential hospitality contract clauses: receiving products and services
Payment terms
Delivery or start date
Completion date
Performance standards
Licenses and permits (e.g. plumber services)
Indemnification
Nonperformance clauses
Dispute resolution terms
Breach of contract = failure to keep the promises or agreements of a contract
Remedies and consequences:
o Suit for specific performance
o Liquidated damages
o Economic loss
o Alternative dispute resolution
Preventing breach of contract:
o Get it in writing
o Read the contract thoroughly
o Keep copies of all contract documents
o Use good faith when negotiating contracts
o Note and calendar time deadlines for performance
o Ensure the performance of third parties
o Share contract information with those who need to know, and educate staff on the
consequences of contract breach

Credit Sales, Cash Sales, Hire Purchase, Leasing

Purchase contract general remarks184
Cash sale: immediate transfer of title oral, written, tacit contract
Cash
Credit card
Cheque
Payment in X parts
Credit sale by installment CO226a (Long-term Credit sales)
Nominative contract (qualified form necessary)
Initial Payment (insisted)
Duration of contract strictly controlled
Issue of consumer protection
Items for personal/domestic use
Hire purchase = intention to purchase from the taker, right to buy conferred to the property, intention
from the vendor to surrender the property payment of installments
Agreement between TWO parties
Possession until all the payments are made ownership only when complete payments
Intention to buy is sine qua non (absolute prerequisite)
Non-nominative (rules are not in CO) contract,
fixed duration
No particular FORM in Switzerland (written/oral or Tacit.)
Leasing = mixed contract involving elements of hire, sale on account and agency
One person furnishes another with a chattel for some/all of its working life
- 12 -

Payments = value of the object at the beginning end value + administrative costs
Contract cannot be terminated before the term specified in the agreement
Option to buy at the end of the contract, at residual value (whereas not for rent)
3 parties involved: buyer, agent, lessee (e.g. buyer of the car, garage which takes care of
the lease, and the customer who leases the car)
The lessee assumes the risk (bears the warranty)

Different types of leasing

Production leasing: IT equipment, machinery in order to work with the most updated
equipment and avoid replacement costs (never want to own product)
Consumer leasing: cars for private usage (sometimes intention to buy)
Consumption leasing: anything else for private usage (sometimes intention to buy)
Leaseback: refers to property e.g. Give property to a bank to receive more cash monthly
Lease payments back to bank

Car leasing
Garage sells to buyer
Buyer leases to customer
Buyer gives warranty to Lessee (customer)
Disadvantages of Leasing
The lessee assumes risk/not owner
High insurance fees (always highest value)
Agreed number of Km
Initial Deposit necessary in most cases
At the end of agreement taker not automatically owner

E-Commerce
40 a-e
7 days revocation period as soon as the sellers name and address is known
E-contracts as door-to-door sales (home, workplace, excursions, public) contracts
Consumer protection: 7 days revocation period 40a
Seller Must inform buyer of this right
Seller Must give his name & address

Issues about E-contracts

Privacy: US self-regulation, few requirements VS Europe Data Protection Directive

o The right to have inaccurate data rectified
o The right of recourse in the event of unlawful processing
o The right to withhold permission to use data in certain situations
o The right to know where data originated
Website terms and conditions: standard terms have to be included in the contract and
brought to the attention of the customer click-wrap agreements are more easily enforceable
Deep linking: not legal in all countries (e.g. Germany), pb if deep link to an illegal site,
hyperlinks to copyright material is illegal in some countries
Hyperlink: illegal to link with copyrighted material without permission (e.g. US)
Jurisdiction: cyberspace which law governs the contract? insert a jurisdiction clause,
but how effective is this? Stick to the Rome Treaty that states that the country where the
purchased GOOD (hotel room) is, is the place of Jurisdiction
Forum selection clause, has to be coherent with the local laws and in case of legal action
the court should accept it
o Handling, Delivery and other processes (Payment) of the sold Good should be
regulated under this term
Advertising.
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EU and E-commerce
Body of law to ensure consumer protection: legislation of general nature, also applies to E-commerce
Misleading advertising
Data protection
o Enforcement of Notice, Choice, Access and Security Measures
o Stick to European Union Data-Protection Directive
o Inaccurate Data has to be RECTIFIED
o RECOURSE in Case of UNLAWFUL Processing
o Right to NOT give Permission to USE personal DATA
o Right to make Data Origin TRANSPARENT
Specific requirements about E-contracts include:
o The name of service provider, the adress
o Electronic mail address
o Trade register and registration no
o VAT no
o Different stages to follow to conclude contract
o The expedients for correcting and handling errors
o If concluded contract will be filed and accessible
Unfair terms in consumer contracts
Unfair terms used in a contract are not binding on the consumer
Must always be written in intelligible language
Balance in parties rights and obligations
Consumer favored in cases of doubt
Payments
In case of fraudulent use: consumer should be allowed to request cancellation and to be recredited with the sums paid
After notification no longer liable for any losses, except if fraudulent
No physical presention or electonic identification, consumer not liable for losses

The EU and E-Commerce:

Directives on misleading advertising
Directive on Data Protection
Directive on Certain Legal Aspects of E-Commerce in the Internal Market
Directive on Unfair Terms in Consumer Contracts
Consumer rights to:
Cancel a purchase made involving FRAUD (made with alien CREDIT CARD)
If card is lost: NO MORE THAN 150 Euro CHARGES
If Seller doesnt ASK for E-IDENTIFICATION Consumer is NOT Liable for LOSSES

Commercial Rental Agreements

Hotel property management
Commercial lease
Management contracts
Franchise contracts
Own and operate hotel property
Leases: transfer of use, not ownership
Rental contract between landlord/tenant or lessor/lessee
Subject to specific regulatory bodies, depending on the country
Free form of contract

Leases: Step 1, obligations of the 2 parties

Lessor must give possession in a suitable condition for use, without defects
Lessee must pay rent, guarantee + duty for care and consideration
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Initial rent: how much and how long in advance?

Leases: Step 2, problems that can occur

Defects in object: different degrees, may be original or subsequent

o Original: if serious, tenant can get out of the contract or ask for immediate repairs or
for damages and interests all depends on the degree of gravity of the defect
o Subsequent: minor are tenants problem; for serious ones and if no repair done,
tenant may ask for legal performance, lessen or suppress rent, damages and interest,
terminate the contract
Procedure when asking for repair: lessee must give written notice with details of defects, time
limit and wish to lodge the rent
Lessee may have right of retention: applies to commercial property only at the beginning,
landlord can request that premises furnished adequately / then can retain chattel as a
guarantee if rent not paid, not sell them though
Lessee can sublet under certain conditions: obligation for lessee to get permission from
the lessor, right for subletting should be specified in the original contract
Lessee can lodge the rent = withholding of the rent for specific reasons (e.g. repair of
serious defects), request sent to official authority

Leases: Step 3, end of the lease agreement

Extension of lease
Termination of lease:
o Due date: specified in contract, in default refer to custom law
o Time limit for anticipated termination, specified in contract
Premature termination of lease
o By the lessor: late payment, violation of due care, change of owner, bankruptcy
o By the lessee: late delivery, serious defect, death of lessee, offer of replacement
lessee
Duration/rental relationship can be definite or indefinite (time) 255
Non performance or imperfect performance of the contract at the time of the transfer of the object 258
Suitable conditions for use 256
Lessee needs to pay rent 257
Deposit laws 257 (e)
Care and consideration (careful usage of the accommodation) 257 (f)
repairs107,109
Termination of the contract 259 a b
Lesson or suppress rent 259 d
Deposit of the rent 259 g
Lodge rent 259 g-I
Damages and interest 259 e
Extension 272
273

1- At the beginning
Lessor must:
give possession art 258
in a suitable condition For use art 256
without defects
Lessee must:
pay rent 257 CO
guarantees 257 (e)
duty of care and consideration 257 (f)
Comminatory period:
30 days after first denial of payment then landlord can take legal action meaning giving another 30days and then can kick him out (evict him)
- 15 -

30 days to dispute the initial rent from state of premises examination

To the competent authority
Because of:
-professional or family necessity
-Letting agreement when short supply
-rent increase of 10%

2- During the Lease

Defects in object
-the lessee may have to lodge rent
-lessee has right of retention in Commercial leases in certain case
-if lessee wishes to sublet- certain conditions
There are Minor defects, Medium defects, Serious defects
Defects may be original or subsequent (occurred during)
Original defects
10 days landlord is responsible for all defects Minor, medium, serious
If serious tenant can get out of contract
Or ask for immediate repairs to be done- 107-109 CO
- medium /minor- tenant must:
- give time limit for repairs- 259 a-i
In default of repairs the tenant may:
- insist it be repaired
- have it repaired at landlords expense
- reduction of rent
- lodging of rent art 259 g-i
- damages and interest
Subsequent defects
minor defects are tenants problem
Serious defects the tenant may after suitable time limit for repair:
Terminate the contract 259 (b) (a)
Ask for legal performance
Lessen or suppress rent 259 (d)
Lodge rent 259 (g)-(i)
Damages and interest 259 (e)
Medium defects
End of suitable time limit lessee may
-fix the defect at lessors expense 259(b)(b)
Lessen or suppress rent 259 (d)
Lodge rent 259 g-i
Damages and interest

Pressure on lessor to do something/repair

Lessee must:
give written notice to landlord with
details of defect
giving a reasonable time limit to repair
stating wish to lodge rent in default
Lessee must send request for repairs of defect to the Conciliation Authority
In a maximum of 30 days from when rent is due and withheld
In default of demand to CA in the time limit the withheld rent can be paid to lessor
Applies to commercial property only
Applies to furniture and fittings on premises of commercial lessee and sub lessee
Cannot be automatically used by lessor
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Right of retention
1. At the beginning- landlord can insist only that premises be furnished adequately
2. When rent unpaid then_
request legal office for proceedings to take inventory of chattels to guarantee
rent due for previous year
rent for current 6 months if lease continues
The chattels cannot be sold, given away
3. Take proceedings for execution of rent
Subletting 262
Obligation for lessee to get permission to sublet
Tenant is allowed to sublet
Clause in contract otherwise null
Lessees obligations
get permission to sublet
Lessors can only refuse if:
lessee refuses to divulge terms when asked
conditions of subletting improper-too much benefit to lessee
nuisance (rgerniss) to landlord, significent changes in use

At the end of the lease agreement

extension of lease agreement
termination of letting agreementpremature termination

ordinary notice

Who can apply for extension?

In the 2 durations of letting agreement?
To whom?
5 impossible cases- 272 (a)
Time allowed- 273(2)(a) 273(2)(b)-30 days or 60 days
Number of extensions
Effects of extensions
Termination of lease 266 CO
Due date
Time limit for termination/date of revocation
Contractual- often end of a month
In default cantonal/local custom- in VD, 1st April, July and October
In default legal -266(c)(d)
Time limit for termination: In general contractual
Legal minium residential- 3 months
- Commercial- 6 months
- Park and room- 2 weeks

Premature Termination of the Lease

By the Lessor:

Late payment 257 (d)

Violation of due care 257 (f)
Change of owner 261
Good cause 266(g)
Bankruptcy 266(h)

By the Lessee
- 17 -

Late delivery 259 (b)

Serious defect in object during lease 259(b)
Death of lessee 266 (i)
Good cause 266 (g)
Offer of replacement lessee 264 (1)

Accommodation Contracts
Contracts hotels enter into:
Purchasing contracts
Service contracts
Accommodation contracts
Sale for cash 184
Deposit contract 272
Letting contract 253

Yield management:

Maximize the enterprises effective use of its resources

Maximize business bottom line profit through managing:
o Pricing
o Sales volumes
o Operating margins
o Gross profit contributions
YM decisions
o Rack rate and discounted pricing
o Timing of offers
o Timing of acceptance of bookings
o Overbooking statistics and practices
o Which customers to book out (walk/bump)

Is it legal?
Breach of contract: reservation either confirmed or held constitutes a valid oral binding
contract promise from the hotel to deliver a room in the future in exchange of payment,
promise of the client to pay for it
Misrepresentation: the hotel willingly misrepresented facts to the client intention to
defraud
o Some US courts recognize YM as a standard practice and dont charge for
misrepresentation
Unfair and deceptive acts and practices: intended to prevent customer deception (public
law; criminal law)
Frustration: when circumstances outside the control of one of the two parties prevent it from
being performed (force majeure)
If a hotel overbooks (and breaches reservation contract, especially if confirmed), customer can
file lawsuit
Fair practices:
Forecasting contract capacity
Establishing an effective reservation policy
o Confirmed reservation: held until mutually agreed time, no prepayment
o Guaranteed confirmed reservation: customer will pay if no-show
- 18 -

French law
o Confirmation must be written
o Arrhes: non-refundable deposit / if hotel cancels, double refund to customer
o Dpt: refundable to customer in case of cancellation
o English, French and Americans can impose cancellation penalties with time periods
applying

Reducing no-shows:
Facility that honors bookings
Document all reservations in writing
Establish policies related to making guaranteed reservations and billing of no-shows in writing.
Reconfirm reservations in certain cases
Develop clear, easily communicated cancellation policies
Penalty in case of no-shows
Truth in material: advertisement, brochure, promotional contracts tort, breach of contract, fraud,
misrepresentation: misleading statements, may lead to actions for damaging and criminal proceedings
(penal law)

Management Contracts
The 2 parties involved are:
The operator
o
o
o
o
o
The owner

Agent for owner

Has full responsibility for operating and managing the property
The employees are owners employees
The losses and lawsuits absorbed by owner
The operator receives fees

The Agency = an Agent is a person authorized to act for, or to represent another person referred
as the Principal
Agency law fiduciary responsibilities over the agent:
Place their principals interest over their own
Preclude them from competing with their principal
Preclude self-dealing (i.e. may not operate on their own behalf without disclosure and
approval of their principals
Advantages of management contracts for operator:
Growth of hotel chain / low investment (no real estate)
Owner bears the financial risk (even though trend towards more investment from the operator)
Disadvantages for operator:
No control on transfer of ownership
Shortfall of owner cash flow = bankrupcy

Types of management contracts:

Category 1
o
o
o
o
o
Category 2:
o
o
o

Day-to-day management
Pre-opening planning
Recruitment and training of staff
High level of name recognition
Cost = 3-4% of total revenue + incentive fee
No name recognition
Franchise affiliation for owner
Cost = 3-4% of total revenue + 5% of room revenue to pay franchise fee
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Franchise Agreements
Franchise = agreement between the holder of a brand name (franchisor) and a franchisee

Services offered by franchisor:

Operating procedures (e.g. SOPs, staff training)

Technical assistance (e.g. study of potential sites, financial assistance, purchasers
network)
Marketing (e.g. name, reservation system, joint advertising, sales network)

Advantages
Least investment to penetrate a market and
access a central reservation system
Customer recognition and brand loyalty

Disadvantages
Power of international firms on independent
franchisees
Standardized approach
Loss of autonomy / close supervision and control

Different types of fees

Initial fee: market study, site inspection, technical assistance for pre-opening
Monthly fees:
o Fixed monthly fee + amount per reservation made through the CRS
o % of room sales (3 to 6,5%)
o % of total sales
Advertising fees
Training fees
Issues:
Encroachment: expansion strategy of the brand
Purchasing requirements
Changes in operating manuals
Renewal clauses
Protection of the brand tight control
Tax treatment of fees vary from country to country

EU and the Hospitality Industry Laws and Regulations

Regulations in Place regarding
o
o
o
o

Environment
Enterprise and Information Society
Employment and Social Affairs
Health and Consumer Affairs

Laws in Place regarding

o
o
o

Data Protection Directive

E-Commerce Directive
Time-Share Directive
- 20 -

o
o
o

Distant-Contract Directive
Package Holiday Directive
Fire-Safety in Hotels Directive

Overall Benefits of the EU

o

FREE Movements of Goods, Persons, Capital and Services

FOR MORE INFO REGARDING THE EU and its CONSTITUTION see the SLIDES

Civil Liability
Definitions
Civil Liability
o

The Obligation imposed on a person to remedy tort or wrong causes to another

person in a violation of his LEGAL or CONTRACTUAL obligations

o
o

Something WRONG against an individual

Intentional (assault) or NON-Intentional (recklessness)

Tort

Duties and Obligations of a Hotel Manager

Duties of CARE
o
o
o
o
o
o

To provide SAFE Premises

Serve ALCOHOLIC DRINKS in a responsible manner
Hire QUALIFIED Staff
TRAIN STAFF properly
WARN of UNSAFE Conditions
SAFEGUARD Guests Property

Different Types of Liability

Fault Based Liability
o

Unlawful Act

An Act is unlawful when it violates a rule of conduct designed to protect

private individuals directly or indirectly
An Unlawful Act occurs every time a person violates the absolute rights of
another such as the RIGHTS of PERSONALITY or PROPERTY Rights

The injured Party has to prove

Article 41

The Unlawful Act

The Injury
The Cause and the Effect
- 21 -

Was it Intentional, Reckless or Negligent

VIOLATION may RESULT in DAMAGE-PAYMENTS

Contractual Liability
o
o

Liability for Agreements within Contracts that were made

Have to follow the AGRGEED patterns

Statutory Liability in Switzerland

Head of Family Article 333
Keeper of Animal Article 56
The EMPLOYER Article 55
Employer is Responsible for DAMAGE
Caused to a THIRD PARTY by his employees
Also responsible for Damage to a Client Article 101

The OWNER of BUILDINGS and STRUCTURES Article 58

Inadequate Maintenance
Fault in Construction

What has a Injured Party to Prove?

Fault based
Unlawful act
Injury
Case + effect

Statutory
Generating fact
Injury
Case + effect
Liability is presumed

Contractual
Breach of contract
Case + effect
Fault of co-contracting party
presumed

Fault-reckless, intentional,
negligent

Liability of Hoteliers
Hoteliers are responsible for
THEFT Article 487
DESTRUCTION Article 487
DETERIORATION Article 487
Liability for Valuables
If NOT Deposited with In-Keeper ONLY liable if Fault Article 488-1
Is with the hotels Personnel
If DEPOSIT was REJECTED by Hotel Total Liability Article 488-2
EXCEPT: Valuable that cannot safely DEPOSITED (Van Gogh)
Personally kept Valuables are Treated as other EFFECTS (1000 CHF Limit Article 488-3
Liability end when HOTEL was not informed Immediately of LOSS Article 489

Restaurateurs are NOT Responsible for Personal Belongings EXCEPT

They restaurant OWNER takes the EFFECTS and GIVES a RECEIPT Article 472

- 22 -

Parking in Switzerland and Corresponding Liability

Parking of vehicle
Underground closed common garage
Supervised exterior hotel parking lot
Non supervised hotel parking lot
Parking lot for payment

Type of liability
Hotel deposit-ordinary personal effects 487
Ditto 487
None could have deposit contract 472
Letting agreement no absolute liability

- 23 -