Danish Contract Law

• Published date: 02 February 2022
• Subject Matter: Corporate/Commercial Law, Contracts and Commercial Law
• Law Firm: Carsted Rosenberg Advokatfirma
• Author: Mr Michael C. Rosenberg and Andreas Tamasauskas

This brief introduction to the main principles and canons of construction of Danish contract law is intended to provide our international clients with a useful overview when structuring Danish transactions or when reviewing Danish agreements.

General

As a jurisdiction, Denmark is predominantly a civil law jurisdiction with elements of common law interspersed. It therefore constitutes more of a hybrid with a civil law base and certain common law characteristics. There is no unified civil law code, but a number of specific statutes interwoven with legal principles emanating from custom and case law.

The main governing statute is the consolidated Agreement Act (Aftaleloven). The Agreement Act sets out the general principles of Danish contract law, but it does not regulate their interpretation per se. Other statutes may as lex specialis regulate certain agreements by imposing terms which cannot be abrogated to the detriment of e.g. the a consumer and thus limiting the liberal approach under the Danish contract law in specific areas. A contract therefore prevails over statutory provision unless the statutory provisions are mandatory.

Freedom of Contract

The overriding principle of the Danish law of contract is the freedom of contract. The parties are therefore free to enter into contractual arrangements, to the extent that the arrangements do not contravene specific statutory provisions set out in a number of discrete statutes governing specific topics and areas of law. Danish contract law is therefore very liberal when it comes to commercial contracts between commercial parties. The starting point to review a contract under Danish law, will therefore be to ascertain the original intention of the parties at the time the contract was concluded, i.e. the 'meeting of the wills'.

Autonomy of the Parties

Danish contract law stems from the fundamental autonomy of the contract parties to agree their "own law" in terms of the contractual agreement. This libertarian basis is then tempered by mandatory statutory provisions or legal principles that may set the limits of the parties' very wide autonomy, e.g. the parties cannot lawfully agree to an unlawful act prohibited by statute. The approach is generally described as Nordic legal pragmatism amongst legal scholars and is not unlike the approach of common law courts in terms of interpreting, applying and developing the law of contracts.

Contract Formation

Unlike common law, Danish contract law does not recognise the concept of consideration. The contract formation is therefore based on an offer and acceptance principle. The offer is the declaration of the intent by the offeror to be contractually bound by a set of terms and conditions. This becomes binding upon acceptance by the offeree.

Formal Requirements

There are generally no formal requirements for contract formation and a contract need neither be in written form nor be concluded before a notary. This also applies to subsequent amendments to a contract. For evidentiary purposes, the written form will take precedence absent evidence to the contrary.

The general rule under Danish law states that a 'wet ink' signature is not required for a contract to be valid. Contracts are generally binding if the parties reach an agreement, irrespective of form ('1 of the Agreement Act). Moreover, the Regulation (EU) No. 910/2014 on electronic signatures (eIDAS) applies in all EU member states as a base line. The majority of standard documents can be signed using a simple electronic signatures. This includes:

• general commercial agreements, such as credit facilities notice and acknowledgements, sale and purchase agreements, NDAs, IP agreements, etc.
• corporate resolutions, articles of association, share transfers, etc.
• real etate agreements, such as sale and purchase agreements lease agreements (expect certain termination notices), etc.
• employment agreements, such as service agreements, employment agreements, termination notices, etc.

Certain documents may however have a statutory prescribed form requirements (lex specialis), incl.:

• transfer of real estate and registration of charges in the Land Registry require a qualified electronic signature (NemID) issued to all Danish residents for the use in connection with public digital services by the Agency for Digitisation. Absent a NemID, the signatory must meet certain statutory form requirements in wet ink and witnessing.
• certain transfers and charges in the Persons Register require NemID as above.
• certain matrimonial and private documents such as last wills and testaments may require a notarisation or two witnesses.
• certain negotiable documents, such as debentures, bills of exchange, cheques, etc.

An agreement may require a prescribed form to amend it. As the vast majority of all contracts are form-free, this is unusual but not unheard of. If there is no specific form requirement other than 'in writing', any form of execution can be used. It is advisable to use a form that leaves some form of an audit trail, e.g. digital signatures such as Adobe, DocuSign, Penneo, Moreover, even where the parties may have agreed a prescribed form of amendment, it is generally also within their powers to agree another form (cf. lex posterior principle).

Implied Terms

A contract may be concluded tacitly without a formal exchange of offer and acceptance. Danish case law has established that a legal obligation can be derived from the parties'...