Glossary

Are you looking for an explanation for a certain term used in the practice areas serviced by PETERER Rechtsanwalt Notar? Click on a letter in the index.

Not found a term? The glossary is being continuously expanded.

Advance care directive

With an advance care directive every person with capacity of judgement can set out instructions and powers of attorney to be acted upon in the event that they should lose their decision-making capacity. This makes it possible to issue detailed instructions stipulating which persons are to act for you in what fields of activity and according to which guidelines for action and decisions. The official heteronomy of a person lacking incapacity is therefore ruled out by issuing an advance care directive. An advance care directive may contain instructions relating to care of the person on the one hand and the care of the principal’s assets on the other. In both areas it is also possible to regulate the related issue of legal representation vis-à-vis private individuals and public authorities.

With an advance care directive every person with capacity of judgement can set out instructions and powers of attorney to be acted upon in the event that they should lose their decision-making capacity. This makes it possible to issue detailed instructions stipulating which persons are to act for you in what fields of activity and according to which guidelines for action and decisions. The official heteronomy of a person lacking incapacity is therefore ruled out by issuing an advance care directive. An advance care directive may contain instructions relating to care of the person on the one hand and the care of the principal’s assets on the other. In both areas it is also possible to regulate the related issue of legal representation vis-à-vis private individuals and public authorities.

Care of the person includes ensuring the principal’s personal well-being and therefore care and decision-making in all personal matters such as attending to the principal’s psychological and physical welfare, cultivating social contacts, participation in social occasions, but also decisions regarding accommodation in a home. These acts of assistance are provided by the person designated in the advance care directive, often with the aid of helpers such as physicians and other medical personnel, home nursing services and relatives.

Care of the principal’s assets concerns the preservation and management of the assets of the person lacking capacity of judgement. This also includes dealing with the principal’s personal mail, settling bills and carrying out banking transactions. If securities have to be managed, the person designated is authorised consult specialists such as asset managers in order to deal with this task. The person designated must keep a careful record of the transactions and management measures taken in caring for the principal’s asset.

When issuing an advance care directive it is necessary to observe certain formal requirements in order to prevent reckless and ill-considered actions. An advance care directive can therefore either be hand-written like a last will and testament, i.e. from beginning to end, or subsequently formulated by a notary and publicly authenticated. These formal requirements make sense because they usually ensure that important personal decisions are definitely delegated by issuing an advance care directive. Formulation by a notary and public authentication ensure that no questions arise regarding the contents of the advance care directive and the principal’s capacity of judgement at the time when the advance care directive was issued. So public authentication is preferable to the hand-written version.

Agency agreement

Agreement under which an agent undertakes to broker transactions for one or more principals (brokering agent) or to enter into transactions on their behalf and for their account (transacting agent). If the agent’s work leads to the conclusion of a transaction between his or her principal and a customer, he or she has a claim to a commission.

The agency agreement is dealt with in Arts. 418a et seq. of the Code of Obligations (Obligationenrecht, OR). For insurance agents, the Insurance Policies Act (Versicherungsvertragsgesetz) also applies.

Agreement between members of a limited liability company

Agreement among several or all members of a limited liability company that may contain, in particular, provisions about block voting, i.e. the casting of a joint vote at the company’s general meeting of the members, and about preemptive rights and duties concerning the purchase and sale of membership interests. Only members are party to the agreement, not the company itself.

Authentication of the transfer of shares in a German limited liability company (GmbH)

According to section 15 of the German Act on Limited Liability Companies (GmbHG), the valid acquisition and pledging of shares in a German limited liability company (GmbH) requires notarial authentication. In a decision of 17 December 2013 (II ZB 6/13) the German Federal Court of Justice ruled that the transfer of shares in a German limited liability company can be authenticated by a Swiss notary with legal validity and that the corresponding lists of shareholders can be submitted to the competent German register court by the Swiss notary.

PETERER Rechtsanwalt Notar performs such authentications at his offices in St.Gallen.

Bailment agreement

Agreement under which the bailee undertakes to safely keep a chattel entrusted to him by the bailor.

Bailment agreements are concluded, e.g. in connection with the conclusion of shareholders’ agreements and other collaboration agreements in order to entrust shares to an independent bailee. In the process, the bailee is instructed to surrender the shares only when the parties jointly request that he or she do so. The bailment agreement serves here to secure reciprocal claims of the parties to the shareholders’ agreement (e.g. preemptive rights), since they no longer have independent control over their shares.

The bailment agreement is dealt with in Arts. 472 et seq. of the Code of Obligations (Obligationenrecht, OR).

Confidentiality agreement

Also non-disclosure agreement (NDA).

Agreement that is often concluded in connection with contract negotiations and prior to the conclusion of principal agreements and is intended to ensure the confidentiality of information, documentation, and know-how disclosed during contract negotiations. The confidentiality agreement normally contains an obligation on the part of the parties to place the duty of confidentiality on third parties, employees, and other persons to whom they disclose the aforementioned information. It is often agreed that payment of a contractual penalty is due in the event of breach.

Contractual penalty

Undertaking by each of the contracting parties to pay the other a pre-determined sum of money or provide other compensation to it in the event that such party breaches the terms of the agreement.

Payment of the contractual penalty is separate from the proof of any damage suffered as a result of conduct in breach of contract. The reason for agreeing on a contractual penalty is to prompt the contracting parties to conduct themselves in conformity with the agreement. This is intended as a proactive measure to prevent breaches of contract.

The contractual penalty is dealt with in Arts. 160 et seq. of the Code of Obligations (Obligationenrecht, OR).

Copyright

Copyright protects works of literature and art that have individual character (so-called intellectual creations). The protection afforded by copyright extends to literature, music, images, sculptures, films, operas, ballets, and pantomime. Also protected by copyright are computer programmes. Copyright also comprises related intellectual property rights, like the right of performing artists in and to their performances (actors, musicians), the right of record and video-music manufacturers in and to their products, and the right of broadcasting companies in and to their radio and television broadcasts.

Under copyright law, the author has the exclusive right to determine whether, when, and how his or her work may be used. In particular, this covers the reproduction, translation, processing, dissemination, sale, performance, and broadcasting of his or her work. However, published works may be used for personal use, i.e. privately or in a circle of closely affiliated persons. By contrast, with computer programmes, a licence must be obtained for each use.

Copyright protection of a work is independent of registration or submission to a register. It arises automatically upon creation of a work. Furthermore, in Switzerland copyright notices (©), for instance, have no influence on the existence of copyright protection (this differs in part from other countries). Copyright protection in Switzerland expires 70 years after the death of the author. With computer programmes, protection expires 50 years after the death of the author. The same applies to related intellectual property rights, whereby the date of performance, publication, or broadcast is controlling here. The right to be designated as an interpreter ends upon death, but not earlier than 50 years after the performance.

Copyright is dealt with in the Federal Act on Copyright and Neighbouring Rights (Bundesgesetz über das Urheberrecht und verwandte Schutzrechte, URG) To be taken into account on the international level are, in particular, the Berne Convention for the Protection of Literary and Artistic Works and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Declaration of intent

Also letter of intent (LoI) or memorandum of understanding (MoU).

Declaration confirming the intent of one or more parties to enter into an agreement or carry out a more complex transaction. The declaration of intent is intended to be non-binding and to not obligate the parties to actually enter into an agreement or carry out a transaction. Declarations of intent normally contain clauses relating to exclusion of liability in the event that the agreement or the transaction does not come about, as well as relating to the confidentiality of information disclosed by the parties in connection with contract negotiations.

Employment agreement

Agreement between an employer and an employee that establishes an ongoing relationship with mutual obligations. This relationship has four characteristics:

  1. Duty of the employee to work;
  2. Dependency relationship of the employee to the employer, which makes the employee subject personally, organisationally, and economically, as well as in terms of time, to the employer’s managerial authority;
  3. A certain duration of the contractual relationship, whereby a distinction may be made between employments agreements with an indefinite term and those with a limited one;
  4. The employee’s claim to payment by the employer.

The employment agreement is dealt with in Arts. 319 et seq. of the Code of Obligations (Obligationenrecht, OR). In certain employment relationships, the provisions of (if need be, generally binding) collective employment agreements (GAV) or standard employment agreements (NAV) may also be relevant. Moreover, the provisions of the Act on Employment (Arbeitsgesetz, ArG) must be complied with.

Favourable treatment of the surviving spouse

In connection with the conclusion of prenuptial and inheritance agreements, spouses can arrange to have each other placed in a better position vis-à-vis other heirs, particularly their mutual children.

This can be accomplished by allocating the surplus under the marital property regime to the surviving spouse. In addition, the surviving spouse can be granted, in addition to one quarter of the estate, usufruct of the ownership of three quarters of the estate to which mutual children are entitled. This is intended to enable the surviving spouse to be able to maintain his or her accustomed standard of living and not to have to sell assets (in particular, any property at which the spouses are living) in order to satisfy the inheritance claims of mutual children.

Franchising agreement

Agreement under which the franchisor makes a business concept available to the franchisee, with the franchisee becoming part of the franchisor’s marketing structure and acting vis-à-vis third parties as representative of a sales or distribution chain. In this regard, the franchisee normally remains legally and financially independent and compensates the franchisor with a franchise fee in exchange for the marketing tools, intellectual property rights, and know-how provided by the latter.

Goodwill

Value that a buyer is prepared to pay in connection with the purchase or take-over of a company that goes beyond the substantive value.

Licensing agreement

Agreement under which the licensor grants the licensee a right to use the licensor’s rights. Licensing agreements are primarily concluded in connection with the exploitation of intellectual property rights, such as copyright licences, trademark licences, licences for patent rights and know-how, and software licences. Licensing agreements contain in particular provisions relating to scope of the right of use (one-time or exclusive licence), payment of licence fees, maintenance and protection of licensed rights, and confidentiality.

Living will

By issuing a living will testators can determine how they wish to be treated in the event of illness or in the case of an accident if they have lost capacity of judgement. In the living will they can determine what medical treatment they agree to and what treatment they reject. A testator can also stipulate that all treatment options are no longer to be exhausted in certain situations.

Through the precise instructions in a living will testators can ensure that the only medical treatment that is administered is treatment that is supported by the will of the testator. In a living will testators can designate one or several persons to whom they are close and who are to take the decisions regarding medical treatment in the event of the testator losing capacity of judgement. If a living will is integrated into an advance care directive, it is subject to the same strict formal requirements (handwriting or public authentication). If it is formulated separately, it must be in writing (but it does not have to be hand-written). In addition, the living will must be dated and signed.

Pre-formulated forms or individually composed dispositions can be used. Individually formulated living wills can be more precisely adapted to the testator’s life situation. This limits room for interpretation and makes it possible to set out precise instructions. In the case of changing circumstances with regard to the testator’s life situation or state of health it is advisable to review the living will at regular intervals and adjust it if necessary.

In order for a living will to be taken into account in the event of the loss of capacity of judgement, it makes sense to deposit it with a trusted physician or another person of trust. In addition, it is possible to have the existence of a living will entered on one’s personal health insurance card.

Loan agreement

Agreement under which the lender undertakes to lend to the borrower, in particular, a certain sum of money and the borrower undertakes to repay such amount of money to the lender when the loan becomes due. The loan may be granted for either a definite or indefinite term and either bear interest or be interest-free. Moreover, the lender may request that the borrower grant collateral (e.g. assignments of receivables, surety agreements, lien rights).

The loan agreement is dealt with in Arts. 312 et seq. of the Code of Obligations (Obligationenrecht, OR).

Participation in acquired property

The statutory marital regime of participation in acquired property always applies, unless the spouses have agreed on a different regime by prenuptial agreement, i.e. one of separation of property or of community of property, or separation of property is required by statute or court order.

In participation in acquired property, a distinction is made between four different types of property, with each of the husband and wife being entitled to one share of individual property and one share of acquired property. A spouse’s individual property includes, in particular, those objects and assets that belonged to him or her prior to the marriage or that he or she acquired during the marriage through inheritance, gift, etc. On the other hand, a spouse’s acquired property consists of those assets that were able to be saved up as a result of his or her employment. These also include any benefits paid by social security or welfare institutions. Acquired property also consists of earnings from acquired property (e.g. interest income) and property acquired to replace acquired property.

By concluding a prenuptial agreement, the statutory arrangement governing the statutory marital regime of participation in acquired property can be modified in certain areas (e.g. allocation of certain assets and income from individual property to the other spouse’s individual property).

The statutory marital regime of participation in acquired property is dealt with in Arts. 196 et seq. of the Civil Code (Zivilgesetzbuch, ZGB).

Shareholders’ agreement

Agreement among several or all shareholders of a corporation that may contain, in particular, provisions about block voting, i.e. the casting of a joint vote at the company’s general meeting of the shareholders, and about pre-emptive rights and duties concerning the purchase and sale of shares. Only shareholders are party to the agreement, not the corporation itself.

Staffing

Staff leasing means the hiring of workers and the commercial assignment of same to outside companies (deployment companies) for the purpose of performing work. In this regard, the employer (contractor) assigns essential managerial authority over its workers to the deployment company.

Staffing may take several forms:

  • Temporary work (exclusive posting of workers to deployment companies);
  • Contract work (employment of workers at the staffer’s own company, as well as posting of same to deployment companies);
  • Occasional assignment(one-time assignment of workers to third parties).

Pursuant to the provisions of the Federal Act on Recruitment and the Hiring of Services (Bundesgesetz über die Arbeitsvermittlung und den Personalverleih, AVG), a permit is required in order to do business as a contractor. In contrast to temporary and contract work, the occasional assignment of workers does not require a permit. Permit issuance depends on the meeting of various conditions and is tied to various requirements (in particular, the obligation to pay a deposit, licensing of an individual responsible for the company, approval of work and staffing contracts). Brokerage and staffing business within Switzerland requires cantonal approval. This is issued by the cantonal approval authority in whose canton the registered office of the staffing company is located. Inter-cantonal business furthermore requires confederation approval. This is granted by the State Secretariat for Economic Affairs (SECO). SECO also oversees the work of the cantonal enforcement authorities.

Statutory entitlement of statutory heirs

The statutory entitlement of statutory heirs is that statutory share of the estate of which a testator may not deprive his or her statutory heirs. Statutory heirs with a statutory entitlement are those persons who are named in the order of succession stipulated by statute (in particular, in contrast to heirs named by the testator himself or herself). Statutory heirs with a statutory entitlement include the testator’s children, parents, and surviving spouse or registered partner. The statutory entitlement for a child amounts to three quarters of his or her statutory succession rights, for the parents, one half, and for the surviving spouse or registered partner, likewise one half.

The statutory entitlement of statutory heirs is dealt with in Art. 471 of the Civil Code (Zivilgesetzbuch, ZGB).

 

Surety agreement

Under a surety agreement, the surety undertakes as against a creditor to vouch for the obligation of a third party (principal debtor) in the event that the latter does not settle the obligation. A distinction may be made here, in particular, between a simple surety agreement (the surety can be held to account only where the principal debtor is in bankruptcy, has been granted a composition moratorium, or collection of the obligation is otherwise no longer possible) and a joint-and-several surety agreement (the surety can be held to account once collection from the principal debtor was unsuccessful).

The surety agreement must be concluded in writing (with respect to the liability amount and joint-and-several liability, even written by hand) and has to be publicly authenticated, insofar as the surety is a natural person and the amount of the surety agreement exceeds CHF 2,000.00. With married sureties and sureties who are registered partners, the spouse or registered partner must also provide his or her written consent to the surety agreement.

The surety agreement is dealt with in Arts. 492 et seq. of the Code of Obligations (Obligationenrecht, OR).

Temporary work

Temporary work means a type of staffing where a staffing company hires workers and commercially assigns them to outside companies (deployment companies) for the purpose of performing work. In this regard, the employer (staffing company) assigns essential managerial authority over its workers to the deployment company. In contrast to other types of staffing (contract work, occasional assignment), the staffing company hires workers in connection with temporary work solely for the purpose of assigning them to deployment companies, without itself running its own production or services company.

Pursuant to the provisions of the Federal Act on Recruitment and the Hiring of Services (Bundesgesetz über die Arbeitsvermittlung und den Personalverleih, AVG), a permit is required in order to offer temporary work.

Witness confirmation under inheritance law

The testator can choose between various forms of wills for dealing with his or her estate. In addition to a hand-written will, he or she may opt for the issuance of a public will (publicly authenticated will) or the conclusion of a publicly authenticated inheritance agreement with one or more heirs.

If the testator chooses a publicly authenticated will, then as soon as the public deed has been signed and dated, he or she must declare to two witnesses that he or she has read the document, or has had it read to him or her by a notary, and that it contains his or her will. The same applies to the conclusion of an inheritance agreement, under which the contracting parties must declare to two witnesses, in particular, that they have read the signed document, or have had it read to them by a notary, and that it contains their inheritance agreement. The witnesses must, inter alia, provide written confirmation that, in their opinion, the testator or the parties had the capacity to make a disposition (i.e. the capacity to form a judgment). Under certain circumstances (e.g. where the testator or a contracting party is deaf or blind, as well as under extraordinary circumstances), witness confirmation may be subject to other requirements.

Witness confirmation is dealt with in Arts. 501 et seq. of the Civil Code (Zivilgesetzbuch, ZGB).

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