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Contract Law
Contracts law governs and regulates the formation, operation, and conclusion of commercial relationships. Our review of this area of law, better known as the law on obligations in Kosovo, indicated that, in many respects, it is reasonably up-to-date. Most importantly, a new Law on Obligations recently passed the Kosovo Assembly that, while not without its deficiencies, is comprehensive, suitable for a modern commercial environment and compatible with European Union directives. Furthermore, contracting standards were also strengthened by the passage of a new Law on Public Procurement by Kosovo Assembly and its promulgation by the SRSG early in 2004.
Despite this, discussions with several leading commercial lawyers indicated that, in practice, contracts are not widely used by the business community in Kosovo. Most transactions and commercial arrangements, typically involving other family members, are based on oral agreements and there is very little appreciation for written contracts. Furthermore, most local lawyers have limited experience with regard to drafting and negotiating commercial contracts. It is not unusual to find a poorly drafted contract document that fails to contain one or more basic elements, such as a date, description of subject, etc.
This situation is beginning to change, however. Foreign investors and business people generally operate on the basis of written agreements and their presence in Kosovo has already increased, and will continue to do so, the use of contracts documents. Furthermore, the new Law on Obligations, as well as the Law on Public Procurement, will put greater impetus behind the development of good contracting practice. However, as in several other legal areas in Kosovo, there is a real lack of information and continuing legal education on contract law to enable practitioners to understand the new laws and take advantage of the improvements they present.
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