Types of civil contracts and their application
Ecovis | 13 November 2024
With the popularization of freelance jobs, different types of civil contracts have to be signed. You will need to sign a different type of contract when working with an accountant, lawyer, notary or other professional. The specific types of civil contracts cover a different range of obligations, restrictions and services that both parties agree to.
In this article by Ecovis Bulgaria we will introduce you to the most popular civil contracts and their applications. We will synthesize features and uses in business and give advice on when is the best time to incorporate them.
What is a civil contract?
Working with freelancers and freelance professionals is a popular choice when you need to perform certain duties. These can range from website development, accounting and legal services, repairs and more. Since these experts are not your employees, you should enter into a civil contract with them. This is a legal document that is made between two or more natural or legal persons and describes their rights and obligations for the performance of a particular service or activity.
It is important to note that a civil contract does not provide the same social and labour rights as an employment contract. The contracting authority hires the contractor to work on a specific task. The contract describes the conditions, the time for performance, the materials needed and the contractor's compensation. This gives the contracting authority a great deal of flexibility, as it is not bound in the long term.
On the contractor's side, he has to complete the assigned task within the deadline. But this does not mean that there are strict working hours. He is free to manage the project as he wishes, as long as he fulfills the obligations written into the civil contract. For example, if you are contracted for accounting services, you are not familiar with the exact work processes, but you expect the end result. This gives the accountant the freedom to take the necessary time and deliver a good end product.
What types of civil contracts exist?
Just as a civil contract differs from an employment contract, there are different types of civil contracts - each with its own specificities and requirements. What they have in common is that they are all time-bound. Typically, you are paid upon completion of the task, but contractors choose when to work as long as they meet the deadline. No insurance is paid by the contracting company and the freelancer is not entitled to paid annual leave or sick leave at the employer's expense. Now that we've covered the similarities, let's look at the most common types of civil contracts:
Construction contract
If you've been wondering whether to hire a freelancer on employment or civil contract, the latter is a sensible decision. When entering into a contract for workmanship, the freelancer must fulfill the commitments described for the controversial contract. This may include website creation, a marketing campaign, audit services, repair work, or others. He also commits that he will complete the task on time and as required by the obligor.
The Contractor shall use its own materials unless the Contract provides otherwise. Responsibility for performance also falls on him, and there are often liquidated damages for poor work. In these types of civil contracts, the price is predetermined in the contract but is paid after the work is done.
Types of civil contracts – Order contract
These types of civil contracts are drawn up between a trustee and a fiduciary. A promissory note is used when the trustee instructs the fiduciary to enter into a transaction on his or her behalf. A good example from practice, is when a property owner (trustee) instructs a real estate agency (grantor) to lease his property, for a certain commission.
It is important to note that any rights the grantor becomes the owner of from the transaction must be transferred to the trustee. If cash is to be used in the transaction, it must be provided by the trustee.
Copyright Agreement
This type of civil contract protects the rights of artists and their works. They are concluded between the author of the work and the user who wants to use it for commercial purposes. Like other types of civil contracts, there is a term for assigning rights. The maximum allowed by law is ten years, but if not agreed, the term is three.
It is common practice for payment to be set as a percentage of the profit from the use of the work. However, if architectural objects or premises are used, a fee may be payable.
Copyright also affects computer programs and software. If a freelancer creates them in the course of employment, they belong to the employer.
Contract for the management of a commercial company | Types of civil contracts
This type of civil contract is concluded between the owner of an enterprise and an authorised person (procurator). This entitles the procurator to perform all acts and transactions related to the exercise of the commercial activity of the enterprise. But the proxy cannot make corporate changes to the structures of the organization.
The Procurator Fiscal is also entitled to authorise other persons to carry out certain activities, but may not appoint other Procurators Fiscal.
Payment is negotiable, and may be fixed per month, or a percentage of the contracted post. The contract can be fixed term or perpetual, with termination occurring by the owner and recorded in the commercial register.
We're sure the information will help you next time you need to sign a civil contract. Learn more valuable tips on our blog here.