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Principles of „Life Time Contracts“ (EN)

April 04, 2018 By: udo.reifner Category: 1.2 LTC Principles

Principles of social long-term contracts

1. Life time contracts: Life time contracts are long-term social relationships providing goods, services and opportunities for work and income-creation. They are essential for the self-realisation of individuals and their participation in society at various stages in their life.

2. Human Dimension: The subject matter of life time contracts is real-life circumstances. The role of the law governing them is to frame the power relationships of those contracts in terms of human development, so that on-going co-operation rather than the formation of the contract lies at the heart of the contractual relationship. Personal relations (like for example the family) have to be taken into account.

3. Long-term relationship: Mutual trust between the parties as to the durability of the long-term relationship must be protected and early termination must have only future effect, having no bearing on the contract prior to that point. Early termination must be restricted to circumstances in which the freedom and the autonomy of the individual is at issue and makes early termination necessary.

4. Linked contracts: Life time contracts are embedded in a network of linked contracts to which the law must have regard when legal questions fall to be decided.

5. Basic needs: The provision of essential goods and services for basic needs related to consumption and employment requires that physical, social and psychological considerations be taken into account in order to ensure the protection the weaker party to the contract. Stringent regulation or other collective rules will secure the degree of social protection needed in line with the subject matter of the contract, its duration and its importance in the life of the individuals concerned.

6. Productive use: The provider of essential goods and services or income-generating opportunities under a life time contract must avoid taking any action which will jeopardise the social purpose of the contract and the productive used of the rendered services.

7. Collective and ethical dimensions: Employees and consumers are entitled to expect that the collective aspect of their individual interests is safeguarded by the state through collective representation mechanisms, together with the application of general values of good morals and good faith which influence access, formation, contents, adaptation and dissolution of such relationships.

8. Access: Providers of life time contracts must refrain from discrimination in terms of the personal and social characteristics of consumers at all stages of the contract, from access to termination, including discrimination in terms of the group of intended users of the contract, or individual members of that group. The importance of life time contracts in meeting the basic human needs of subsistence, employment and participation in economic life gives access to these goods, services and income opportunities the status of fundamental human right (distributive justice).

9. Remuneration: The mutual obligations of life time contracts shall not be grossly disproportionate. Prices must be transparent and nondiscriminatory and the charges must be affordable and in line with the costs.

10. Adaptation: If the social and economic circumstances upon which a life time contract is based have changed significantly since the contract was entered into, or if material circumstances from which the parties derived have arisen that are found to be at variance with its original situation to such an extent that the social nature of the contract is jeopardised, and if the parties would not have entered into the contract or would have entered into it on different terms had they foreseen this change, adaptation of the contract may be required if, taking into account all the circumstances of the specific case, and in particular the contractual or statutory allocation of risk and the fundamental obligation of a human being, one of the parties cannot reasonably be expected to continue to comply with the contract without variation of its terms. Collective regulation shall take precedence over individual adaptation.

11. Termination: Termination of life time contracts imposed on workers and consumers must be transparent, accountable and socially responsible. Early termination against the will of the consumer, tenant or worker must be a measure of last resort. Disclosure of true and fair grounds for termination must be non-discriminatory and be provided a reasonable period before termination comes into effect. The only grounds for termination are personal behaviour of such significance as to merit termination, or financial circumstances or interests on the part of the provider which materially affect the viability of the subject matter of the contract. Where the reasons for termination are financial in nature, users are entitled to have recourse to mechanisms of collective redress, including the right of the individual to be heard or represented. This procedure must allow sufficient time for users to put forward measures preventing termination and/or its consequences. As far as the termination in in the interest of that party which has developed the contract and organised the service it has to consider the interest of the other party with due diligence.

12. Communication: Throughout the contractual relationship, from the beginning of the process of negotiation of the contract to its termination, a continuing and co-operative dialogue must be established on an equal basis and at a personal level between the parties with regard to fulfilling the purpose of the contract. Such a discussion must take place before each stage in the contract (formation, adaptation, termination) and communications must at all times be based on the principle of trust and confidence.

13. Information and Transparency: During the negotiation of the contract and for the life time of the contract accurate, complete, timely and understandable information must be provided which is adequate to overcome any information asymmetry that arises.

14. Securing livelihood: Where life time contracts provide for regular income, making it available according to time and place, or for payments to be drawn from that income, a minimum level of income must be guaranteed in the form of continuing payments sufficient to meet the consumer’s subsistence needs and, if applicable, protection must be provided from attachment of income, seizure and individual voluntary arrangements with creditors.

15. Exclusion: The social risks of unemployment, homelessness and overindebtedness must be taken into account in both the individual and the collective forms of the contract with due regard to its social origin and in line with public law.

16. Confidentiality: Personal data obtained during a life time contractual relationship and assessments based on such data must be treated confidentially and only be used for the purpose of the contract.

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