There are no legal provisions of a general nature that define what a framework agreement actually is and what its basic elements or characteristics are.

There are no legal provisions referring to it directly, as in the case of classic “named contracts”, which have their own regulation in the Civil Code (e.g. sale, lease, rental or loan agreement). It is also difficult to find clear elements, which could each time determine that a given agreement is a framework agreement.

However, it is certain that qualifying a given relationship as a framework agreement should be approached with a great deal of caution. The mere naming of a given contract as a framework agreement does not make it a framework agreement of its own. The most important thing for the assessment whether we are dealing with a framework agreement is its content. Only the analysis of the content of the contract will determine what the parties actually agreed on within their freedom and what the limits of their responsibility are. This article tries to explain how to understand a framework agreement in a maze of unknowns and little regulation, where business practice plays a crucial role.

Types of framework agreements

A framework agreement helps the parties organise the process of concluding a sequence of agreements of a similar nature or regulate a pattern of cooperation for the future. There are several types of framework agreements that help achieve this goal, of which two are the most common.

The first type stipulates that the contracting parties are immediately bound by a definitive agreement, but that the series of services and their details are set in a general framework (forks) and will only be specified at a later stage by one of the parties or a third party. The commencement of the performance specification itself is often dependent on the occurrence of external conditions foreseen by or directly dependent on the parties.

Another type of framework agreement is a contract under which all performance contracts with similar characteristics will only be entered into in the future. It may also be the case that the two types of framework agreement will overlap. They may also contain characteristics inherent in other contracts and stand alone or as part of a larger whole.

A framework agreement will primarily be used where the parties, for various reasons, cannot or do not consider it advisable to enter into a highly specific agreement at a particular stage of the cooperation, or are uncertain about their ultimate objectives in the future.

What does the framework agreement contain?

A framework agreement usually regulates the form and mode of future contracts with one or more contractors and may apply to almost any industry, including the MICE industry. Common provisions include the introduction of an obligation to conclude execution agreements in a specific form (e.g. as an exchange of e-mails, orally or in writing). There are also provisions in framework agreements which determine whether the counterparty’s silence can be regarded as acceptance of the offer or whether other effects should be attributed to it. Often, the introduction of appropriate solutions into the framework agreement makes it possible to make cooperation more flexible and faster, which may result in the subsequent waiver of the provisions of the framework agreement in the execution agreements.

While the binding nature of the provisions of the framework agreement is most often that of a rigid framework and obligations, this does not restrict the parties in changing their content. The parties, under their freedom of contract, are entitled to change the relations between them, but – naturally – this requires their mutual consent. In other words, the essence of the framework agreement boils down to making additional declarations of will (concluding execution agreements) at a later stage of cooperation, which, as a rule, cannot change the original rules of the framework agreement established by the parties (unless the parties agree otherwise).

While this sounds obvious, the parties often forget that if there is unanimity, they can always adjust the terms of cooperation, even if they are bound by an earlier framework agreement. Specific contracts (executory contracts, performance contracts) implementing the framework agreement are generally concluded in greater number and may have different subjects. There may also be different rules for their settlement. The framework agreement referring to them may contain provisions indicating the quantity and amount of future performances, the deadlines for their performance and other conditions for performance of individual executory contracts. However, this is not an obligation, because – in accordance with the nature of the framework agreement – the parties are often not able to foresee the scale of future cooperation, deadlines or other specific provisions.

Is there an obligation to conclude implementing (execution) contracts under the framework agreement?

A framework agreement is primarily the basis for concluding execution (implementation) agreements. As for its subject, it is usually formulated in a very general way. In one of the judgments, it was even stated that the framework agreement as such, is in fact not an agreement in the classic sense of the word, but only a way of concluding an agreement, different from the ones regulated by the Civil Code. Thus, it is the mechanism leading to the creation of execution agreements that comes to the fore and constitutes the basic element of the framework agreement construction.

Is there an obligation to conclude an executory contract (performance contract) if a framework contract is concluded?
Once again, it all comes down to an analysis of the content of each individual contract. The general assumption of a framework agreement is the creation of a permanent relationship of a long-term nature, but most often without the obligation that a contract with a given specific content will be concluded. If such an obligation existed in the framework agreement, we would probably be dealing with a preliminary agreement and not a framework agreement.

On the other hand, the lack of permanency features and reliance on general declarations would probably take the form of a letter of intent or constitute mere negotiations. In summary, a framework agreement provides that the obligations of the parties will be definitive, but only of a framework nature. In other words, the parties, by concluding a framework agreement, make sufficiently advanced arrangements to define the future framework of their cooperation in a minimum (sufficient) manner. But in order to actually and finally implement them, they need time and additional detailed arrangements which will only become actualised in the future.

What if the execution (implementation) contract provided for in the framework contract is not concluded?

As indicated by the jurisprudence of Polish courts, an agreement with features of a framework agreement, which stipulates the obligation to perform executory legal acts of a specified, general minimum value, may be the basis for compensatory liability covering actual loss and lost profits.

However, such situations are rare and bring the framework agreement closer to a preliminary agreement. Thus, while as a general rule the right holder cannot claim the compulsory conclusion of executory (performance) contracts under the framework agreement, under certain exceptional conditions it can claim damages. This stems from the fact that the obligation to conclude an executory contract exists in fact only if all elements make it possible to clearly and objectively decode a minimum content of the future agreement, and not only a general outline of cooperation.

A golden mean?

The Framework Agreement escapes rigid bpawoundaries and is difficult to place in a strict category. If one tried to describe it poetically, it would be like an oxymoron full of contradictions. If one tried to characterise it in terms of physics and astronomy, it would have no fixed centre of gravity. Without limiting itself to platitudes, each framework agreement is, as it were, governed by its own laws, which are ultimately determined by the will of the parties and the specificity of the issues. The common denominator of all framework agreements, however, seems to be their flexibility. It is the plasticity of the framework agreement that should guide the consensual aim of the contracting parties and its interpretation.

This article appeared in Think Mice Magazine –