If a contracting party has been induced to conclude a contract by intentional deception, the contract is not binding on him even if the error aroused was not a material one (Art. 28 para. 1 CO). With other words the contract is not binding for the deceived person and no obligations from the contract can be held against him.
Approval of the contract
However, the deceived party must indicate within one year that it will not comply with the contract, whereby the one-year period begins with the discovery (Art. 31 CO). Otherwise, the contract is deemed to be approved despite deception. A distinction must be made here between three types of approval. First, an approval by legal transaction is conceivable, in which the deceived party explicitly declares that he wants to keep the contract despite the lack of will; on the other hand, the contract can also be approved by implication. The doctrine mentions as an example the consumption, the sale or the unconditional acceptance of the performance. Furthermore, the non-assertion of a defect of will in a pending lawsuit is also seen as an approval. Finally, as already mentioned at the beginning, the expiry of the one-year period is seen as approval of the legal transaction.
Impact
The question arises whether the approval of the contract means that the deceived party can no longer assert any rights. In principle, the approval of a contract that is not binding due to deception or fear does not exclude the claim for damages without further ado (Art. 31 Section 3 CO). However, in the doctrine it is strongly disputed to what extent warranty or further rights can be asserted after an approval.
Conclusion
If the contract is accepted, whether by tacit consent, by an actual declaration of intent, or by the expiration of the one-year period, a subsequent invocation of a defect of intent is barred. Despite the approval of a contract, however, further claims may exist. These may be claims arising from the contract itself or claims arising from pre-contractual fault.
