A signed contract usually binds. In cases of defects of intent under Art. 23 ff. CO it can be unwound — but the one-year deadline is unforgiving.
The Swiss Code of Obligations recognises three categories of defect of intent that make a contract voidable: essential error (Art. 23–27 CO), wilful deception (Art. 28 CO) and well-founded fear — i.e. duress (Art. 29–30 CO). Whoever invokes one of them can unilaterally dissolve the contract within one year of discovering the defect (Art. 31 CO).
In practice, these grounds matter most in real-estate purchases, marriage and inheritance contracts, business participations and marriage-fraud cases. The one-year deadline is a forfeiture period — it cannot be extended or interrupted.
1. Essential error (Art. 23–27 CO)
An error is relevant for avoidance only if it is essential according to the principle of good faith. Art. 24 CO lists four categories deemed essential:
• Error as to the identity of the contractual partner (e.g. confusion of the person to be contracted with).
• Error as to the type of contract (e.g. believed to be signing a lease, in reality a sale).
• Error as to the subject matter (e.g. confusion of the parcel of land).
• Error as to facts which, by commercial usage, are to be regarded as the necessary basis of the contract (fundamental error).
Mere motive error — for example mistakenly assuming the purchased share would rise — is not voidable. Unilateral calculation error rarely suffices either.
2. Wilful deception (Art. 28 CO)
Where a contract is concluded as a result of wilful deception by the other party, the deceived party may avoid the contract — even where the error is not essential. The threshold is lower than for simple error: any untrue statement of fact or concealment of a fact subject to disclosure duty suffices.
Classic cases: concealed defects in real-estate sales (e.g. undisclosed water damage), falsified balance sheets in business acquisitions, sham love relationships entered into with a view to the Swiss passport.
3. Well-founded fear — duress (Art. 29–30 CO)
Whoever enters into a contract out of well-founded fear of serious harm to themselves or a close person is not bound (Art. 29 CO). The threat must be unlawful and concrete — references to legal action are generally not an unlawful threat.
A practical classic: a client signed an acknowledgement of debt after being threatened with the publication of intimate recordings. The Federal Supreme Court clarified in BGE 132 III 24 that even the threat of legal action can be unlawful where it is used in an immoral manner.
4. The avoidance declaration — how does it work in practice?
Unlike rescission in a sales contract, no court action is needed — a unilateral declaration of intent that needs to be received suffices (Art. 31 CO). In practice, a registered letter is recommended, containing:
• Clear designation of the avoided contract (date, contract number, parties).
• Specific description of the defect of intent (error/fraud/duress) with the facts.
• Time at which the defect was discovered (relevant for the deadline).
• Unambiguous avoidance declaration with claim for restitution (Art. 31 para. 3 CO in conjunction with Art. 62 ff. CO).
• Demand for unwinding with a deadline.
5. The one-year forfeiture period (Art. 31 para. 1 CO)
Avoidance must be declared within one year of discovering the error, the deception or the cessation of duress. This period is a forfeiture period — it cannot be extended by negotiations, silence or mutual agreement. Whoever misses the deadline loses the right of avoidance permanently.
Important: what counts is the discovery of the defect, not the contract conclusion. For a deception discovered in 2018 on a 2015 contract, the deadline runs only from 2018.
6. Ratification — letting the contract stand
Whoever recognises the defect of intent and nonetheless continues the contract has impliedly ratified it (Art. 31 para. 1 CO). Practically: anyone who, after discovering a defect, still pays instalments, accepts entry in the land register or uses the object can no longer rely on avoidance.
7. Effect of avoidance — restitution
Successful avoidance unwinds the contract ex tunc — retroactively (Art. 31 para. 3 CO). What has already been performed must be returned (unjust enrichment, Art. 62 ff. CO). Whoever has caused damage to the contracting partner through their own breach of due care — for instance via a negligent declaration — owes damages (Art. 26 CO).
8. Avoidance vs. action for performance
Anyone sued for performance may raise avoidance as a defence, without being bound by the one-year period (Art. 32 CO — the defence is available 'without time limit'). Practically: even after the one-year deadline has lapsed, the partner's claim can be repelled — but no active claim can be brought.
9. Pitfalls in practice
• Deadline missed — right of avoidance permanently lost.
• Unclear avoidance declaration without statement of facts — the contracting partner can later deny that avoidance was declared at all.
• Ratification by conduct — even an instalment paid after discovery can forfeit the right of avoidance.
• Evidentiary problem with oral deception — written documentation of all contract negotiations is decisive.
• International contract: in cross-border cases, the applicable law must be clarified — the CISG has its own rules on contract termination.
Practical note
Sobiera Legal Consulting helps with detecting defects of intent, preparing avoidance declarations and negotiating unwindings — in Ukrainian, Russian, German, English and French. Anyone suspecting deception or duress at contract conclusion should not ignore the deadline — the one-year avoidance period is the only chance.