Administrative contract

The Law on General Administrative Procedure, which will apply from June 01, 2017, for the first time in the Serbian legal system introduces the definition of administrative contract.

The mentioned law regulates basic issues related to all administrative contracts (conclusion, the contracting parties, changes due to changed circumstances, termination and legal remedies – objection and appeal). Particular types of the administrative contracts shall be regulated by the provisions of particular regulations.

Whereas the administrative contract deviates from the general regime of resolving in administrative matters, as well as from the classic contract law, on administrative contracts shall be applied pursuantly the other provisions of The Law on General Administrative Procedure and subsidiary provisions of the Law on Obligations.

Administrative contract – definition

According to the provisions of Article 22 of the Law on General Administrative Procedure administrative contract is a sinallagmatic written act, which shall be concluded between authority and party when it is prescribed by the particular law and wherewith legal relationship in an administrative matter shall be created, modified or abolished.

The content of the administrative contract must not be contrary to the public interest or legal interest of third parties.

From the above definition result from the following specifics of administrative contracts:

Administrative contract shall be concluded between a public law entity, on the one side, and a private entity, on the other side. The cause of this contract is the realization of a public interest and making the certain benefits to citizens and legal entities.
Administrative contract takes effect to everyone (erga omnes), as it represents the means of achieving the public interest.
The administrative and legal nature of this type of contract is reflected particularly in the fact that it creates, changes and abolishes the relationship in the administrative metter. Administrative metter is an important feature of this type of contract, as this type of contract is approaching to an administrative act, but legal technique differs it from the administrative act significantly.

Changing of the administrative contract due to changed circumstances

According to the provisions of Article 23 of the Law on General Administrative Procedure if, due to circumstances arising after the conclusion of administrative contract that could not be foreseen at the time of conclusion of the contract, the fulfillment of the obligation for one contracting party has become significantly more difficult, it can request from another contracting party that the contract to be changed and adapted according to arising circumstances.

Authority rejects the request of the party by the decision if the conditions have not fulfilled for the modifying of the contract or if the contract changes shall cause damage to the public interest which would be greater than the damage that would be suffered by party.

Against the decision of the authority wherewith rejected the party’s request for change of the contract, the party may lay an appeal, if it is permitted, or initiate the administrative dispute.

Termination of the administrative contract

The right to terminate the administrative contract unilaterally is given to only one of the contracting parties – the authority by provisions of the Law on General Administrative Procedure and in the following cases:

if there is no consent of the party for the changes of the administrative contract due to changed circumstances
if the party fails to fulfill their contractual obligations
if it is necessary to eliminate a serious and imminent threat to life and health and public security, public peace and public order or to eliminate disturbances in the economy, but it can not be eliminated successfully by other means that less prejudice to the acquired rights.