Swiss Code of Obligations: What Blockchain Companies Need to Know

The Swiss Code of Obligations (Obligationenrecht, OR — Federal Act of 30 March 1911 on the Amendment of the Swiss Civil Code, Part Five; Systematische Sammlung des Bundesrechts number SR 220) is the foundational statute governing private law relationships in Switzerland. Every contract entered into in Switzerland, every Swiss company formed, every Swiss employment relationship, and every commercial transaction conducted by a Swiss entity is governed primarily by the Code of Obligations. For blockchain and technology companies operating in Zug, the OR is not an abstract legal reference — it is the operational rulebook for the company’s daily existence.

What the Code of Obligations Covers

The OR is structured in five major divisions:

General Contract Law (Part 1, Arts. 1–183 OR). The foundational rules governing all contracts in Switzerland: offer and acceptance, contractual capacity, form requirements (which contracts must be in writing or notarially authenticated), conditions and terms, breach and remedies, assignment of rights, and transfer of obligations. Swiss contract law is civil law — it derives from written statute and the legal tradition of the Napoleonic code era — not common law. There is no doctrine of consideration; contracts require a meeting of minds and lawful cause. Written contracts are legally required for certain types (notably share transfers for restricted shares, founding acts of companies, and certain real estate transactions) but oral contracts are binding for most commercial purposes.

Specific Contracts (Part 2, Arts. 184–551 OR). Detailed rules for named contract types: sale of goods, gifts, lease, employment (Arbeitsvertrag — Articles 319–362 OR), loan, mandate (Auftrag), simple partnership, and numerous others. The employment contract provisions are particularly important for Zug companies; Swiss employment law provides a structured framework for minimum notice periods, protections against unlawful dismissal, mandatory benefits, and conditions applicable to the termination of employment.

Commercial Law (Part 3, Arts. 552–926 OR). The company law provisions governing all Swiss company forms:

• Kollektivgesellschaft (general partnership, Arts. 552–593)
• Kommanditgesellschaft (limited partnership, Arts. 594–619)
• AG (Aktiengesellschaft) (joint stock company, Arts. 620–763) — the primary company form for established blockchain companies
• GmbH (Gesellschaft mit beschränkter Haftung) (limited liability company, Arts. 772–827)
• Genossenschaft (cooperative, Arts. 828–926)
• Verein (association — in the Swiss Civil Code, ZGB, not the OR)
• Stiftung (foundation — in the ZGB)

For AG and GmbH companies, the OR specifies minimum capital requirements, share and quota mechanics, board composition and duties, shareholder rights and meetings, profit distribution, and dissolution procedures. Swiss company law was substantially revised in the 2021 reform (the “OR-Aktienrechtsrevision”), which introduced changes including: mandatory gender representation targets on boards of listed companies, enhanced flexibility for share capital (including share capital in foreign currencies and conditional capital mechanisms), updated treasury share rules, and reinforced whistleblower protections. The DLT Act amendments to the OR (see below) came into force from 1 February 2021.

Commercial Register, Business Names, and Accounting (Part 4, Arts. 927–964j OR). The statutory basis for the Swiss commercial register system, rules governing business name selection and reservation, and the foundational accounting provisions. Articles 957–964j OR establish mandatory accounting requirements: every company subject to commercial register registration must maintain proper accounts (Buchhaltung) and annual financial statements (Jahresrechnung) in accordance with the OR’s principles of completeness, clarity, prudence, and consistency.

Negotiable Instruments and Similar Instruments (Part 5, Arts. 965–1186 OR). Bills of exchange, cheques, and related instruments — less immediately relevant to blockchain companies but the statutory context within which the DLT Act amendments were integrated.

DLT Act Amendments: Directly Relevant to Blockchain Companies

The Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (DLT Act; Bundesgesetz zur Anpassung des Bundesrechts an Entwicklungen der Technik verteilter elektronischer Register), which entered into force on 1 February 2021, amended the OR and several related federal statutes to accommodate blockchain-native financial instruments and transactions.

The most significant OR amendments introduced by the DLT Act:

Ledger-Based Securities (Registerwertrechte, Art. 973d–973i OR). The DLT Act created a new type of security recognised under Swiss law: the Registerwertrecht, a right that is constituted in a distributed ledger and can only be exercised and transferred through that ledger. This is the legal foundation for issuing securities as digital tokens on a blockchain that have full legal standing under Swiss law without reference to a paper certificate or a traditional securities custodian. A Registerwertrecht is not a claim against an issuer that happens to be represented by a token — it is itself the legally recognised form of the right. This distinction is practically significant for token issuance, DeFi applications, and digital securities exchanges operating in Switzerland.

Uncertificated Securities in Distributed Ledgers. The DLT Act also amended the rules on uncertificated securities (Bucheffekten) to clarify how existing securities law concepts apply to ledger-based representations.

Contract Validity for Blockchain Transactions. Swiss contract law does not require paper forms for most contracts; electronic signatures under the Swiss Federal Act on Electronic Signatures (ZertES) can satisfy written form requirements. The DLT Act reinforced the legal validity of smart contract execution and on-chain transactions as legally cognisable commercial acts — though Swiss courts have not yet produced an extensive body of case law on the precise legal characterisation of specific smart contract types.

Key Differences from Common Law Jurisdictions

Blockchain companies founded by English, American, or Australian nationals frequently encounter the OR with expectations shaped by common law frameworks. The key differences:

Consideration is not required. In common law, a contract without consideration (something of value given by each party) is generally not enforceable. Swiss law has no equivalent doctrine; contracts are valid if the parties have capacity, there is a meeting of minds, and the purpose is lawful.

Good faith obligation. Swiss law imposes a general duty of good faith (Treu und Glauben, Art. 2 ZGB) in commercial relationships. This duty is broader and more actively enforced in Swiss courts than the equivalent concept in English or US commercial law. Contract provisions that are highly one-sided or that would be regarded as unconscionable may be reviewed against this standard.

Statute of limitations. Swiss limitation periods differ from common law equivalents. The general contractual limitation period is ten years (Art. 127 OR); specific claims (e.g., for services rendered by professionals) have shorter periods of five years (Art. 128 OR). Damage claims in tort are subject to a one-year limitation period from knowledge of the damage and responsible party, with a longer absolute period.

Company liability and piercing the corporate veil. Swiss company law provides robust limited liability for shareholders and quota holders. Piercing the corporate veil (Durchgriff) is recognised but applied conservatively by Swiss courts — more conservatively than in many US jurisdictions.

Choice of law. Swiss contracts can validly choose Swiss law as the governing law; Swiss courts will generally respect this choice for commercial contracts between sophisticated parties. However, Swiss mandatory law provisions (including in employment law and consumer protection) cannot be contracted out.

For Zug blockchain companies, the Swiss Code of Obligations is the primary statutory reference for corporate governance, contract management, employment relationships, and the new framework for blockchain-native securities. Every lawyer advising a Zug blockchain company — and every founder who wants to understand the legal framework they operate in — must be comfortable with its key provisions.