Can I enter into a contract with myself?

One sunny afternoon, I got caught up in a fascinating discussion, the ins and outs of which I'm not sure I fully understood. It was about whether or not you can enter into a contract with yourself. The subject intrigues me and I'd love to know more.

Eric, Geneva

Under Swiss law, you can enter into a contract with yourself... but not always. And certainly not just any old way.

A contract with oneself refers to a situation in which the same person acts both in his or her own name and as the representative of another. A similar situation, dual representation, arises when a representative acts for two parties to the same contract. In both cases, the person in a position to sign the deed controls the entire contractual process, without any apparent contradiction. In reality, this dual role is a source of conflict of interest, as you cannot negotiate fairly with yourself. Swiss law therefore considers such legal acts to be null and void in principle.

But as is often the case, the rigour of the rule is accompanied by a flexibility clause. Two exceptions make it possible to save a contract with oneself or a double representation.
Firstly, when the act does not give rise to any risk of prejudice for the principal, in particular when it is concluded under market conditions, i.e. at a customary price and on customary terms. This presupposes not only that the amount is correct, but also that the act is of real economic benefit to the principal. Secondly, where express consent or ratification has been given by the principal. This consent must come from an authorised body - in principle of the same or higher rank - and the transaction must be sufficiently clear and specific.

In the case of legal persons, case law is particularly strict. A company is presumed not to authorise dual representation or contracts with itself, unless its organs have decided otherwise, in order to protect creditors who could be harmed by unbalanced acts between the company and its directors.

If a director common to two companies signs a contract between them and the conditions of the act are not objectively favourable to both entities, or if no clear authorisation has been given by the highest body of each of them, the contract will be null and void. There is no point in trying to put on a show with the signature of a partner just for the sake of appearances, as the pirouette is likely to be noticed immediately.

To sum up, under Swiss law you can indeed enter into a contract with yourself, but you must be careful. You need to ensure that the transaction is transparent, that there is no economic imbalance, and - if in doubt - obtain a clear green light from the representative. Otherwise, the deed will be null and void... even if the sky is bright.