How contracts are formed under Swedish law
Swedish contract law is primarily governed by the Contracts Act (Avtalslagen, 1915:218) – one of the oldest still-operative statutes in Swedish law. Despite its age, the Act remains the foundation of Swedish contract formation rules, supplemented by extensive case law from the Supreme Court (Högsta domstolen). For the sale of goods, the Sale of Goods Act (Köplagen, 1990:931) supplies the substantive framework in B2B and private sales.
A contract is formed through a matching offer and acceptance. The Swedish model follows the will theory (viljeteorin), but in practice courts look at the objective manifestation of the parties' intentions rather than their subjective states of mind. For businesses coming from England, the United States or Australia, several features differ sharply from what they expect.
- No consideration requirement. Swedish law does not require consideration for a contract to be binding. A gratuitous promise can be enforceable if the promisor intended to be bound.
- Binding offers. Under Section 1 of the Contracts Act, an offer is binding on the offeror for the period specified in the offer, or for a reasonable time if no period is stated. This differs from common law, where an offer can generally be revoked at any time before acceptance.
- No parol evidence rule. Swedish law has no parol evidence rule. Courts may consider pre-contractual communications, negotiations and surrounding circumstances when interpreting a contract.
- Informal contracts. No particular form is required for most commercial contracts. Oral contracts are generally binding and enforceable, though naturally harder to prove.
Letters of intent and pre-contractual liability
Swedish law recognises a limited concept of pre-contractual liability (culpa in contrahendo). While there is no general duty to negotiate in good faith, a party that breaks off negotiations under certain circumstances may be liable for the other party's wasted expenses. This is particularly relevant in M&A transactions and large commercial deals where due diligence costs are significant.
Contract interpretation – the objective approach
How a contract is interpreted can determine the outcome of a dispute, and Swedish courts apply a set of principles that differ from the common law approach. Swedish law primarily follows an objective interpretation method. The starting point is the wording of the contract, read in its natural meaning. But unlike the strict textualism sometimes applied in English law, Swedish courts will also consider the parties' common intention at the time of contracting, pre-contractual negotiations and correspondence, industry practice (handelsbruk) and course of dealing, the purpose and commercial context of the contract, and – where ambiguity exists – the interpretation that leads to a commercially reasonable result.
Contra proferentem and good faith
Where a term is ambiguous, it may be interpreted against the party that drafted it – the contra proferentem principle (oklarhetsregeln). This rule is most significant in standard-form contracts and consumer agreements, but it applies in B2B contracts as well. And while Swedish law does not impose a general duty of good faith in the performance of contracts (unlike German, French and many other civil law systems), good faith plays a role in interpretation. Section 36 of the Contracts Act allows courts to adjust or set aside contract terms that are unreasonable (oskäliga) – a powerful tool that functions as a de facto good faith mechanism, used to strike down penalty clauses, limitation of liability provisions and non-compete clauses deemed unreasonable in the circumstances.
How the CISG interacts with Swedish law
For international sales contracts, the relationship between the CISG and domestic Swedish law is a frequent source of confusion. The CISG (the UN Convention on Contracts for the International Sale of Goods, lag 1987:822) applies automatically to contracts for the international sale of goods between parties in different CISG contracting states. Sweden ratified the Convention in 1988 and it is incorporated into Swedish law – so a choice-of-law clause selecting "Swedish law" triggers the CISG rather than the domestic Sale of Goods Act, unless the parties explicitly exclude it.
Three differences matter most in practice. Notice period: under CISG Article 39 the buyer must give notice of non-conformity within a reasonable time and, in any event, within two years from the date the goods were actually handed over – whereas the domestic Sale of Goods Act has no fixed outer limit and relies on the general 10-year limitation period. Fundamental breach: CISG Article 25 defines a fundamental breach as one that substantially deprives the other party of what it was entitled to expect under the contract; Swedish law uses a similar concept (väsentligt kontraktsbrott) but applies it somewhat differently. Interest: CISG Article 78 entitles the aggrieved party to interest on a sum in arrears but does not specify the rate, so under Swedish gap-filling rules the Interest Act (Räntelagen, 1975:635) supplies it. Limitation periods are not addressed by the CISG at all – the Limitation Act (1981:130) applies as a gap-filling measure.
Freedom of contract and mandatory rules
Swedish law is characterised by a strong principle of freedom of contract (avtalsfrihet). In B2B relationships the parties are largely free to agree on any terms they wish – choice of law, dispute resolution, limitation of liability and allocation of risk. Several areas nonetheless contain mandatory provisions that cannot be contracted around: consumer protection under the Consumer Sales Act (2022:260) and the Consumer Services Act (1985:716); Section 36 of the Contracts Act, which applies even in B2B; the Commercial Agents Act (Lagen om handelsagentur, 1991:351), which implements the EU Commercial Agents Directive and contains mandatory termination-compensation rules for agents; Swedish employment law; and competition law (Articles 101–102 TFEU and Swedish competition law).