What Foreign Investors Get Wrong About Contracts in Romania

Signing a contract in Romania is where opportunity meets risk for every foreign investor. Whether you are acquiring a company, leasing premises, appointing a local distributor, or engaging a supplier, the contract governs not only what you expect to happen, but what happens when things go wrong. Romanian contract law is a codified civil law system, broadly aligned with continental European principles, so it will feel familiar to most European and international investors. The details that differ, however, are precisely the details that determine whether your investment is protected.

This guide explains what a foreign investor genuinely needs to understand before signing a contract in Romania.

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Is your contract even valid under Romanian law?

Most foreign investors worry about the wording of a contract. Romanian law asks an earlier question first: was the contract validly formed at all?

Under the Romanian Civil Code, a contract is generally valid the moment the parties agree, in writing, by email, or even verbally. But two things decide whether that agreement actually binds and protects you. Get either wrong and even a perfectly drafted document can fail.

1. Good faith is a legal duty In Romania, good faith binds the parties from the first negotiation through to full performance. It is not a courtesy. Breaking off talks abusively, or hiding something material, can create liability before a contract is even signed.

2. Form can decide everything For most commercial deals, a simple agreement is enough. But for land, buildings and certain other acts, Romanian law requires a notarised form. Skip it and there is no valid contract, only a promise to sign one later.

The form checker further down this page shows exactly when a handshake is enough and when a notary is not optional.

A familiar foundation, with unfamiliar limits

Romanian contract law is governed principally by the Romanian Civil Code, in force since 2011 and modelled closely on modern European codifications, with strong French and Italian influences. It is a civil law system, which means the rules are set out in statute rather than built primarily on case law. Its starting point is one every investor will recognise, namely freedom of contract: the parties are generally free to determine the content of their agreement, and a validly concluded contract has the force of law between them.

That freedom operates within boundaries. A contract cannot derogate from mandatory legal provisions, from public order, or from good morals, and certain protections, for consumers, for employees, and in specific regulated sectors, cannot be contracted away regardless of what the parties sign. The practical lesson for a foreign investor is a direct one. A clause that is perfectly enforceable in your home country may be void in Romania if it conflicts with a mandatory rule, and this is among the most common and costly assumptions we are asked to correct.

Good faith as a binding duty, not a courtesy

One principle deserves particular emphasis because it tends to surprise investors from common law backgrounds. Romanian law imposes a duty of good faith that runs through the entire life of a contract, during negotiations, at the moment of conclusion, and throughout performance. This is not a decorative statement of principle, and it carries real consequences.

A party that breaks off negotiations in bad faith, or that behaves dishonestly during performance, can incur liability even in the absence of a signed contract or an express breach of its terms. Investors accustomed to walking away from negotiations at any time and for any reason should adjust their expectations accordingly. The same principle, of course, works in your favour, protecting you against a counterparty that acts opportunistically once discussions are under way.

When form matters and when it does not

In most cases, a Romanian contract is valid by the simple agreement of the parties and requires no special form. A commercial services agreement or a supply contract may be concluded in writing, by exchange of emails, or even orally, although we invariably advise a clear written instrument for reasons of proof.

The exceptions, however, are decisive, because in certain cases the law imposes a specific form as a condition of the contract's very validity. The most significant of these for investors concerns real estate. The transfer of ownership of land or buildings in Romania must be concluded before a Romanian notary public, in authenticated form, known as formă autentică. A private agreement to sell property does not transfer ownership at all; it merely creates an obligation to conclude the notarised deed at a later stage. Certain corporate acts, gifts, and mortgages carry comparable formal requirements. Getting the form wrong is therefore not a technical inconvenience but a matter that can mean no valid contract exists.

Does your contract need a special form?

When a handshake is enough — and when it is not

Select the type of agreement you have in mind.

Commercial & supply Sale of property Corporate acts & gifts

Valid by simple agreement

A services, distribution or supply contract is valid the moment the parties agree — in writing, by exchange of emails, or even orally. We still advise a clear written instrument, purely so you can prove what was agreed if it is ever questioned.

Notarised form required

The transfer of land or buildings must be concluded before a Romanian notary in authenticated form (formă autentică). A private agreement does not transfer ownership — it only obliges the parties to sign the notarised deed later. Skip the form and there is simply no valid sale.

Special form applies

Certain corporate acts, gifts and mortgages carry their own formal requirements. These are not technical inconveniences: getting the form wrong can mean the act never took legal effect. Confirm the requirement before, not after, you sign.

The language of the contract

As a general commercial matter, the parties are free to contract in English, French, or any other language, and bilingual contracts are routine in cross border transactions. We recommend a bilingual format accompanied by a clear clause specifying which language version prevails should the two diverge.

Romanian becomes necessary in particular contexts. Documents submitted to Romanian authorities, including the Trade Register, the tax authorities, and the courts, must be in Romanian or accompanied by an authorised translation. Employment contracts and many consumer facing documents must be available in Romanian. And where a contract is ultimately to be enforced before a Romanian court, an authorised Romanian translation will be required in any event. Planning the language architecture of your contracts at the outset spares considerable delay and expense later.

Choosing foreign law and a foreign forum

This is the single most important question for most foreign investors, and it is one we are asked in almost every cross border matter. In genuinely international contracts, the parties may, within the limits set by European regulations, choose a foreign governing law and agree to resolve their disputes before foreign courts or through international arbitration. That freedom is not unlimited. Real estate situated in Romania, certain employment matters, and disputes involving consumers are subject to particular rules capable of overriding the parties' choice.

The decision to choose English law, for instance, for a contract that a Romanian court may eventually have to enforce is one with genuine practical consequences, and it should be taken deliberately and with local advice rather than by reflex. Because the subject is both important and frequently misunderstood, we address it in a dedicated guide on governing law, jurisdiction, and arbitration in Romanian contracts.

Remedies when the other side fails to perform

A contract is ultimately only as valuable as the remedies available when it is breached, and here Romanian law offers the full range an investor would expect: the right to demand performance, the right to terminate, and the right to claim damages. Several features nonetheless merit attention.

Termination can occur in more than one way, and the distinctions matter a great deal in practice. A well drafted contract will contain an express termination clause, known as a pact comisoriu, permitting you to terminate without recourse to the courts in defined circumstances; in its absence, judicial termination may be required, which is slower and more costly. Penalty clauses, or clauza penală, which fix damages in advance, are valid and useful, though a court retains a limited power to reduce a penalty it considers manifestly excessive. And in the case of late payment in commercial transactions, Romanian law, giving effect to European rules, entitles the creditor to statutory interest and a fixed recovery compensation even where the contract is silent on the point. It is precisely these provisions that distinguish a contract which protects you from one that merely records your good intentions.

Your remedies, explained

If the other side fails to perform

Termination — with or without a court

A well-drafted contract contains an express termination clause (pact comisoriu) that lets you end the agreement without going to court in defined situations. Without it, you may need judicial termination — slower and more costly. The clause you negotiate today decides how quickly you can walk away tomorrow.

Penalty clauses that fix damages in advance

A penalty clause (clauză penală) sets the damages payable for breach ahead of time, giving you certainty. It is valid and useful — though a court keeps a limited power to reduce a penalty it considers manifestly excessive.

Late payment in commercial deals

Giving effect to European rules, Romanian law entitles a commercial creditor to statutory interest and a fixed recovery compensation for late payment — even where the contract says nothing about it. It is precisely these provisions that separate a contract which protects you from one that merely records good intentions.

Knowing your counterparty before you sign

Finally, even the most carefully drafted contract offers little protection against a counterparty that is insolvent, has misrepresented itself, or is simply not who it claims to be. Before signing, we routinely verify the counterparty's registration and standing with the Romanian Trade Register, the identity and authority of the individual signing, the beneficial ownership behind the entity, and any history of litigation, insolvency, or enforcement. For a foreign investor unfamiliar with the local landscape, this verification is not an optional refinement but the foundation on which the entire contract rests, and we set out how to approach it in our practical due diligence checklist for contracting with Romanian companies.

Before you sign

Know exactly who is on the other side

Even a flawless contract offers little protection against a counterparty that is insolvent, misrepresented, or not who it claims to be. We routinely verify:

• ✓Registration & standing with the Romanian Trade Register.
• ✓Identity & authority of the individual actually signing.
• ✓Beneficial ownership behind the entity — who really controls it.
• ✓Any history of litigation, insolvency or enforcement.

How we help

We advise foreign investors and international companies across the full life of a contract in Romania, from drafting and review to negotiation and enforcement. Our role is to bridge the distance between what you know from your home jurisdiction and what Romanian law actually requires, so that the document you sign does what you believe it does and protects you at the moment it matters most. If you are preparing to enter into a contract in Romania, we would be glad to review it before you sign, or to draft it so that it reflects your commercial objectives and safeguards your position.

Questions foreign investors ask us

Contracts in Romania, answered plainly

Is a contract signed by email valid in Romania?

Yes. For most commercial contracts, an agreement reached by email is valid and binding in Romania. Written form is usually about proof, not validity: you want a clear record of what was agreed if it is ever disputed. The important exceptions are contracts that the law requires to be notarised, such as the sale of property.

Do I need a notary for a contract in Romania?

Only for specific contracts. The transfer of land or buildings must be concluded before a Romanian notary in authenticated form (formă autentică), and certain gifts, mortgages and corporate acts carry their own formal requirements. For ordinary services, supply and distribution agreements, no notary is needed. When in doubt, confirm the form before you sign, not after.

How do I terminate a contract in Romania?

It depends on what your contract says. A well drafted agreement includes an express termination clause (pact comisoriu) that lets you end it without going to court in defined situations. Without such a clause, you may need judicial termination, which is slower and more costly. The termination terms you negotiate at the start decide how easily you can exit later.

Can I recover money if the other side pays late?

Yes. In commercial dealings, Romanian law gives effect to European rules that entitle a creditor to statutory late payment interest and a fixed recovery compensation, even where the contract is silent on the point. A clear payment and penalty clause makes recovery faster and more predictable.

Does a contract governed by foreign law work in Romania?

Often, yes, but with limits. Parties can frequently choose a foreign governing law and even foreign courts or arbitration. However, certain Romanian mandatory rules and matters of public order still apply, and enforcing a foreign judgment against a Romanian counterparty has its own practical steps. The choice of law and dispute clause should be a deliberate decision, not a copied template.

Before you sign in Romania

Let us read it before you commit.

We advise foreign investors across the full life of a contract, from drafting and review to negotiation and enforcement, so the document you sign does exactly what you believe it does.

Have your contract reviewed