Russian business law: the essentials. Отсутствует

regulation pertaining to a certain type of contract. In other scenarios, the norm should be considered to be of a dispositive nature.

      With respect to the relationship under mixed contracts, or contracts which have elements of a mixed contract, the rules governing these contracts apply in respective portions, unless the parties agreed otherwise, or the rules are implied based on the nature of the mixed contract.

      As for unnamed contracts, the rules on individual types of contracts provided in the CC of the RF do not apply directly. However, if the parties do not set in the contract the rules governing a particular aspect of their relationship, then the provisions on the individual types of contracts of the CC of the RF may apply by analogy (analogy of the law – Clause 1 of Article 6 of the CC of the RF).

      In any of the aforementioned scenarios, the parties have the right to agree that the individual terms of the contract shall be determined by standard terms developed for contracts pertaining to the respective type, and published in the press (Article 427 of the CC of the RF). In the event that the contract does not contain a reference to such standard terms, they can be applied to the relationship of the parties as customs of trade.

      The general stipulations of contract law in the CC of the RF includes provisions applicable to certain types of contracts: public contract, contract of adhesion, preliminary contract, framework agreement, option agreement, subscription contract, and the contract for the benefit of third persons.

      1.2.1. The Rules for Concluding Contracts

      1.2.1.1. General rules for concluding a contract

      As a general rule, a contract is concluded by the means of one party sending an offer, and the other party accepting it. The contract shall be considered to be concluded from the moment of receiving the acceptance by the party which has sent the offer.

      Furthermore, a contract shall be considered to be concluded, if an agreement in the required form has been reached between the parties on all of the essential terms of the contract (Article 432 of the CC of the RF). The essential terms of the contract are:

      – the subject matter of the contract;

      – the terms that are named in a statute, or in other legal acts, as essential or necessary for contracts of the given type;

      – the terms with respect to which, by declaration of one of the parties, an agreement must be reached.

      1.2.1.2. Declaring the contact as unconcluded

      If any of the essential terms of the contract have not been agreed on, the contract, as a general rule, shall be deemed to be unconcluded. In this respect, the following factors shall be considered:

      – the party cannot claim that the contract is unconcluded if: first, that the party has accepted the performance of the contract or otherwise acknowledged the validity of the contract; second, considering the particular circumstances, such a claim will contradict the good faith principle (Clause 3 of Article 432 of the CC of the RF);

      – the contract shall not be considered as unconcluded, if the essential term, with respect to which an agreement has not been reached, can be covered by the general rules on obligations, or by a framework agreement. The application thereof shall not, however, be in conflict with the nature of the specific contract.[45]

      1.2.1.3. State registration of contracts

      Some contracts require state registration. Such registration is required, for example, for real estate rental agreements concluded for a period of not less than one year (Clause 2 of Article 609 of the CC of the RF), and for commercial concession contracts (Clause 2 Article 1028 of the CC of the RF). For third parties, the contracts which by law require state registration, shall be considered concluded from the moment of such registration.[46] Such a contract creates obligations for its parties, and cannot be declared by the courts as an unconcluded contract.

      In its informative letter No. 165, dated February 25, 2014, the Presidium of the Supreme Court of Arbitration of the RF noted that the contract, which has not been duly registered, does not bear all of the consequences of the contract. Such a contract does not bear consequences which can affect the rights and interests of third parties who are unaware of the conclusion and the content of that contract. On the other hand, all legal consequences arise for the parties of the contract, from the moment an agreement has been reached in relation to all the essential terms. The full range of the consequences of the contract are enforced upon its state registration.[47] Such an interpretation of the provision has previously been conveyed by Decision No. 73 of the Plenum of the Supreme Court of Arbitration of the RF, dated November 17, 2011.[48]

      1.2.1.4. Obligatory conclusion of a contract

      In certain scenarios, the CC of the RF and other laws provide for an obligation of a party to conclude a contract. For example, such an obligation is set forth for organizations supplying energy, regarding the conclusion of power supply contracts.[49] In case the party/parties have an obligation to conclude a contract, it has to be concluded, in accordance with Article 445 of the CC of the RF. In the event of disagreements regarding the individual terms of the contract, the parties have the right to bring the case to the court, within six months from the moment the conflict arose.

      If the party obligated to conclude a contract avoids its conclusion, the counterparty has the right to ask the court to coerce the party to conclude the contract. In this case, the contract is deemed to be concluded with the terms that are determined by the decision of the court, and from the moment that decision has come into force.

      1.2.1.5. Conclusion of a Contract at an Auction

      Unless otherwise implied from the nature of the contract, it can be concluded at an auction. General provisions on the conclusion of a contract at an auction can be found in Articles 447–449.1 of the CC of the RF. The order of organizing auctions in different domains is regulated in specific legislation.[50]

      The auctions shall be held in the form of a tender, auction by bidding, or in another form prescribed by law. The latter category includes, for example, “reverse auctions” (reductions).[51] It can be organized for acquiring goods and services for state, municipal, and private needs.

      The contract is concluded with the winner of the auction. Some laws and regulations provide the possibility (or obligation) to conclude a contract with the second place winner, in case the first place winner avoids the conclusion of the contract.

      An auction conducted in violation of the rules may be declared invalid by a court, based on a complaint brought by an interested party, or in certain cases by the competition authorities. The declaration of an auction as invalid shall entail the invalidity of the contract concluded with the winner of the auction.

      1.2.2. The Rules on the Amendment and Termination of a Contract

      1.2.2.1. The grounds for the amendment or termination of a contract

      The amendment and termination of a contract are possible by an agreement of the parties, or by a court decision.

      An agreement to amend or terminate a contract shall be made in the same form as the contract that has been concluded, unless otherwise implied by the laws, regulations, customs of trade, or by the contract.

      Upon one of the parties’ request, a contract may be amended or terminated by a decision of a court in case of:

      – a substantial breach of the contract by the counterparty (Article 450 of the CC of the RF). A breach of a contract by one party shall be recognized as substantial, if it entails damages for the counterparty that significantly deprive the party from what they had the right to expect upon conclusion of the contract;

      – a substantial change of circumstances

45

See Informative letter No. 165 of the Presidium of the Supreme Court of Arbitration of the RF, dated February 25, 2014, “On the Overview of the Judicial Practice Regarding the Disputes Related to the Declaration of Contracts as Unconcluded,” // “ConsultantPlus” Legal Directory System

46

The finding that the contract, which has not undergone state registration, shall be deemed concluded for third parties and not for the parties of the contract, has been determined in Federal law No. 42-FZ, dated March 8, 2015, “On Amending Part One of the Civil Code of the Russian Federation,” which came into effect on July 1, 2015.

47

See Clauses 2 and 3 of the Informative letter No. 165 of the Presidium of the Supreme Court of Arbitration of the RF, dated February 2, 2014, “On the Overview of the Judicial Practice Regarding Disputes Related to the Declaration of Contracts as Unconcluded,” // “ConsultantPlus” Legal Directory System

48

See Clause 14 of the Decision No. 73 of the Plenum of the Supreme Court of Arbitration of the RF, dated November 17, 2011, "On Some Issues of the Application of the Rules on Rent Contracts, Provided in the Civil Code of the Russian Federation,” // “ConsultantPlus” Legal Directory System

49

See Clause 3 of Article 15 of the Federal Law No. 190-FZ “On Power Supply,” dated July 27, 2010, // “ConsultantPlus” Legal Directory System.

50

See for example, Bankruptcy Law // “ConsultantPlus” Legal Directory System; Federal Law No. 229-FZ “On Enforcement Proceedings,” dated October 2, 2007, // “ConsultantPlus” Legal Directory System;

51

The terms “reverse auction” or “reduction” are not used in Russian legislation. These forms of auctions, however, are prescribed in Federal Law No. 44-FZ, “On the System of Public Procurement Contracts for Products, Works, Services for State and Municipal Needs” dated April 5, 2013, and in Federal Law No. 223-FZ, “On Purchases of Goods, Works and Services by Certain Types of Legal Entities,” dated July 18, 2011. In these laws the term “auction” is used for the identification of such procedures.