money is a monetary sum given by one of the contracting parties to the other towards payments due under the contract. If the party giving the earnest money is liable for the nonperformance of the contract, the earnest money remains with the other party. If the party receiving the earnest money is liable for nonperformance of the contract, it has the duty to pay the other party twice the amount of the earnest money.
1.2.4.7. Security deposit (Article 381.1–381.2 of CC of the RF)
Monetary obligations may be secured by a security deposit given from one party to the other (security deposit). When the circumstances described in the contract arise, the amount of the security deposit is set off towards the performance of the corresponding obligation. If such circumstances do not arise in the period stipulated in the contract, or if the secured obligation is terminated, the security deposit has to be returned, unless the parties agreed otherwise.
2. Types of Contracts under the Russian Law
2.1. Contracts of Alienation of Property
The CC of the RF identifies a variety of contracts, which allow the transfer of property, by its owner or another person legally holding that property, to a third person. Such contracts include contracts of sale, barter, donation, and rent. These contracts are regulated in Chapters 30–33 of the CC of the RF.
Under the contract of sale, one party (the seller) undertakes an obligation to transfer property (goods) to the ownership of the other party (the buyer), and the buyer undertakes the obligation to accept these goods, and to pay a defined monetary sum (the price) (Article 454 of CC of the RF). Chapter 30 of the CC of the RF includes general provisions on purchase and sale, as well as specific provisions pertaining to individual types of this contract. Those types include contracts of retail sale, supply of goods, supply of goods for state needs, sale of agricultural produce, power supply, real estate sale, and sale of enterprises.
Under barter contract each party undertakes the duty to transfer certain goods to the ownership of the other, in exchange for other goods (Article 567 of CC of the RF).
Under the contract of rent, one party (the rent recipient) provides the other party (the rent payer) with property, and the rent payer undertakes the duty to periodically pay the recipient a certain amount, or to provide money for its maintenance in a different form (Article 583 of the CC of the RF).
Under donation contract the donor shall, without consideration:
– transfer, or undertake to transfer something to the ownership of the recipient;
– transfer, or undertake to transfer to the recipient, property rights of the donor or a third person;
– release, or undertake to release the recipient from the property obligation towards the donor or a third person (Article 572 of CC of the RF).
The contracts of sale, barter, and rent are compensated contracts. The only uncompensated contract in this category is the contract of donation. It should be taken into account that donations between commercial organizations are expressly prohibited under Clause 1 of Article 575 of the CC of the RF.
2.2. Contracts of Transferring the Property for Use
The CC of the RF specifies the following contracts of property use: lease, rental of housing premises, and gratuitous use. With the transfer of the property under these contracts, the lessee obtains the legal title to that property. The rights of the rent payer are protected by proprietorial means – through vindicative and negatory claims (Article 301–304 of the CC of the RF). Furthermore, the rent payer has the right to protect the property, even from its owner (Article 305 of the CC of the RF).
Chapter 34 of the CC of the RF is dedicated to the regulation of the lease. Under the lease agreement (contract for the lease of property), the lessor shall undertake to furnish (for a charge) the leaseholder with property, for temporary possession and use, or for temporary use (Article 606 of the CC of the RF).
The provisions governing the rent of premises can be found in Chapter 35 of the CC of the RF. Under a rent contract of housing premises, one party – the owner of the housing premises or an authorized person (the lessor), undertakes the duty to provide (for payment) the other party (the lessee) with housing premises for possession and use for housing purposes (Article 671 of the CC of the RF). The difference between this contract and the lease contract is the object, which is being transferred to the possession of the counterparty. In this contract the object can only be used as housing premises.
The gratuitous use is governed by Chapter 36 of the CC of the RF. Under the contract for gratuitous use, one party (the lender) undertakes to transfer, or transfers something for gratuitous use by the other party (the borrower). The latter undertakes to return the object of the contract in the same condition with due account for normal depreciation, or in the condition stipulated in the contract (Article 689 of the CC of the RF). Commercial organizations do not have the right to lend property for gratuitous use to their founders, shareholders, directors, members of management, or control bodies.
2.3. Contracts on Providing Services and Performing Works
2.3.1. Contracts on Performing Works
The CC of the RF regulates two types of work contracts: contracts of work for hire (Chapter 37 of the CC of the RF), and contracts of scientific research works, experimental designs, and technological works (Chapter 38 of the CC of the RF).
Under the contract of work for hire, one party (the contractor) undertakes the duty to do certain work at the order of the other party (the customer), and to transfer the results to the customer within the established period of time. The customer, on the other hand, undertakes the duty to accept the results of the work, and to pay for it (Article 702 of the CC of the RF). There are several types of work for hire contracts: consumer work, construction work, design and exploratory work, and work for state and municipal needs. These specific types of contracts are regulated in Chapter 37 of the CC of the RF.
Chapter 38 of the CC of the RF incorporates the regulation of two types of contracts: contracts of scientific research, and contracts of experimental designs and technological works. Under a contract for the performance of scientific research work, the performer undertakes the duty to conduct scientific research, based on a technical order of the customer. Under a contract for the performance of experimental design and technological work, the performer undertakes the duty to develop a model of a new manufacture, draft documentation for it, or for a new technology. In both contracts, the customer undertakes the duty to accept the work and to pay for it.
2.3.2. Contracts on Providing Services
Several chapters of CC of the RF govern the contracts of providing different kinds of services: carriage, freight forwarding, insurance, storage, delegation, commission, entrusted management of property, bank deposits, bank accounts, and agency.
The rules of Chapter 39 of the CC of the RF (contracts of compensated services) apply to the contracts which are not specifically regulated in the code. In particular, the rules of this chapter apply to the provision of medical, auditing, consulting, and information services, as well as to the services related to education and tourism.
3. Common Types of Contracts
3.1. Contract of Sale
3.1.1. General Rules
The general provisions on the contract of sale can be found in Articles 454–491 of the CC of the RF. These provisions subsidiarily apply to individual types
