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 (Article 451 of CC of the RF). A change of circumstances shall be recognized as substantial when they have changed the contract to the extent that the contract would not have been concluded, or it would have been concluded on significantly different terms, if the parties could have reasonably foreseen these changes;
– or in other cases provided by law or contract.
Before applying to the court, the party intending to amend or terminate the contract shall comply with the rules of pre-trial procedures, which includes the submission of a proposal to the counterparty to amend or terminate the contract. The court shall consider the request to amend or terminate the contract, if the counterparty rejected such a proposal, or the response has not been received in due course. Non-compliance with the rules of pre-trial procedures shall result in leaving the claim without consideration (Article 148 of the Arbitration Procedural Code of the RF). This, however, does not deprive the claimant from the right to apply again after complying with those rules.
1.2.2.2. Unilateral refusal to perform the contract
The law or the contract may allow the parties to unilaterally refuse to perform the contract (or to exercise relevant rights). In this case, the party may inform the counterparty of its refusal to perform the contract (Article 450.1 of the CC of the RF). The contract is terminated from the moment such notice has been received, unless otherwise provided by law or stipulated in the contract. From that moment forward, the contract shall be deemed to be terminated or amended.
1.2.2.3. The consequences of contract termination
Upon termination of a contract, the obligations of the parties shall be terminated unless otherwise provided by law, or implied from the nature of the obligations (Article 453 of the CC of the RF). The parties do not have the right to demand the return of what was performed by them under an obligation, before the time of amendment or termination of a contract, unless otherwise provided by law, or agreed by the parties. In a situation where before the termination of the contract, one of the parties has performed its obligations but the counterparty has not, the rules of unjust enrichment apply to the relationship.
The Opinion of the Plenum of the Supreme Court of Arbitration of the RF, ruled on the following stipulations, in clause 5 of Resolution No. 35, dated June 6, 2014.[52] According to this ruling, upon the termination of a contract, a party has the right to demand the return of property in the following circumstances:
– the party has transferred some property to the counterparty’s property as a performance of the contract;
– the counterparty has not performed its obligations properly or at all;
– in this respect, the court has found the parties to be in violation of the equality of their performance.
Moreover, all of the encumbrances (e.g. mortgage) of the returned property shall persist, which were existing at the time of being in the possession of the counterparty.
1.2.3. Formal Requirements to the Contract
According to Article 158 and Article 434 of the CC of the RF, all transactions, and particularly contracts, may be
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.
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
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
See Clause 3 of Article 15 of the Federal Law No. 190-FZ “On Power Supply,” dated July 27, 2010, // “ConsultantPlus” Legal Directory System.
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;
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.
Resolution No. 35 of the Plenum of the Supreme Court of Arbitration of the RF, dated June 6, 2014, "On Consequences of the Termination of a Contract," // “ConsultantPlus” Legal Directory System
