The Russian Civil Code is the principal document establishing
the Russian contract law framework. General contract law rules and
principles are set out in Part I of the Civil Code. Parts II and IV
of the Civil Code contain provisions applicable to specific types
of contracts. Please note that the provisions of the Russian Civil
Code are often very broad and/or open to interpretation. Because it
is a relatively new document, Russian courts have not had a chance
to interpret its provisions in a comprehensive way. This shortage
of interpretive history and guidance often makes it hard to predict
how a Russian court would interpret a given Civil Code
Article 421 establishes a general "freedom of
contract" principle that allows the parties to enter into
those types of contracts that are expressly provided by law, as
well as those that are not, including "combination"
contracts (i.e. contracts that combine features of several contract
types). At the same time, the terms of a contract should be
consistent with the mandatory legal requirements that govern the
relevant type of contract and transaction. To the extent the
parties try to circumvent such mandatory legal requirements by
creating a contractual and transactional structure that appears to
be one or a series of transactions of a seemingly different type,
those risk being classified as a "sham" transaction that
purports to "mask" another underlying transaction, in
which case the court would apply rules usually governing the actual
The parties may enter into a so-called preliminary contract
whereby they undertake to enter at some point in the future into a
"main" agreement on the terms set out in the preliminary
agreement. For certain types of contracts, the law lists
"material conditions" that must be included in the
contract in order for it to be valid. A preliminary agreement must
contain terms sufficient for establishing all the material terms
and conditions of the "main" agreement, including the
"material conditions" established by the law for such
type of contracts. Such an obligation to enter into the main
contract in the future constitutes an enforceable obligation and
parties refusing to do so are liable for damages caused to the
other party. In practice, however, such damages may be difficult to
assess and prove in court.
Generally under Russian law, it is possible to terminate a
contract (whether its term is defined or not) in one of two ways:
(i) outside of court or (ii) through the court. The terminology is
somewhat different: (i) a unilateral termination outside of court
is technically called a "refusal to perform the contract"
and (ii) a through-the-court termination is called
A party willing to initiate a through-the-court termination must
first notify the other party of its intention. The party willing to
terminate the contract may only go to court after the other party
has refused to terminate or amend the contract or, if the other
party is not responding, after 30-days have passed from the notice
date (a different time period may be established by law or by
contract). The termination is by no means automatic, as the
plaintiff would need to prove that it has sufficient grounds to
terminate (such as "material breach" of contract by the
other party or other grounds provided by law or by contract). A
breach of contractual obligations by one party is deemed to be
"material" if it results in a loss to the other side that
is so significant that that it deprives the other party of its
reasonably expected benefit under the contract.
A unilateral termination through an out-of-court "refusal
to perform" is only possible if this possibility is expressly
provided for in the contract itself or in the law. With regard to
out-of-court termination called "refusal to perform"
there is no general rule on the termination notice period --
specific notice periods may be set out in the law (for a given
contract type) and/or in the contract itself.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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