A unilateral refusal to fulfill a supply agreement may occur in the event of a significant violation of the terms of a transaction by one of the parties. This provision is established by 523 articles of the Civil Code. Consider the norm in more detail.
Features of violations
Unilateral refusal to fulfill the contract is allowed if one of the parties does not comply with the terms of the transaction. In Art. 523 identified significant violations that may be committed by the parties to the relationship. In particular, for the supplier they are repeated failure to meet the deadlines, the delivery of products of inadequate quality with defects that cannot be eliminated in a period acceptable to the purchaser. Significant violations by the buyer will be considered repeated non-selection of goods or delay in payment.
Explanations
As a general rule, fixed in Art. 310, unilateral refusal to fulfill the contract is prohibited . The Civil Code of the Russian Federation , however, provides for exceptions. In accordance with Article 450 of the Code (paragraph 1), the termination of a transaction or a change in its conditions are possible by agreement of its participants. This provision is aimed at ensuring stability in civil circulation.
Specific terms
By enshrining the rules for the early termination of an obligation, the law uses various concepts. Among them, in particular, a unilateral refusal to fulfill the contract , termination of the agreement. The difference between them is the way they are implemented. Termination of the agreement is an option to terminate the obligations of the agreement between the parties or in court. Cancellation of the contract is a unilateral measure. Moreover, it can be attributed to the methods of operational impact in the framework of providing an adequate response to the violation committed by the counterparty. The second party, in turn, must compensate for losses caused by default. Legislation, however, allows the challenge of applying this operational measure.
Nuance
If the refusal to fulfill the contract unilaterally provided by law at any time, it should be considered solely as a way of operational impact on the counterparty. The commented norm of the Code allows the use of this measure in the presence of a significant violation of the terms of the transaction by one of the participants. This means that the settlement of the problem is carried out without appeal to any authorities.
The materiality of the violation as an evaluation concept
In Art. 523, providing for unilateral refusal to execute the contract , there is a reference to article 450 of the Code. It provides an official definition of a material violation. He refers to such action / inaction that causes such damage to the participant in the transaction that he loses to a large extent what he was entitled to rely upon when entering into these legal relations.
Criteria
Having established the general concept of the materiality of the violation, the legislation determines its specific types in which it is possible to unilaterally refuse to fulfill the contract . They are provided for in paragraphs 2 and 3,523 of the Code. At the same time, the buyer has established such a criterion as repeatability. She assumes that the violation was committed at least two times.
Additionally
Article 523 is not the only norm providing for a unilateral refusal to fulfill a contract. The Civil Code of the Russian Federation contains, for example, Art. 509. In a. 3 of this norm, it is established that if the purchaser fails to provide the delivery order within the prescribed period, the counterparty has the right to unilaterally refuse to execute the contract. The Civil Code provides for a similar possibility in Art. 515. Clause 2 of this rule states that the counterparty may exercise its right if the recipient has not selected the required volume of products within the prescribed period. The Plenum of the Supreme Arbitration Court in one of its resolutions explains the specifics of the application of 515 and 509 articles. In particular, the Court points out that if, under the terms of the agreement, the transfer of products is made in batches, in the event of a unilateral refusal to fulfill the contract on the grounds specified in these norms, the entire obligation as a whole is terminated, unless otherwise stated in the notice of termination of legal relations.
Indemnification
Unilateral refusal to fulfill obligations may result in claims from the injured party for reimbursement by the counterparty of the losses incurred. However, such a right is granted to a party to the relationship if the violation is considered material. A participant who declares a unilateral refusal may present a claim for compensation for losses arising from the termination or amendment of the agreement. This provision enshrines Article 453 of the Code.
Litigation in court
In a conflict proceeding that arises from a supply contract related to a declaration of refusal to fulfill the agreed conditions unilaterally, the authorized body in all situations assesses the arguments of both parties regarding its lawfulness if it concerns claims. It seems that, within the meaning of the instructions present in paragraphs 2 and 3 of the article under review, the burden of proof of the materiality of the violation must be shared in accordance with the subject who committed it. From this we can draw the following conclusion. In the course of a dispute proceeding from a supply agreement, the execution of which was refused, the absence of materiality in the violation must be proved by the participant who committed it. The commented norm does not define an exhaustive list of actions that may act as a basis for withdrawing from a transaction. In this regard, the parties to the legal relationship in the agreement have the right to establish specific violations that they will consider material, circumstances in the event of which the injured party may unilaterally declare refusal to partially or fully fulfill the conditions.
Notification
As mentioned above, the considered norm is applied to certain legal relations without appeal of the parties to the transaction to any authorized bodies. However, the law establishes the obligation of the entity exiting the transaction to notify the counterparty of this. As a general rule, upon receipt of such notice, the contract will be deemed terminated (or amended). Another period may be provided directly in the notice or agreement of the parties.
conclusions
In accordance with the commented norm, thus, the entity has the right to declare refusal to fulfill unilaterally accepted obligations in accordance with the terms of the transaction if the counterparty has committed a material violation. For the buyer, it will consist in receiving goods of inadequate quality, in which such shortcomings are identified that cannot be quickly eliminated, as well as in repeated non-compliance by the other participant with the shipment date. For the supplier, a significant violation on the part of the acquirer will be repeated non-selection of products and delay in payment. The injured party to the legal relationship may claim compensation for losses suffered. When filing a claim, he must take into account that the court must carry out a comprehensive study of the circumstances. In accordance with this, the court must receive all materials relevant to the consideration of the dispute. All arguments to the injured party must be confirmed by documents.
Conclusion
Unilateral refusal is carried out in an out-of-court settlement of the dispute. It leads to the termination of the relationship from the moment the counterparty receives a notification from the second party to the transaction. This distinguishes this procedure from the termination of the contract. It is carried out in court. In this case, before filing a claim, the interested person must conduct a claim settlement. According to Art. 452, the requirements for adjusting or terminating the contract are declared by the party only after receiving from the counterparty a refusal to send him a proposal or not receiving a response within the stated time period or within 30 days. Common between these two events can be called the fact that in both situations the termination of legal relations takes place. In accordance with the Civil Code, in most cases of significant violations of the terms of the transaction, it provides for the unilateral cancellation of the contract, and not its termination.