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 provisions.
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 underlying transaction.
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 "termination".
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.
