Russian business law: the essentials. Отсутствует
has property subject to transfer to a debtor, or a person indicated by a debtor, shall have the right to retain the property until the performance of the obligations. If the parties are not entrepreneurs, the retention of property is allowed only for the purposes of securing the obligation to pay for that property, or for the compensation for the creditor’s losses in relation to that property. If, however, the parties to the contract are entrepreneurs, other obligations may also be secured by retention of property.
1.2.4.4. Surety (Article 361–367 of CC of the RF)
Under the contract of “suretyship,” the surety undertakes the duty to the creditor of another person to be fully or partially liable for the performance of its obligations.
The terms of the suretyship, as related to the main obligation, are deemed to be agreed on if the suretyship contract refers to the contract from which the secured obligation arose or will arise. If the surety is an entrepreneur, then the suretyship contract may secure all existing and/or future obligations of the debtor, in a predefined amount.
As a general rule, the debtor and surety are jointly and severally liable towards the creditor. The law or the contract may also establish subsidiary liability of the surety.
The surety who has performed the obligation, obtains the rights of the creditor in relation to this obligation and the rights of the creditor as a pledgee, to the extent that the surety has satisfied the initial creditors’ demands.
1.2.4.5. Guarantee (Article 368–379 of CC of the RF)
By virtue of a guarantee, the guarantor, upon the principal’s request, undertakes an obligation to pay, to the person indicated by the principal (the beneficiary), a monetary sum in accordance with the terms of an obligation set by the guarantor. This is irrespective of the validity of an underlying secured obligation.
The obligations of the guarantor towards the beneficiary do not depend on the main obligation for the security of which the guarantee was issued, as well as on the relationship between the principal and the guarantor, or any other obligations, even if a reference to such obligations is made in the guarantee.
A guarantee may be issued by banks or other credit organizations (bank guarantees), as well as by other commercial organizations. Before June 1, 2015, the CC of the RF only regulated bank guarantees. Guarantees issued by other commercial organizations are new to Russian law.
1.2.4.6. Earnest money (Article 380–381 of CC of the RF)
Earnest 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