Autor: Juan Camilo Carmona. 2018
Nombre de la obra: El frenético. Técnica: Tinta sobre papel
Review of contractual obligations in the Civil Code of Ukraine*
Anatoliy V. Kostruba**
Abstract
Breaching of contractual obligations may lead to certain negative consequences. Hence, this work analyzes the
theoretical aspects of termination of contractual obligations in Ukraine’s civil law. The article aims to study the
obligation termination mechanism by determining the legal framework for its functioning. The author focuses on
one of the forms of contractual obligation termination, more specifically, the start of cancellation and deferred
status of a legal transaction. Using normative and protective functions in legislation, the author plans to determine
specifics of legal facts of normative compensatory nature. It is established, that the condition for cancellation of a
legal transaction, can be a direct or reverse mechanism for the termination of contractual obligations. A condition
for cancellation of a legal transaction can be applied to the whole transaction or to its separate parts.
Keywords: Legal basis; self-organization; alienation; legal transaction; circumstance; Civil Code; Ukraine.
Revisión de las obligaciones contractuales en el Código Civil de Ucrania
Resumen
La violación de obligaciones contractuales puede causar consecuencias negativas. Por tanto el trabajo analiza los
aspectos teóricos de la terminación de obligaciones contractuales en el Código Civil de Ucrania. El artículo apunta
a estudiar los mecanismos de terminación de obligaciones determinando el marco legal para su funcionamiento.
El autor se enfoca en una de las formas de terminación de obligación contractual, específicamente en el estatus
de cancelación y diferimiento de la transacción legal. Usando funciones normativas y protectoras de la legislación,
el autor busca determinar las especificidades de los hechos legales de naturaleza normativa compensatoria. Se
establece que las condiciones para la cancelación de una transacción legal pueden ser un mecanismo directo
para la terminación de obligaciones contractuales. Una condición para la cancelación puede aplicarse a toda la
transacción o a sus partes por separado.
Palabras clave: base legal; auto organización; alienación; transacción legal; circunstancia; Código Civil; Ucrania.
Revisão das obrigações contratuais no Código Civil da Ucrânia
Resumo
A violação das obrigações contratuais pode causar consequências negativas. Este artigo analisa os aspectos teóricos
da terminação de obrigações contratuais no Código Civil da Ucrânia. Igualmente, visa estudar os mecanismos de
terminação de obrigações determinando o quadro legal para o seu funcionamento. O autor foca-se em uma das formas
de terminação da obrigação contratual, especificamente no status de cancelamento e diferimento da transação
legal. Usando funções reguladoras e protetoras da legislação, o autor procura determinar as especificidades dos
fatos legais de natureza reguladora compensatória. Estabelece-se que as condições para o cancelamento de uma
transação legal podem ser um mecanismo direto para a terminação de obrigações contratuais. Uma condição para
o cancelamento pode ser aplicada a toda a transação ou a suas partes separadamente.
Palavras-chave: base legal; auto-organização; alienação; transação legal; circunstância; Código Civil; Ucrânia.
*
**
The presented original research is completely developed and performed by Anatoliy V. Kostruba. The author has
studied the obligation termination mechanism by determining the legal framework for its functioning.
Doctor in Law, Associate Professor, Professor of the Department of Civil Law, Vasyl Stefanyk Precarpathian National
University, Ivano-Frankivsk, Ukraine. E-mail: priminterpar@yahoo.com
Cómo citar este artículo: Kostruba, A. (2019). Review of contractual obligations in the Civil Code of Ukraine. Estudios
de Derecho, 76 (167), pp-pp. 143-160
DOI: 10.17533/udea.esde.v76n167a06
Fecha de recepción: 22/05/2018 Fecha de aprobación: 20/08/2018
Review of contractual obligations in the Civil Code of Ukraine
Introduction
C
ivil contract is the main instrument for the organization of market relationships,
while contractual regulation, is the traditional means of regulation of relationships,
in the fields of private and public law (Parkhomenko, 1998, p. 34; Shevchenko,
2005, p. 43). It should be added that contract, in the civil law of Ukraine, is a
means of self-organization and self-regulation of civil legal relationships among
their participants.
Civil law is a rather specific industry. Subjects who enter into this kind of
legal relationship, at some point, commit themselves. Civil law divides obligations into contractual and non-contractual ones, which differ, significantly, from
one other. Obligation, in the generally accepted and most widespread sense, is a
legal relationship in which one party has rights, and the other has obligations. But
such a definition cannot reveal the whole essence of the term. The Civil Code of
Ukraine (CC) (Article 546) provides different types of security for the fulfillment
of obligations, such as: forfeit, bail, guarantee, pledge, withholding and deposit
(Civil Code of Ukraine, 2003).
Any obligation, including the contractual one, is of a temporary nature. The
fulfillment of a contractual obligation, is the commission by the debtor in favor
of the creditor or a third person, of certain actions –defined in the contract- that
constitutes the subject of fulfillment of the contractual obligation. In order to satisfy
the contractual obligation, and the termination of legal relationships between the
parties, it must comply with certain general rules, which are called the principles
of fulfillment of obligations (Markovits, 2015).
The way of execution of a contractual obligation, is the procedure for the
debtor to take actions to fulfill the obligation (Calabresi, 2015, pp. 575-578), and
as a rule; it is defined in the contract. Early fulfillment of a contractual obligation
is possible, unless otherwise provided by the contract, acts of civil law or it follows
from the essence of the obligation or customs of business turnover. The fulfillment
of certain types of obligations requires their specificity to be taken into account.
At a certain point G.F. Shershenevich separated all methods of termination
of obligations in two groups, depending on whether they are repaid, as a result
of a mutual agreement between creditor and debtor, or due to circumstances
Review of contractual obligations in the Civil Code of Ukraine
independent of the transaction (impossibility of execution, set-off, death of one
of the subjects, combination of an active and passive entity, prescription) (Shershenevich, 1915).
One of the first reasons, in the Soviet literature system, for termination of
obligations in 1975, proposed by O.S. Ioffe, who, without noticing the criterion of
classification, also divided them into two groups (without taking into account the
reasons of general significance or those that can be applied only by direct order
of the law) (Ioffe, 1948):
1) Termination of obligations as a result of their implementation (fulfillment,
offset, innovation);
2) the actual termination of obligations (agreement of the parties, combination,
impossibility of fulfillment, death of a citizen or liquidation of a legal entity).
Nevertheless, the division proposed by O.S. Ioffe, did not have a clear criterion for
demarcation; therefore, unreasonably, different explanations were put together in one
group for their grounds, since he did not cover all possible grounds at that time. The
current Civil Code of Ukraine did not only expand the list of reasons for termination
of the obligation, but also systematized these reasons to some extent. Simultaneously,
with the adoption of the Code, a number of problems relating to the termination of
the obligation were not only not resolved, but, on the contrary, new ones, due, inter
alia, to changes in civil and economic legislation, were added to the existing problems.
The uniqueness of such legal aspect of contract should be explained by the
fact that, on the one hand, it is capable of causing the consequences in the form of
onset, change or termination of civil legal relationships or subjective civil rights,
or legal obligations. On the other hand, under civil contract, both objective and
subjective grounds for the movement of proprietary and binding legal relations
are fixed, the occurrence of which involves onset, change or termination of rights,
obligations or even new civil legal relationships between parties to contract. The
terms of civil contract establish individual mechanisms for right termination of
civil relationships and legal models of right-terminating legal facts.
The theoretical issues of contractual regulation of private legal relationships
are the subject of numerous scientific research of such scientists as N.S. Kuznietsova (2013), R.A. Epstein (2016), D. Markovits (2015), A.B. Hryniak (2013),
N. Fedorchenko (2017) and others. Nonetheless, the scientists left outside their
attention, the theoretical and practical problems of formation and functioning of
the mechanism of termination of contractual obligation, in the context of the theory
of legal facts, which considers the grounds for such termination as individual legal
facts, and their legal compositions.
The purpose of the scientific article is to study the mechanism of termination
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tioning. By means of regulatory and protective functions in the law, it is planned to
identify the special features of legal facts of regulatory and compensatory nature.
Typical features of contractual obligations
The characteristic feature of contractual obligation is the dependence of onset of
legal fact in its structure, on the lawful will of party (action) of legal transaction
or objective circumstance of reality (event). Its existence is provided by the legal
model of certain legal fact in contract, which, in coincidence with actual circumstances established by such model, can lead to reasonable expectations of parties
to the legal result and, accordingly, the termination of such obligation. By means
of such legal facts, the action of regulatory function of the law is ensured, the
content of which is the realization of rights and interests of parties to contractual
obligation, established by terms of the relevant contract bona fides.
In the theory of the civil law in Ukraine, such legal constructions have been called, regulatory right-terminating legal facts. Among the most common, they include
alienation. Alienation should be understood as the legal mechanism established
by contract, for the transformation of property right to assets in accordance with
its legal regime, which is accompanied by onset of actual consequences of such
transformation, resulting in termination of contractual obligation.
The regulatory effect of alienation, as a right-terminating legal fact in contractual obligation, is an achievement of the purpose of legal regulation established by
parties to contract. Thus, as a result of alienation, a certain owner, through his will
expression implements his property right, in result of which parties of contractual
obligation receive mutual satisfaction.
Moreover, the reason for termination of contractual obligation is its proper
fulfillment. It consists in observance of the five established requirements, which
simultaneously are conditions of onset of the given right-terminating legal fact
(Civil Code of Ukraine, 2003):
1) Proper object of fulfillment (articles 610, 620, 622);
2) Proper subject of fulfillment (articles 527, 528);
3) Proper date of fulfillment (articles 530, 531);
4) Proper place of obligation fulfillment (article 532);
5) Proper manner of fulfillment (articles 529, 533).
The termination of contractual obligation by fulfillment consists in the implementation, by its parties, of subjective civil rights and fulfillment of counter legal
obligations, which express the object of obligation. In this way, the purpose of legal
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regulation established in contract is achieved, that is, the satisfaction of common
interests of participants in civil legal relationships. In other words, the proper fulfillment is legal composition with differentiated accumulation of its elements, the
formation of which, inevitably, leads to the termination of contractual obligation.
The legal status “outside the framework of contract”, has no effect on the efficiency of the mechanism of termination of contractual obligation, by the proper
fulfillment.
The proper place for fulfillment of contractual obligation (article 532 of Civil
Code of Ukraine) is: a) for obligations on transfer of real estate – at the place of
the property location; b) for obligations on transfer of goods (property) arising
from contract of carriage – at the place of delivery of goods (property) to carrier;
c) for obligations on transfer of goods (property) arising on the basis of other
transactions – at the place of manufacture or storage of goods (property), if this
place was known to creditor as of the moment of creation of the obligation; d) for
monetary obligations – at the place of residence of creditor, and if the creditor is
a legal person – at its location as of the moment of creation of the obligation. If
creditor changes its place of residence (location) as of the moment of creation of
the obligation and informed debtor about it, the obligation is fulfilled at the new
place of residence (location) of creditor, with assigning all losses related to change
of place of fulfillment to creditor; e) for other obligation – at the place of residence
(location) of debtor (Civil Code of Ukraine, 2003).
The reason for termination of contractual obligations
The reason for termination of contractual obligation is also transfer of payoff.
The transfer of payoff is made by conclusion of legal transaction between creditor
and debtor, whose purpose is to terminate the principal obligation. Such legal
transaction shall confirm the achievement of agreement of parties regarding the
quality and quantity of object, which is payoff, the deadline for the transfer of the
payoff, the order of its transfer, as well as fixing the time of termination of the
contractual obligation.
Article 604, of Civil Code of Ukraine, considers that obligations may
also be terminated by agreement of parties. The cancellation of contract is
condition with which partial or full termination of contractual obligation is
connected, until the moment of its legal and actual fulfillment. That is, the cancellation of contractual obligation is one way of its termination. Any agreement
on termination of contractual obligation has features of legal transactions, with
the special feature that they are aimed at termination of subjective civil rights,
and legal obligations that arose on the basis of primary contract. Consequently,
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such agreements must comply with general requirements for the lawfulness of
legal transactions envisaged by article 203 of Civil Code of Ukraine. Thus, the
termination of contractual obligation, by agreement of parties, is executed in
the form established for the conclusion of such obligation. It should be noted
that termination of contract by agreement of parties entails not only the termination of rights and obligations of its parties, but also a number of other
legal consequences.
According to article 601 of Civil Code of Ukraine, contractual obligation is
terminated by offset of counter uniform claims, term of fulfillment of which has
expired, as well as claims, which term of fulfillment has not been set; however, it
is determined by the time when claim is made. Thus, the offset implementation
is possible in the presence of several conditions: a) the uniformity of civil obligations (object of both obligations must be of the same kind); b) counter character
of claims in obligation (creditor of one obligation is simultaneously debtor under
another obligation, and vice versa – debtor of the first obligation is creditor of the
other); c) onset of time of fulfillment of civil obligations; d) conclusion of legal
transaction on offset of counter uniform claims; e) fulfillment of reconciliation
of offsets on the basis of uniform obligations, which are terminated by offset of
counter uniform claims.
To date, there are several approaches as to the moment of onset of indicated
right-terminating legal facts. According to the first, offset is considered as completed and repays set-off claims at the time of sending notification of offset to other
party (Civil Code of Ukraine, 2003).
The second approach implies that civil obligation is considered to be terminated by offset, since the moment of expiry of term for fulfillment of obligation
that came later. This position is substantiated by the fact that, since the expiry of
termination term of civil obligation, the payment of penalty and interest ceases,
because the obligations are considered to be repaid.
But the phenomenon of reciprocity of offset will lead to the fact that, before
the receipt of application about it, which is, of course, necessary for the legal validity of offset, parties may be regarded as being in default. At the same time, after
offset by debtor, this delaying may be, only for the party which has achieved the
fulfillment of the previous obligation (Sarbash, 2001, pp. 87-88).
The third option is based on the assumption of the involvement of counterparties by offset, since the moment of reception, by addressee party of the notification. The choice of this approach will necessarily raise the question of the
admissibility of recalling of offset (by analogy with the recalling of offer), until the
reception of corresponding notification by the addressee. Civil obligation may also
be considered terminated after the expiry of the time necessary for reception of
application on offset by other party. If this party has reasons to consider it to be
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carried out in the absence or non in accordance with, at least, one of necessary
conditions, such person may apply to the court for the recognition as invalid of
offset and fulfillment of contract requirements (Mikhno, 2004, p. 53).
The position produced by A.V Sirotkina is appropriate (Syrotkina, 2009, p. 51).
In her opinion, the termination of civil obligation by offset, unlike other types of
unilateral legal transactions, entails the termination of both rights and obligations
of applicant of offset as well as its counter-party.
One of the reasons for the termination of contractual obligation, in accordance with article 605 of Civil Code of Ukraine, is the release by creditor
of debtor from his obligations (debt forgiveness). Based on the fact that one
party – creditor has a subjective civil right, legal obligation is imposed on his
counter-party – debtor that corresponds to certain subjective civil right to
terminate contractual obligation, is carried out in direct and reverse order. The
direct order consists in the fulfillment of legal obligation of creditor, and the
reverse – in depriving the person of subjective civil right, which corresponds
to such an obligation.
Debt forgiveness is characterized by the fact that creditor relieves the debtor
from fulfillment of his obligations, without requiring counter-fulfillment of obligations, resulting in termination of corresponding contractual obligation. This is
unconditional, unilateral legal transaction, termination of contractual obligation
of which is fulfilled in reverse order.
In accordance with article 606 of Civil Code of Ukraine, contractual obligation
is terminated by combination of debtor and creditor in one person (confusion).
Each civil obligation implies the existence of three of its main elements: subject,
object, and content. Unlike the other, the exclusion of such element of obligation
as subject terminates his existence. The formula for such exclusion is the combination of debtor and creditor in one person.
When a debtor and creditor are combined in one person, the contractual
obligation undergoes certain changes. One person assumes all legal properties of
the other in contractual obligation, therefore; the status of participant in relevant
legal relationships is terminated. Previously, existing legal bonds between parties
are absorbed by the person that has joined two (or more) participants in such
obligation (Chilton & Versteeg, 2018, pp. 293-335).
By the way, citizen A. and citizen K. are parties to lease legal relationships
concerning real estate. Real estate is property of citizen A., citizen K. is respectively,
lessee. While in lease legal relationships, parties conclude contract of sale, which
results in property being transferred to ownership of citizen K. In this case, the
conclusion of sale contract, changes lease legal relationships, as a result of which
they are terminated.
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Characteristics of changes in contractual obligations
The terms in the civil law of Ukraine are of a significant legal category, which determines not only the regularization of civil circulation in time, but also ensures
the possibility of fulfillment and realization by subjects of civil relationships of
their rights, thus inducing, obligated persons, to perform their obligations and the
possibility of the timely protection of breached rights.
The onset of term is such legal fact that may lead to the termination of contractual obligation. Its peculiarity is that it is attributed to events, even regardless of the fact that its course may depend on the will of participants in civil legal
relationships.
In particular, item 5 of part one of article 1141 of Civil Code of Ukraine states
that, simple partnership contract shall be terminated in case of expiry of simple
partnership contract period. In this case, the right-terminating fact is the moment
of expiry of simple partnership contract period. That is, the expiry of period is
law-terminating legal fact (Civil Code of Ukraine, 2003).
A similar legal norm is also contained in article 2219 of the Napoleonic Code,
which states that statute of limitation is a means of establishing or repaying obligation in case of onset of certain term, and in the presence of relevant conditions
established by the law (Code civil, 2017).
At the same time, in legal literature, there is an opinion that the expiry of contract period cannot always be identified with the reasons for termination of obligations (Kossak, 2004, p. 17). Termination of civil obligations is legal consequence of
validity of legal facts (volitional actions of participants in civil legal relationships),
aimed at termination of civil rights and obligations of specific subjects. After onset
of such legal fact, the civil legal relationships among these entities are terminated.
This thesis is reflected in article 764 of Civil Code of Ukraine, which states that, in
case when lessee continues to use property after expiry of contract of lease, then,
in the absence of objections of lessor within one month, the contract is considered
as renewed for the period that was previously established by contract.
Thus, part one of article 615 of Civil Code of Ukraine states that, “in case of
obligation breaching by one party, the other party shall have the right to refuse,
partially or totally, from obligations if it is established by contract or by law”.
In some cases, the exercise of right to unilateral refusal from contract is due to
other circumstances that are not related to violation of contract. Their onset may
be caused both by external facts and by such actions that do not have any signs
of breaching of right (Obolonkova, 2010, p. 17). The provision of right to refuse
from contractual obligation is always based on impossibility of achieving aim in
its legal regulation.
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The given mechanism of right termination of contractual obligation causes
legal consequences, as result of unilateral action of party to contract. Breaking
legal relationships among participants in civil legal relationships, it ends at certain
stage of their development. Such termination of contractual obligation occurs at
any stage of its development, at the stage of exercise of right (Gonzalez-Zapata &
Heeks, 2015, pp. 441-452).
Part two of article 604 of Civil Code of Ukraine states that, civil obligation
shall be terminated by agreement of parties, on replacement of the original
obligation with a new obligation between the same parties (innovation). The
innovation covers cases of termination of contractual obligation by transforming
its content. It also adjusts its object. In this case, such element as subject of obligation remains unchanged (Civil Code of Ukraine, 2003).
Contractual obligation is also terminated by impossibility of its fulfillment
in connection with circumstance for which neither party is responsible (article
607). Unfortunately, Civil Code of Ukraine does not establish criterion for impossibility to fulfill obligation. It is a circumstance that makes it impossible to fulfill
obligation, or circumstance that has changed conditions in connection with which
parties (party) cannot fulfill obligation objectively, regardless of all other circumstances. In addition, the law does not reveal the concept itself of impossibility to
fulfill obligation.
With the death of natural person (the liquidation of legal entity), his
legal capacity, proprietary rights and binding rights, as well as participation in
contractual obligations, are also terminated.
In accordance with the general rule established by Civil Code of Ukraine, civil
obligation must be fulfilled by debtor personally, unless otherwise provided for
by the law or contract. The fact of the death of natural person (the liquidation of
legal entity) objectively affects the stated purpose of legal regulation of relevant
civil legal relationships.
Features of the life cycle of a contractual transaction
In most cases, the “life” of a legal transaction is associated with onset of unconditional factors to achieve its purpose. At the same time, parties to legal transaction
have the opportunity to determine, in advance, the existence of circumstances
(their presence or absence) that may affect the dynamics of contractual obligation among them. It gives the right to existence of such a legal phenomenon as
conditional legal transactions. The aforesaid has in sight to minimize possible
risks associated with uncertainty in development of events that determine its
implementation (Fedorchenko & Kalaur, 2017, pp. 34-39).
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In legal literature, in the division of all legal transactions into conditional and
unconditional ones, legal transactions with cancellation and delayed conditions
are in the first category. The two types of terms of legal transaction are traditional:
conditions with delay or suspension (from lat. suspensus – suspended, delayed)
and cancellation or resolution (from lat. resolutivus – final) circumstances.
Thus, according to the first and second paragraphs of article 212 of Civil Code
of Ukraine, people who implement legal transactions have the right to determine
onset or change of rights and obligations by circumstances concerning which it
is unknown whether the (delayed circumstance) will come or not. The people
who implement legal transaction have the right to stipulate the termination of
subjective civil rights, and legal obligations by circumstances concerning which
it is unknown whether (cancellation circumstance) will come or not (Civil Code
of Ukraine, 2003).
As it is seen from the above provisions of Civil Code of Ukraine, the legislator
delimits the delayed and cancellation consequences, that result in legal transactions where such circumstances are stipulated. In the projection of legal facts, the
delayed circumstance has the character of right-establishing or right-changing
act or event, whereas onset of cancellation condition is defined by regulations as
right-terminating legal fact of contractual obligation.
At the same time, it is worth pointing out that such division is quite arbitrary,
in view of the complex and relative nature of legal facts. However, the cancellation
condition, in its nature, should always result in form of termination of rights, obligations, legal relationships or powers in legal relationships. The nature of delayed
condition is that it is not legal transaction, but its consequences come after certain
period of time, that is, they are delayed.
Thus, in accordance with part one of article 723 of Civil Code of Ukraine, deed
of gift may set grantor obligation to hand over gift to grantee in the future after
a certain term (within a certain period), or in case of onset of delayed condition.
With regard to lease of housing with ransom, in accordance with part seven of
article 810 of Civil Code of Ukraine, lease contract with ransom is the document
indicating the transfer of property right to real estate from the enterprise – lessor
to lessee with delayed circumstance determined by the law. In its turn, cancellation condition of legal transaction is mentioned only in one article of Civil Code
of Ukraine, in addition to article 212, which is article 1142. In accordance with
the second part - of which part of the simple partnership contract concluded for
specified period or by contract in which the achievement of the purpose is defined as cancellation condition – the lessor has the right to demand termination
of contract in relationships with other participants due to valid reason, with the
reimbursement to other participants of real damage caused by termination of
contract.
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It should be noted that, in view of the definition of delayed and cancellation
conditions in article 212 of Civil Code of Ukraine, they can also be applied in
unilateral legal transactions. The provision of again article 723 of Civil Code of
Ukraine, serves in favor of this circumstance, which provides for the possibility of the
existence of variance of deed of gift with the obligation to hand over the gift in the
future. Thus, in accordance with part two of the aforementioned article, in case
of the expiry of period (term) or the delayed circumstance established by deed
of gift with the obligation to deliver the gift in the future, grantee has the right to
demand from grantor to transfer gift or reimburse its value.
For the cancellation condition, onset of which is right-terminating legal fact,
it is characteristic that it cannot be an essential condition of legal transaction.
The explanation of this circumstance lies in the very nature of legal transaction
as volitional conscious action aimed at onset, change or termination of civil rights
and/or obligations. Consequently, giving the nature of the essential condition of
legal transaction to cancellation condition, it actually blocks its implementation
by parties. Cancellation condition at the time of legal transaction conclusion exists
only in the ideal form, and in fact, in real life the relevant circumstance should arise
only in the future. Herewith, it is not known for sure whether it will come or not.
Consequently, cancellation condition is certain circumstance of reality, with
onset of which rights are terminated; however, at the same time, this circumstance may not depend on will of parties to legal transaction, in this regard, not
circumstance should be considered as cancellation condition, but the fact of its
onset. It is precisely the fact of onset of one or another condition, implementation
of action, the arising of certain phenomenon is the “final point” in the process of
formation, existence or termination of such phenomenon. Termination of right in
legal transactions with cancellation condition is the legal consequence of reason
in the form of onset of cancellation condition.
Characteristic features of termination of contractual circumstances
A characteristic feature of the referral and cancellation circumstance, onset of
which is legal fact, is that they have “objectified” character and their onset must,
in the majority, occur without the parties’ participation in legal transaction or with
their participation, but without creating obstacle for counter-party in contractual
obligation. But the mechanism of right termination of contractual obligation, can
act both according to objective and subjective scenario.
The general procedure for the termination of the transaction (agreement) in
Ukraine requires the agreement of both parties to terminate the contract. Therefore, unilaterally terminating the contract of sale of an apartment or other real estate;
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its party will not be able to do so, unless it is directly established by the contract. As
a rule, in real estate transactions, a ban on unilateral extrajudicial termination of
the contract is established. If the consent of the other party is not available, or the
unilateral termination is not permitted by the contract, the contract will have to be
terminated in court (Petrie, 2014, pp. 75-92; Epstein, 2016, pp. 47-93). Therefore,
when preparing a treaty in the text, it is necessary to stipulate the possibility of
unilateral extrajudicial termination or amendment of the treaty. Termination and
refusal to fulfill a contract with real estate must be made in writing. The order of
registration is established in the contract or in the law.
One of the conditions, for the validity of the contract of sale and purchase of
real estate as well as the main duty of the buyer, is its payment. The main mistake
that the parties allow during the conclusion of a transaction is the incorrect execution of payment documents, the lack or vice of which lead to disastrous consequences. So, if the property is purchased from the organization, it is preferable to
pay it only by bank transfer. If housing is bought from an individual, that is, from a
citizen, the calculation must be confirmed not only by an act, but also by a receipt
containing complete and understandable information about who, to whom and for
what the corresponding amount of money was transferred. It should be borne in
mind that the termination of a transaction cannot be invalidated. The application
of the consequences of the invalidity of the disputed transaction is possible only
if there is a decision to recognize such a transaction, as invalid.
There is no such legal concept as the cancellation of the contract of sale. The
contract can be either terminated or invalidated (Article 651, art.652). Both mean
termination of the contract. For the termination of the contract of sale of an apartment,
a mutual consent of the parties is necessary (Civil Code of Ukraine, 2003).
The contract is subject to termination in case of a significant change in circumstance, from which the parties proceeded at the conclusion of the contract. A change
in circumstance is recognized as significant when they have changed so much that, if
the parties could reasonably foresee this, the treaty would not have been concluded
at all, or would have been concluded under significantly different conditions.
Recognizing the same transaction, as invalid, is only possible in court. To do so,
you need to go to court with a civil suit and provide evidence that your demands
are legitimate and justified. For example, when a transaction was made in the
absence of the will of the owner (by forged documents, a trustee, exceeding the
powers, etc.) or a transaction committed under the influence of fraud, violence,
threat, malicious agreement of the representative of one party with the other party.
An invalid transaction can be recognized as a transaction committed by a citizen,
though capable, but at the time of his imprisonment he was in a state where he
was not able to understand the meaning of his actions and/or to manage them
(alcoholic, narcotic intoxication, etc.)
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In general, it can be stated that, onset of cancellation condition of legal transaction is a right-terminating legal fact with a delayed mechanism of action. The
very nature of such legal transaction determines the circumstance that there is
certain period of time between the moment of its conclusion and onset of consequences (Hryniak, 2013, p. 18-29).
It should be noted that, the cancellation condition as element of contract, as
well as the basis for termination of contractual obligations, may take place only
within the limits of the existing legal relationships, and only within the limits of the
current legal transaction. In other words, cancellation condition may be reflected
as its element, when such legal transaction is actually concluded. At the same time,
parties cannot agree on cancellation condition of legal transaction, if it is not the
case yet, because such agreement will not have sufficient validity in order to be
reflected in a future legal transaction.
It is possible to attribute to peculiarities of cancellation condition, onset of
which is right-terminating legal fact in contractual obligation in legal transaction,
the fact that, on the one hand, such circumstance, or rather its legal model, are
considered as element of legal transaction. After it has been consolidated under
terms of legal transaction, it is necessary and sufficient for the operation of such
contract, although not having the character of essential condition. On the other
hand, the cancellation condition is the result of the creative approach of parties to
legal transaction to formation of its terms, and therefore is considered as circumstance which terminates legal relationships in relation to the fact that is reflected
in legal transaction by the will of parties.
Nevertheless, the order of occurrence of legal consequences of cancellation
condition may also be specified. In fact, it is possible to distinguish two orders of
onset of consequences of corresponding condition of legal transaction – objective
and subjective ones. Objective right termination is characterized by the fact that a
contractual obligation is terminated automatically, since the moment of onset of
relevant condition. For example, parties to legal transaction may foresee that rights
and obligations of parties are terminated since the moment of the death of one
of the parents of the lessor. In such circumstances, contractual obligation shall be
deemed to be terminated since the moment of the biological death of the relevant
person, regardless of all other circumstances (Bennett et al., 2018, pp. 817-878).
If, however, looking at the given situation in terms of objective termination, the
legal transaction, in fact, is terminated since the moment of the relevant circumstance, regardless of whether other members of civil legal relationships learned
about onset of such circumstance. At the same time, in the course of the legal
transaction itself, in order to avoid misunderstandings and abuses, parties to legal
transaction foresee the order of fixing and proof of the existence of cancellation
condition. Both objective and subjective right termination lead to one consequence,
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but give rise to various risks. In case of subjective right termination, the relevant
party receives the required amount of information regarding its condition. From
the moment it is received, the party has some time to take the necessary actions
to terminate completely contractual obligation and not to cause negative consequences (Kuznietsova, 2013, pp. 51-64).
In case of objective termination, the relative party may not be aware of onset
of condition. During the time between the fact that the relevant condition has come
and the person has learned about its onset, the party uses the benefits without
sufficient legal basis, and therefore his counter-party can apply to such person,
negative consequences, in the form of penal sanctions.
It should be noted that, cancellation condition of legal transaction is the
construction that fits into the basic principles of functioning of the mechanism of
right termination of contractual obligations, and is consistent with the procedure
for fulfillment and termination of legal transactions. In particular, in our opinion,
the cancellation condition may be reflected in terms of legal transaction as the
basis, not only for termination of contractual obligation as a whole, but also for
termination of individual rights and obligations of participants of corresponding
legal relationships.
Cancellation condition of legal transaction may trigger direct or reverse mechanism of termination of contractual obligation. That is, it may terminate legal
obligations in connection with termination of subjective civil law, or vice versa,
may terminate subjective civil rights in connection with termination of legal obligation of the party to legal transaction. Cancellation condition of legal transaction
may be applied to the whole transaction or to individual part thereof. As a consequence, cancellation condition of legal transaction may change the nature of legal
relationships, make a bilateral legal transaction a unilateral one or a mixed legal
transaction a singular one, etc.
Conclusions
Civil contract, in the mechanism of legal regulation of civil property relationships,
is considered as an instrument of legal regulation of relevant relationships (legal
remedy of self-regulation), as means of establishing of right-terminating legal
facts, as well as, basically, right-terminating legal fact.
The author examined the issues of the normative effect of the mechanism for the
legal termination of contractual obligations, set out the reasons for the termination
of the contractual obligation, and determined the characteristics of the changes in
contractual obligations. Also, the terms of termination of the legal transaction were
ascertained. It is established that it is canceled, basically, as agreed by both parties.
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The author also established that, in the legal regulation of civil property
relationships, the contract ensures the interests of participants in civil legal
relationships, while retaining the ability to be flexible within the mechanisms
of balancing interests of specific subjects of civil legal relationships, society,
and State.
Legal regulation of civil property relationships is aimed at achieving the legal
result determined by their participants, at the stage of exercise of right. As it turned
out, at this stage, right-terminating legal facts, with the help of the appropriate
mechanism of right termination, ensure the onset of consequence agreed by parties
in the form of right termination.
The achievement of the purpose of legal regulation of civil property relationships, at the stage of exercise of right, is ensured by the regulatory action of the
mechanism of right termination.
Such right-terminating legal facts in binding legal relationships are: alienation,
the combination of debtor and creditor in one person, termination of obligations by
agreement of parties, due fulfillment of civil obligations, offset of counter uniform
claims, transfer of payoff, debt forgiveness, expiration of terms, and conditions of
contract, etc.
The emergence of defect of legal fact, at the stage of exercise of right, leads
to the impossibility, for their participants, to achieve the purpose of legal regulation of civil property relationships. The defect character of legal facts, at this
stage, changes the model of legal regulation of civil legal relationships. There is
replacement of the stage of exercise of right by the stage of right termination of
civil property relationships.
At the stage of right termination, the compensatory effect of the mechanism of
right termination is manifested, which is, in the compensation of the impossibility
to remove defect of legal fact, that interferes with the achievement of the purpose
of legal regulation, at the stage of exercise of right, by onset of the expected legal
effect in accordance with the legal model of subjects of law, adopted by the participants of civil legal relationships.
Such compensatory right-terminating legal facts include the death of the
natural person, termination of obligation at the request of one of the parties,
innovation, and impossibility to fulfill civil obligation, etc.
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