Article 620 of the Civil Code of the Russian Federation. Early termination of the contract at the request of the tenant

Grounds for termination

In legal terms, the conclusion of any agreement, changes to any of its clauses, as well as termination itself should occur only with the mutual consent of both parties. Accordingly, a decision to unilaterally terminate any contract is possible, but it must have specific and significant reasons.

The party that decides to undertake such a procedure must immediately be aware of the possible consequences and, if necessary, be prepared in advance to justify such a step in court from the point of view of its legality. The legislation provides for such a measure and describes it in detail in articles of the Civil Code: 450, 451, 452 and 453. They state that the following grounds for unilateral refusal of a contract are possible:

1. The simplest and most obvious case is that the text of the agreement itself stipulated in advance that each party could withdraw from the agreement unilaterally.
2. In some cases, the law provides such an opportunity: for example, termination of an open-ended lease agreement.
3. The other party has violated the terms of the original agreement, and these violations are significant. For example, the price was increased unilaterally, although the contract did not provide for such a possibility. Another example is a gross violation of the deadlines for fulfilling an obligation, as a result of which the counterparty suffered a significant loss.
4. The parties did not violate the agreement, but circumstances changed in such a way that fulfillment of the agreement became unprofitable for the company. For example, for reasons beyond the control of the parties (due to drought), prices for agricultural products have increased significantly, so supplying them at the agreed price means working at a loss. Accordingly, the law sides with the injured party.

Significant change in circumstances

If the first two reasons are quite obvious, and their proof in court is not particularly difficult, then the latter represents the most complex development scenario. The main reason is that it is quite difficult to prove the occurrence of circumstances that entail unprofitable performance of the contract.

The situation is aggravated by the fact that many unscrupulous companies seek to find a “loophole” using this particular clause: in an attempt to essentially illegally terminate the contract unilaterally, they try to refer to the fact that the market situation has changed in such a way that it is now unprofitable for them to cooperate in advance stipulated conditions.

Therefore, civil legislation specifies in more detail precisely this basis for termination of an agreement. The practice of judicial proceedings shows that judges are especially strict about the evidence base in such cases. When making a decision, they proceed from the fact that the result of the review must prove that all the following conditions are met simultaneously:

1. At the time of signing the agreement, each company (or citizens) could not objectively assume that the situation would change so significantly that it would become unprofitable to work under the concluded conditions. For example, companies could not objectively know that in such and such a year there would be a drought, as a result of which buckwheat prices would increase by 3-4 times.
2. The situation arose for reasons beyond the control of the parties, i.e. they objectively cannot influence this process.
3. Analyzing the text of the agreement, it is impossible to say that the parties assumed all the risks of changing the situation. For example, if the contract clearly states that prices cannot change under any circumstances, then each party must be aware of the consequences of signing such an agreement. In practice, such a point, of course, is extremely rare.
4. The party managed to prove that if it had not terminated the contract unilaterally, but continued to perform it, this would indeed have led to losses.

Thus, when a party relies on the possibility of termination due to a changed situation, it must immediately understand that in the event of possible proceedings in court, it will often not be easy to prove its position.

Calculations for early termination of a contract

If a work contract is terminated early, the parties have the question of mutual settlements for work completed before the termination of the contract. The answer to this is not always obvious.

According to the general rule, enshrined in paragraph 4 of Article 453 of the Civil Code of the Russian Federation, in the event of termination of the contract, the parties do not have the right to demand the return of what they performed under the obligation before the termination of the contract, unless otherwise established by law or agreement of the parties. However, this rule is to be applied only in cases where counter-property provisions under a subsequently terminated contract have been made properly at the time of termination, or if the subject of the obligation is divisible, the amounts of property provision made by the parties are equivalent (for example, the amount of advance payments paid corresponds to the cost of work performed provided for in the contract), and therefore the interests of the parties to the agreement are not violated (clause 4 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 06.06.2014 N 35 “On the consequences of termination of the agreement”).

If the counter-provisions are not equivalent (for example, the amount of advance payments paid exceeds the cost of the work performed at the time of termination of the contract or, on the contrary, does not fully cover the cost of the work), settlements between the parties must be made in such a way that equivalence of the counter-provisions is achieved (clause 5 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 06.06.2014 N 35 “On the consequences of termination of the contract”). Thus, if the advance payments paid by the customer do not fully cover the cost of the work performed by the contractor, the customer must pay for the unpaid work, and if the advance payments paid by the customer exceed the cost of the work performed by the contractor, the contractor must return the unpaid advance to the customer. An unearned advance payment constitutes unjust enrichment of the contractor and is subject to recovery according to the rules provided for in Chapter 60 of the Civil Code of the Russian Federation (general explanations on this matter were formulated in paragraph 1 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated January 11, 2000 N 49, and were reflected in the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 1. 2011 N 10406/11, and subsequently this rule was directly enshrined in paragraph 2 of paragraph 4 of Article 453 of the Civil Code of the Russian Federation and was reflected, for example, in the Ruling of the Supreme Court of the Russian Federation dated 07/05/2016 N 305-ES16-2157).

Thus, taking into account the general principle of equivalence, in case of early termination of the contract, the customer must pay the contractor the cost of the work actually performed.

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According to paragraph 1 of Article 746 of the Civil Code of the Russian Federation, payment for work performed by the contractor is made by the customer in the amount provided for in the estimate. The estimated cost of work performed by the contractor, as a rule, is reflected monthly by the parties in interim acceptance certificates drawn up according to the unified KS-2 form. At the same time, these acts are not acts of acceptance of the result of work performed within the meaning of Articles 720, 753 of the Civil Code of the Russian Federation (clause 18 of the information letter of the Presidium of the Supreme Arbitration Court dated January 24, 2000 N 51), and therefore the customer is not deprived of the right to submit objections regarding the volume, cost and the quality of the work accepted by him under such a bilateral act (paragraphs 12 and 13 of the information letter of the Presidium of the Supreme Arbitration Court dated January 24, 2000 N 51).

The basis for the customer’s obligation to pay for the work performed by the contractor is the contractor’s delivery of the result of the work to the customer according to the rules provided for in Articles 720, 753 of the Civil Code of the Russian Federation (clause 8 of the information letter of the Presidium of the Supreme Arbitration Court dated January 24, 2000 N 51, Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated March 9, 2011 N 13765/10, dated July 27, 2011 N 2918/11, dated March 27, 2012 N 12888/11, dated July 23, 2013 N 4030/13, etc.). The law does not provide exceptions for cases of early termination of a work contract. Therefore, a contractor claiming to receive payment from the customer for work performed must hand over to him the unfinished result of the work in the manner prescribed by Articles 720, 753 of the Civil Code of the Russian Federation.

Despite the fact that the approach to the legal nature of the CC-2 acts, set out in paragraph 18 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated January 24, 2000 N 51, is reflected in judicial practice (for example: Resolution of the Arbitration Court of the Moscow District dated March 30, 2015 in the case N A40-96797/13, Resolution of the Volga-Vyatka District Court of June 30, 2016 in case N A43-12868/2015), in most cases, courts perceive acts of acceptance of work performed, drawn up according to the unified form KS-2, precisely as acts of acceptance in within the meaning of Articles 720, 753 of the Civil Code of the Russian Federation. The reason for this, apparently, is that often the parties to the contract simply neglect to comply with the procedure for the final acceptance of the work result, limiting themselves to the sequential execution of intermediate acts in the KS-2 form.

During such acceptance of the work result, the customer is not deprived of the opportunity to correct the previously drawn up KS-2 acts in the manner prescribed by Federal Law dated December 6, 2011 N 402-FZ “On Accounting” and the Regulations on Accounting and Accounting Reports in the Russian Federation, approved. By Order of the Ministry of Finance of the Russian Federation dated July 29, 1998 N 34n, taking into account updated data on the volume and cost of work actually performed by the contractor.

In judicial practice there is no single position regarding the possibility of adjusting acts of KS-2. For example, the AS of the Moscow District, in its Resolution dated December 17, 2014 in case No. A40-156104/13, indicated that the preparation of corrective acts KS-2 based on the results of a control check of the volume of work performed and the correct application of prices is not prohibited by current legislation. The FAS of the East Siberian District came to similar conclusions in its Resolution dated March 6, 2014 in case No. A33-9021/2013, noting that the monthly forms KS-2 and KS-3 are of an intermediate nature and their adjustment is not a violation of current legislation. At the same time, in the Resolution dated January 28, 2015 in case No. A40-59899/14, the Moscow District Court, for example, rejected the plaintiff’s references to the amended acts of KS-2, indicating that the initial acts were signed by him without comments, and the re-measurement of the volumes of completed work is not provided for by the parties in the contract.

In addition, the customer has the right not to pay for additional work included in the KS-2 act, the implementation of which was not agreed upon with him in the manner prescribed by paragraphs 3 and 4 of Article 743, paragraph 5 of Article 709 of the Civil Code of the Russian Federation (paragraph 10 of the information letter of the Presidium of the Supreme Arbitration Court dated January 24. 2000 N 51, Ruling of the Supreme Court of the Russian Federation dated December 27, 2016 N 310-ES16-12554).

Having identified deficiencies in the quality of work performed by the contractor during acceptance, the customer, on the basis of paragraph 1 of Article 723 of the Civil Code of the Russian Federation, has the right to demand a proportionate reduction in the price established for the work. The customer can also take advantage of this right in cases where the contract provides for the contractor’s obligation to eliminate identified deficiencies, since, according to the legal position formulated in Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 06/05/2012 N 17325/11, the contractor’s obligation stipulated by the contract to promptly eliminate identified deficiencies and defects does not is exclusive and cannot be interpreted as depriving the customer of the right to demand a proportionate reduction in the price under the contract.

The most common approach in judicial practice is the approach according to which the price established for work, when quality deficiencies are identified, is subject to reduction by the amount of the cost of work to eliminate such deficiencies (for example: Resolution of the Moscow District Court of October 25, 2016 in case No. A40-10080/2016; dated 10/11/2016 in case No. A40-10090/2016; dated 04/21/2014 in case No. A40-2062/11; Resolution of the Administrative Court of the East Siberian District dated 10/13/2014 in case No. A33-15321/2012, etc.). In addition, the courts reduce the price by the amount of the cost of poorly performed work (the legal basis for this conclusion may be the position of the Presidium of the Supreme Arbitration Court of the Russian Federation, set out in Resolution No. 13765/10 of 03/09/2011, according to which work performed with defects cannot be considered completed) , as well as up to the market value of the result of work performed with deficiencies (this approach was applied by the Presidium of the Supreme Arbitration Court of the Russian Federation in Resolution No. 17325/11 dated 06/05/2012). Moreover, if the amount of money paid by the customer in payment for the work performed exceeds the contract price reduced by the cost of the work necessary to eliminate the deficiencies, the resulting overpayment is subject to recovery in favor of the customer as unjust enrichment (unearned advance payment) of the contractor (Resolution of the Moscow Region District dated September 18, 2014 in case No. A40-141287/13).

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Often, when making payments between the parties to an early terminated work contract, the question arises of payment for materials and equipment purchased by the contractor, but not used in the performance of work (in accordance with paragraph 1 of Article 704 of the Civil Code of the Russian Federation, the provision of work with materials and equipment, as a general rule, is carried out at the expense of the contractor, and the costs incurred by him in connection with this, by virtue of paragraph 2 of Article 709 of the Civil Code of the Russian Federation, are included in the price of the work). The answer to this question is reflected in the Resolution of the Presidium of the Supreme Arbitration Court of September 23, 2008 N 5103/08, according to which such materials and equipment are subject to transfer to the customer and must be paid for by him.

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If disagreements arise between the parties regarding the volume and estimated cost of the work actually performed by the contractor, this issue can be resolved through a forensic examination. Despite the fact that, as a general rule, the right of the parties to request the appointment of an expert examination in a case does not correspond with the obligation of the court to appoint it (this legal position is formulated in the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 03/09/2011 N 13765/10), in order to establish the volume and cost of work performed under the contract work requires special knowledge, and this, in turn, by virtue of Part 1 of Article 82 of the Arbitration Procedure Code of the Russian Federation, presupposes the need to appoint a forensic examination (Determination of the Supreme Court of the Russian Federation dated June 23, 2016 N 305-ES16-4366).

The Arbitration Procedure Code does not classify the determination to appoint or refuse to appoint an examination as judicial acts that can be appealed in accordance with Part 1 of Article 188 of the Arbitration Procedure Code of the Russian Federation. Therefore, in the event of a refusal to appoint an examination, a party to the case has the right to indicate this in the appeal against the judicial act adopted in the case and re-submit the corresponding petition in the appellate court (paragraphs 5 and 17 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 04.04.2014 N 23; paragraphs 6 and 26 Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated May 28, 2009 N 36).

The exception is cases when, having ordered an examination, the arbitration court suspends the proceedings on the basis of paragraph 1 of Article 144 of the Arbitration Procedure Code of the Russian Federation. In such a situation, the appellate and cassation courts, when considering an appeal against a ruling to suspend proceedings in a case, have the right to assess whether there was a need to appoint an expert examination to consider the case and whether the procedure for its appointment was followed (paragraph 17 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 04.04. 2014 N 23 “On some issues of practice in the application of legislation on examination by arbitration courts”).

In addition, if the court refuses to order an expert examination in the case, the interested party has the right to submit to the case materials an extrajudicial expert opinion, which is subject to evaluation as another document in accordance with Article 89 of the Arbitration Procedure Code of the Russian Federation (clause 13 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated April 4, 2014 N 23).

Also, an extrajudicial expert opinion can be presented to refute the conclusions of a forensic examination. According to the legal position formulated in the Ruling of the Armed Forces of the Russian Federation dated January 31, 2017 N 305-KG16-15981, the conclusion of an extrajudicial examination presented in the case materials is not an expert opinion on the case, however, it is evidence admitted as such by Article 89 of the Arbitration Procedure Code of the Russian Federation, therefore it is subject to accounting and assessment by the court when making a decision along with other available evidence. If there is an expert opinion in the case and an opinion obtained as a result of an extrajudicial examination, the court must evaluate both the expert opinion and the extrajudicial opinion according to the rules of Article 71 of the Arbitration Procedure Code of the Russian Federation. Based on the results of the assessment, the court must provide reasons on the merits of these conclusions, according to which it accepts or rejects each of this evidence.

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The features of mutual settlements between the parties to an early terminated work contract also depend on the circumstances that served as the basis for termination of the contract. If the contract is terminated by the customer on the grounds provided for in paragraphs 2 and 3 of Article 715, paragraph 3 of Article 723 of the Civil Code of the Russian Federation (significant delay or performance of work with defects), the customer has the right to demand compensation for losses from the contractor. If the contract is terminated by the customer in the absence of violations committed by the contractor, in accordance with Article 717 of the Civil Code of the Russian Federation, the contractor has the right to demand compensation for losses, and the amount of such damages is limited to the difference between the price determined for the entire work and part of the price paid for the work performed. The contractor also has the right to demand compensation for losses from the customer in cases where he himself refuses the contract on the grounds provided for in paragraph 3 of Article 716, paragraph 2 of Article 719 of the Civil Code of the Russian Federation.

The customer's losses incurred in connection with the early termination of the work contract may be associated with the need to conclude an agreement with another contractor (replacement transaction) on less favorable terms (in this case, the amount of losses is determined according to the rules of Article 393.1 of the Civil Code of the Russian Federation), elimination of quality defects committed by the contractor work performed, and also consist in lost profits of the customer associated with the impossibility of operating the facility (clause 3 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated March 24, 2016 N 7).

When calculating losses according to the rules of Article 393.1 of the Civil Code of the Russian Federation, it is necessary to keep in mind that the types and volumes of work that form the subject of the new (replacement) work contract must coincide with the types and volumes of work not performed by the contractor under the early terminated contract. The same applies to the deadlines for completing work - the deadlines established by the new (replacement) contract must be comparable to the deadlines for completing the work under the early terminated contract.

For example, when considering case No. A02-1450/2015, the courts refused to satisfy the customer’s claims for damages on the basis of Article 393.1 of the Civil Code of the Russian Federation, because, having examined the terms of the contracts, they came to the conclusion that there was no evidence that the work provided for in the new contracts was replacement in relation to the agreement concluded with the defendant (Resolution of the Court of Justice of the West Siberian District dated 03/02/2017 in case No. A02-1450/2015).

In Resolution dated August 23, 2016 N A04-4442/2014, the Far Eastern District AS also came to the conclusion that there were no grounds for collecting damages from the contractor under the rules of Article 393.1 of the Civil Code of the Russian Federation, since the construction of the facility was completed by third-party organizations within three years (whereas under the terms of the terminated the contract envisaged complete completion of the work within 13 months) and during this period, along with a significant increase in the cost of building materials and construction work, an increase in construction costs also occurred due to utilities and payments (Resolution of the Far Eastern District AS dated 08.23.2016 in case No. A04-4442/2014).

If the customer, having rejected the contract, for example, on the basis of paragraph 2 of Article 715 of the Civil Code of the Russian Federation, hires a new contractor to perform in a comparable time frame the same types and volumes of work that were not performed under the terminated contract, the difference between the price of the new (replacement) the contract and the cost of unfulfilled work under the terminated contract are subject to recovery in favor of the customer as damages according to the rules of Article 393.1 of the Civil Code of the Russian Federation (Resolution of the Central District Court of May 10, 2017 in case No. A84-2675/2016).

As lost profits (income not received by the customer due to the contractor’s untimely completion of work), the courts consider, for example, rent not received by the customer when the tenant, who is the customer’s counterparty, refuses the lease agreement for the facility due to its unreadiness for operation on time (Resolution of the Autonomous District of the Far Eastern District dated September 16, 2016 in case No. A73-16697/2015). However, for the purpose of collecting damages, it is necessary to prove that the impossibility of timely start of operation of the facility was caused precisely by the contractor’s delay. So, for example, in the Resolution dated 01.07.2015 in case No. A14-9194/2014, the Central District Court pointed out the absence in the case materials of sufficient evidence of the readiness of the premises for its intended use, which would allow one to come to the conclusion that it is impossible to use it solely related to the part of the work not completed by the defendant. In the same Resolution, the CA of the Central District indicated that the receipt of income from the rental of non-residential premises is probabilistic in nature, while the subject of proof in a claim for such losses includes the obligation to confirm the existence of a real possibility of receiving income in the future, that the receipt of this income was real.

The Plenum of the Supreme Court of the Russian Federation in paragraph 2 of Resolution No. 7 of March 24, 2016 indicated as an example that in a customer’s claim for compensation for losses caused by improper execution of a contract for the renovation of a store building, the calculation of lost profits can be made on the basis of data on the plaintiff’s profit for the same period time before the defendant violates the obligation and (or) after this violation has been terminated.

In the Determination of October 12, 2015 N 305-ES15-7522, the Economic Board of the Armed Forces of the Russian Federation noted that the customer’s losses caused by downtime due to poor quality work performed by the contractor can be expressed in the penalty established by the contract (clause 2 of article 1, article 330, clause 4 of article 421 of the Civil Code of the Russian Federation).

The contractor's losses, recovered in accordance with Article 717 of the Civil Code of the Russian Federation, may consist of the costs of issuing a bank guarantee and insurance of construction and installation risks (Resolution of the Moscow District AS dated 03/07/2017 in case No. A40-202736/2015), rental of special equipment (Resolution of the Povolzhsky AS district dated 12/17/2014 in case No. A55-25233/2013), personnel reduction (Resolution of the AC of the North-Western District dated 08/02/2016 in case No. A13-9825/2015), unused estimated profit (Resolution of the AC of the West Siberian District dated 17.06 .2016 in case No. A02-2263/2014; Resolution of the Administrative Court of the East Siberian District dated November 22, 2016 in case No. A33-14919/2015).

The amounts of penalties paid by a party to the contract to its counterparties cannot be recovered from the other party as damages (Decision of the Supreme Court of the Russian Federation dated December 15, 2015 N 309-ES15-10298).

If the work contract is terminated early due to the impossibility of its execution for reasons beyond the control of the parties (Articles 416, 417 of the Civil Code of the Russian Federation) and the construction project is mothballed, the customer, in accordance with Article 752 of the Civil Code of the Russian Federation, is obliged to pay the contractor in full for the work completed up to the moment of mothballing , as well as reimburse expenses caused by the need to stop work and mothball construction, taking into account the benefits that the contractor received or could receive as a result of stopping work.

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Quite often, the parties to a work contract stipulate a condition according to which, when paying the contractor for work performed, the customer retains part of their cost (usually in the amount of 5–10 percent) and pays the contractor after the expiration of the warranty period, if during this period in the work performed by the contractor (and delivered to the customer) work, no deficiencies were identified for which the contractor is responsible, or such deficiencies were eliminated, or upon the occurrence of other conditions stipulated by the contract. The security function of such a “guarantee retention” is that the customer, who has discovered deficiencies in the result of the work delivered by the contractor, has the right, due to this guarantee retention, to satisfy his claims against the contractor (for a proportionate reduction in the price of work, for reimbursement of expenses for eliminating defects, for payment of a penalty and so on.). Both the Supreme Arbitration Court of the Russian Federation (Resolution of the Presidium of the Supreme Arbitration Court dated July 23, 2013 N 4030/13) and the Supreme Court of the Russian Federation (Decision of the Supreme Court of the Russian Federation dated August 25, 2016 N 301-ES16-4469) spoke out about the legality of including such a condition in the contract.

According to the explanations contained in paragraph 3 of the Resolution No. 35 dated 06.06.2014, the terms of the contract, which by their nature imply their application after termination of the contract (for example, warranty obligations in relation to goods or work under a subsequently terminated contract; a provision for the consideration of disputes under agreement in an arbitration court, agreements on jurisdiction, applicable law, etc.) or are aimed at regulating relations between the parties in the period after termination (for example, on the conditions for returning the leased item after termination of the contract, on the procedure for returning the advance payment, etc. ), remain valid even after termination of the contract.

Thus, as a general rule, termination of a work contract should not entail the customer’s obligation to early pay the contractor the “guarantee retention” remaining to ensure the fulfillment of the contractor’s obligations regarding the quality of work performed before termination of the contract.

At the same time, the solution to the question of the fate of the “guarantee lien” upon termination of the work contract also depends on how fully the security function of such a “guarantee lien” is described in the work agreement. For example, the Autonomous District of the Volga-Vyatka District, in its Resolution dated 01.03.2016 in case No. A33-17576/2014, came to the conclusion that it was legal to collect a “guarantee lien” from the customer, since the obligations of the parties under the contract were terminated due to its termination, and the terms of the contract do not contain an express agreement of the parties on the issue of the customer withholding funds in the amount of 5% of the cost of the work performed by the contractor as a way to ensure the proper fulfillment by the latter of those obligations from the contract, which, by virtue of paragraph 3 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 06.06.2014 N 35 remain valid after termination of the contract.

Another example is the Resolution of the Arbitration Court of the North-Western District dated 08/06/2015 in case N A56-39004/2014, in which the court, with reference to paragraph 3 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 06/06/2014 N 35, recognized the refusal to satisfy the contractor’s demands for recovery as justified “guarantee retention” on the grounds that the customer’s right to withhold sums of money to ensure the contractor fulfills its obligations arose before the parties terminated the contract and it could not be lost in connection with the termination of the contract.

The Arbitration Court of the North Caucasus District in its Resolution dated 04/28/2016 in case No. A63-7485/2015, applying paragraph 3 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 06/06/2014 No. 35, came to the conclusion that since the contract was terminated, the courts should investigate the issue on the existence of grounds for applying its terms after termination. The court indicated that as a result of termination of the contract, the customer is not deprived of the right to present claims to the contractor related to deficiencies in the quality of the work performed, however, this circumstance does not mean that the customer has the right to withhold the amount of the “guarantee retention” after termination of the contract if the scope and cost of eliminating the detected deficiencies is not proven.

However, often the courts proceed from the fact that termination of the contract in itself is the basis for the customer to return the “guarantee retention” (for example: Resolutions of the Moscow District Court dated September 26, 2014 in case No. A40-116274/13, dated January 19, 2015 in the case N A40-10519/14 and dated November 16, 2015 in case N A40-28503/15, Resolution of the North-Western District Court dated October 16, 2015 in case N A56-50333/2014), although in other cases they indicate that termination the contract does not affect the terms and procedure established by the contract for the payment of “guarantee retention” to the contractor (for example: Resolution of the Federal Antimonopoly Service of the North Caucasus District dated May 21, 2014 in case No. A53-15213/2013).

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Another rule regulating the procedure for mutual settlements between the parties to an early terminated work contract is formulated in Article 729 of the Civil Code of the Russian Federation, according to which, in the event of termination of a work contract on the grounds provided for by law or contract, before the customer accepts the result of the work performed by the contractor, the customer has the right to demand transfer to him the result of unfinished work with compensation to the contractor for costs incurred.

Despite the fact that this rule cannot be interpreted as an exception to the general rule on settlements between the parties based on the principle of equivalence and does not abolish the customer’s right not to pay for additional work not agreed upon with him, as well as work performed with defects, in some cases the courts proceed from that the provisions of Article 729 of the Civil Code of the Russian Federation can be applied in isolation from the remaining provisions of Chapter 37 of the Civil Code of the Russian Federation.

For example, the AS of the Ural District in its Resolution dated April 22, 2015 in case No. A50-10414/2014 indicated that the contractor’s demand for compensation on the basis of Article 729 of the Civil Code of the Russian Federation for costs incurred in connection with the performance of work under the contract is not identical to the requirement for payment for the unfinished result of work, in connection with which such circumstances as the procedure for payment for the result of work provided for in the contract, the suitability of the result of work, its compliance with modern requirements of regulations, the presence of a positive conclusion of the state examination, do not have legal significance.

The Moscow District Court, in its Resolution dated December 2, 2015 in case No. A40-186666/14, came to the conclusion that, by virtue of Article 729 of the Civil Code of the Russian Federation, the customer is not exempt from reimbursement of costs incurred by the contractor, even in the case where the result of the work for the disputed amount is not was handed over to him by the contractor.

The FAS Povolzhsky District, in its Resolution dated April 12, 2010 in case No. A57-2271/2009, noted that when resolving a dispute about reimbursement of costs to a contractor on the basis of Article 729 of the Civil Code of the Russian Federation, neither the fact that the customer accepted the result of the work performed, nor the price of the work agreed upon by the parties matters. The court indicated that if the result of the work performed by the contractor is actually with the customer or general contractor (which is typical for a construction contract), the contractor (subcontractor), upon termination of the contract on grounds of improper performance of obligations by the contractor, has the right to demand compensation for the costs incurred before the termination of the contract with the submission to the court of evidence of their incurrence, but not payment of the contract price in proportion to the volume of work performed.

In the Resolution dated December 26, 2012 in case No. A40-21692/12, the Federal Antimonopoly Service of the Moscow District indicated that even the lack of the contractor’s right to demand payment of the price under a general contract for repair and construction work does not limit the plaintiff’s right to compensation for his costs that have a different legal basis nature.

Fortunately, such an approach, which under no circumstances can be considered correct, has not become widespread in judicial practice. Indeed, the specificity of a construction contract is that the result of the work performed by the contractor (both completed and unfinished) in any case remains with the customer. However, this cannot mean that the contractor has the right to demand compensation for his costs of performing work in an amount exceeding the contract price (according to paragraph 2 of Article 709 of the Civil Code of the Russian Federation, the contractor’s costs are covered by the contract price, and by virtue of paragraph 1 of Article 424 of the Civil Code of the Russian Federation, the execution of the contract is paid according to the agreed price in it), costs for performing additional work not agreed upon with the customer (clause 4 of Article 743 of the Civil Code of the Russian Federation directly stipulates that such work is not subject to payment) or work performed with deficiencies that have not been eliminated or are irreparable (clause 1 of Article 723 In this case, the Civil Code of the Russian Federation gives the customer the right to demand a proportionate reduction in the price established for the work).

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Considering the rather contradictory judicial practice on the issues of settlements between the parties upon early termination of a work contract, it is advisable to resolve these issues as fully as possible when concluding the contract. In particular, it makes sense to provide in the contract:

• the provision that payments for early termination of the contract are made taking into account the cost of the work actually performed by the contractor, the quality of which complies with the terms of the contract and the mandatory requirements for such work;
• the procedure for determining the cost of actually completed work, securing the provision that their cost is determined on the basis of the estimated prices provided for in the contract;
• a mechanism for proportionately reducing the cost of work actually performed on the basis of Article 723 of the Civil Code of the Russian Federation in the event of identifying quality deficiencies (by the amount of the cost of poorly performed work, by the amount of the cost of work to eliminate deficiencies, etc.);
• the procedure for adjusting KS-2 acts and KS-3 certificates drawn up before termination of the contract;
• the provision that the amount of the contractor’s costs reimbursed by the customer on the basis of Article 729 of the Civil Code of the Russian Federation, in any case, cannot exceed the cost of the work actually performed by the contractor;
• the procedure for the transfer, acceptance and payment of materials and equipment purchased by the contractor, but not used in the performance of work (depending on whether these materials and equipment were delivered to the construction site or were only paid by the contractor to suppliers, but not yet delivered (in this case, the contract may the obligation of the contractor to cede to the customer the right of claim against suppliers or the customer’s right to refuse acceptance and payment for materials and equipment purchased by the contractor, but not delivered to the site, shall be provided);
• the composition of losses compensated by the parties upon early termination of the contract (depending on the grounds for termination), and the procedure for calculating the amount of such losses.

Andrianov Nikolay, Moscow.

Termination procedure

In order to terminate a contract, not in all cases it is necessary to go to court. Often firms or citizens try to resolve a contradiction peacefully so as not to waste additional money and time on proceedings. The law also provides for the possibility of pre-trial settlement. Therefore, in general, the procedure for terminating an agreement by decision of one party can be done in 2 ways:

1. Without a lawsuit - in this case, the counterparty is sent a notice of termination (for more details, see the relevant section), which he must review and respond on the merits within 1 calendar month. If the parties managed to agree, this is the fastest and most successful solution to the problem. An agreement to terminate the contract is drawn up, a sample of which is presented below.

Such a case has a legislative definition as “unilateral refusal to fulfill the contract.” This means that the counterparty recognizes such a decision as fair, so he will no longer be able to subsequently demand through the court the fulfillment of obligations by the other party. In this sense, the document acts as an analogue of a settlement agreement - if it is signed, the parties will no longer be able to go to court again with the same claims.

1. The second case is a court decision on the issue, which is defined in law as a “unilateral termination decision.” In such situations, the counterparty may go to court to invalidate the decision and oblige the defendant to fulfill his obligations, which he assumed by signing the agreement.

How to terminate a transaction according to Art. 450 Civil Code of the Russian Federation

Termination of a transaction by agreement of the parties is relevant only for contracts in which the validity period is established, as well as for those contracts that do not terminate with the fulfillment of obligations under them. For open-ended contracts, the legislator provides for the possibility of unilateral refusal to perform them with notification to the other party, for example, a month in advance.

The agreement between the parties indicates that both parties do not object to the severance of the relationship. If one of the parties does not express its consent, then the contract is subject to termination only through the court. At the same time, this agreement is intended to regulate certain aspects of the early termination of the transaction.

By signing an agreement, the parties can confirm that they have no mutual claims, or, conversely, indicate the fact that there is a debt under the obligation and it must be fulfilled within a certain period. In this case, one of the parties, by signing the agreement, also recognizes itself as a debtor.

Unilateral termination: sequence of actions

Thus, in general, if a party intends to terminate the performance of obligations, it can adhere to the following algorithm:

1. Analysis of the consequences of the step, preparation of the evidence base for possible litigation, analysis of possible risks and calculation of losses that the decision may entail.
2. An attempt to verbally agree on a decision with the counterparty, explaining the situation during business negotiations.
3. Sending a notice of unilateral termination.
4. Making a decision based on the partner’s response: if he agrees, then the matter is resolved peacefully, and an agreement to terminate the contract is drawn up.
5. If consent is not received, the party must decide what to do: fulfill the contract to the end or take a risk and terminate it, waiting for the counterparty to go to court.
6. Independently going to court based on the fact that the counterparty is acting illegally by not accepting your terms.

Each specific scenario depends on a particular situation. In some cases, it is a simpler option to fulfill the contract to the end than to wait for risks to arise due to the adoption of relevant court decisions. A commentary on this topic can be seen here.

Sample

Krug LLC, referred to as the “Customer”, represented by General Director O.L. Zaitsev, working on the basis of the Charter, and Put LLC, referred to as “Executor”, represented by General Director A.A. Nosov, working on the basis of the Charter, together referred to as the “Parties”, have entered into this additional agreement to terminate the lease agreement:

Expert opinion

Kostenko Tamara Pavlovna

Lawyer with 10 years of experience. Author of numerous articles, teacher of Law

1. Lease agreement No. 44 dated February 1, 2020 is terminated as of August 1, 2020. 2. The obligations of the Parties under Agreement No. 44 terminate from the date of signing the additional agreement. 3. This additional agreement has been created in 2 copies.

General Director of Krug LLC (signature) Zaitsev O.L. General Director of Put LLC (signature) Nosov A.A.

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Why do you need a termination agreement? How to compose it correctly? What are the consequences of entering into an agreement? Download sample agreements for various situations, see recommendations for drafting, and ask questions to a lawyer.

Notice of termination of contract

Formally, such a notification should only be in writing , since an oral communication of intentions over the phone or during a personal meeting is subsequently quite difficult to document and prove in court.

Along with this, writing a document allows you to accurately establish the time frame within which the other party is obliged to respond to the notice. There can be two options:

1. In general, (unless otherwise specified in the contract), the company must respond within 30 calendar days from the date of receipt of the notification (the period begins from the next day).
2. If the agreement specifies such a procedure (which is extremely rare), then the parties act in accordance with it.

The notification should be drawn up in 2 copies: 1 is given to the company, and the other remains with the first party with a visa on receipt. If the document is sent by mail, this must be done only by registered mail so that there is a mark of delivery and the corresponding date.

The legislation does not have a clearly developed form of notification of the intention to terminate the contract unilaterally, so it is drawn up arbitrarily. There are several points to consider:

1. A preamble that reflects who is sending the document and to whose address.
2. The main part with a mandatory reference to the contract: its name, date and place of conclusion, and other essential information are indicated. It also contains the actual expression of the desire to terminate the contract, the reason is indicated and references are made to the clauses of the agreement and/or norms of civil law.
3. The conclusion indicates the period within which the addressee is obliged to respond (in accordance with the agreement or legislation), as well as the date after which the contractual relationship between the companies is terminated.
4. At the end there is a list of all documents that are attached to the notification, indicating their form - original or copy.
5. Finally, the date, signature of the authorized person(s) with a transcript and the seal of the organization are affixed.

A sample notification of a party that the other party intends to unilaterally terminate the contract is presented below.

NOTE. The notification must be recorded in the internal document flow journal (as additional evidence of the date of its writing). The document is signed only by the director or another person who has the right to do so in accordance with internal regulations.

What to consider when terminating a deal

​Termination of a transaction by agreed termination of the contract does not mean the parties return to the situation “before the transaction”.
It is always assumed that final settlements will be made, and that what the party must do will be done. This should be taken into account both when declaring a desire to terminate the contract and when responding to such a proposal or demand. It is advisable to specify specific conditions for completing the transaction in the agreement on this.

• reasons for breaking the contractual relationship, especially if these are some kind of violation of the contract or the law (here the right to recover damages, penalties, etc. arises);
• continuing rights and obligations, as well as rights and obligations for the future - how they will terminate and what this will lead to;
• possible damage or loss upon termination of the contract;
• how to document the situation with the fulfillment of obligations and rights under the contract at the time of its termination (for example, draw up a work acceptance certificate, conduct a reconciliation);
• who and what remains due after the termination of the relationship, how this debt is planned to be repaid;
• who and how will control the process of mutual settlements and their documentation.

When preparing an agreement, it is important to take into account all the “slippery” points. In addition, the agreement itself should be made clear and detailed, reflecting all the essential circumstances of the conclusion of the transaction and its termination.

When preparing agreements, examples (samples) are often used that correspond to specific types of transactions. This is convenient and allows you to see guidelines when drawing up a document.

As a rule, the agreement is prepared and agreed upon by lawyers - either invited or their own.

If the agreement has lost its relevance, then the best option for all participants would be for the parties to sign an agreement to terminate it. Such a document must be drawn up and signed in the same format as the main one.

That is, a written contract is terminated by the same agreement, and if the main document was signed by a notary, then the agreement must be certified in a similar way.

In the event that a contract that has passed State registration is terminated, this procedure is not required when concluding an agreement on its termination. Lawyers also recommend entering into a written agreement.

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Termination of the lease agreement

Situations in practice often turn out to be very complex, since contracts between legal entities are often concluded for a very long period, many years, during which it is objectively impossible to foresee all possible risks associated with changes in market conditions.

One example of long-term contracts is a lease agreement. In this case, there are 2 possible scenarios:

1. If the contract is concluded for an indefinite period, this is the most beneficial situation for the tenant, because it is directly provided for in civil legislation (Article 610 of the Civil Code). In this case, the party may not explain the reasons that prompted it to make the decision. In most cases, the refusal is implemented out of court on the basis of an agreement to terminate the contract. The only condition is that the tenant must notify the landlord of his intentions in advance (as specified in the contract - for example, 6 months in advance).
2. If the contract is concluded for a specific period (for example, until January 1, 2020), this greatly complicates the situation for the tenant and facilitates the position of the landlord, who has the right to disagree with the notice of termination. The tenant can file a statement of claim, but it is advisable to do this if there is strong evidence of the correctness of his position.

Legal consequences

It is important to know that in the absence of an agreement, negative consequences for both parties will not be long in coming.

In addition, neglecting the issues of peaceful settlement of pressing problems may result in protracted legal proceedings , and then an agreement will have to be concluded in a higher authority.

However, in most cases, termination of the contract has a favorable outcome for both parties.

What obligations do not cease after termination?

According to paragraph 2 of Art. 453 of the Civil Code of the Russian Federation, the obligations of the partners terminate after they sign an agreement to terminate the contract, unless otherwise provided by law. But there are obligations that do not terminate regardless of the fact of termination. It could be:

• presentation of claims for violation of obligations to collect penalties and fines, which must be accrued before the date of termination of the contract (determination of the Supreme Arbitration Court of the Russian Federation No. VAS-9825/11 dated 09/07/2011);
• acceptance by one of the partners of performance under a contract from another partner and failure to fulfill the undertaken obligations. The counterparty has the right to make demands for the return of the fulfilled obligation on the basis of illegal enrichment. This provision contains clause 4, paragraph. 2 tbsp. 453 of the Civil Code of the Russian Federation (Resolution of the plenum of the Supreme Arbitration Court of the Russian Federation No. 35 of 06.06.2014);

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To protect your interests in court, it is better to use the help of our lawyers, from whom you can obtain a sample of termination of an agreement by agreement of the parties, as well as consult on all issues related to drawing up the agreement. To provide legal services, you must fill out an online application or call the numbers that are on our website.

Termination of the service agreement

In the case of such an agreement, the situation can be greatly complicated by the fact that although civil law provides for the possibility of terminating the agreement due to poor-quality services provided, it does not describe certain cases in detail.

Since the provision of services is an area with extremely diverse types of activities, termination of a contract after the fact can have a lot of reasons.

Most companies insure themselves against possible early termination, so when signing a contract you should immediately pay attention to the relevant clause. For example, if you are installing cable Internet in an apartment in which you will not live for more than a year, you need to choose those providers who do not require payment of a penalty in such cases.

A seminar with a practicing lawyer specifically on termination of a service agreement can be seen here.

Termination of an employment contract at the initiative of the employer

At the initiative of the employer

Most often, employees have disputes with their employers precisely when it is the employer who breaks the contract. It should be clearly understood that there is a whole list of conditions that allows the employer to terminate the employment contract on his own initiative. Here is the list:

• The enterprise was liquidated or ceased operations;
• There was a staff reduction;
• The employee was hired for a job that he could not perform due to lack of skills or necessary knowledge;
• The employee did not fulfill his direct duties without any compelling reason that exempted him from liability;
• The employee grossly violated labor etiquette, working conditions, and safety precautions;
• Theft by an employee of the employer's property;
• An employee revealed corporate secrets;
• An employee made a serious mistake when working with the organization’s finances;
• The employee provided the employer with false documents;
• An employee holding a leadership position committed a gross violation of the Labor Code of the Russian Federation, accepted a violation that resulted in harm to the organization as a whole;

As you can see, the list is quite extensive, but the cases described in it can hardly be called universal. So if you are faced with other reasons for dismissal that are not included in these categories, then know that your labor and civil rights have been violated.

However, let us return to the description of the contract termination process itself. It is very simple - the employer is obliged to warn the employee that his contract will be terminated early. In this case, the employer himself will be obliged to explain to the employee the reason for termination of cooperation, otherwise the dismissal will be considered illegal.

After receiving the notification, the employee is obliged to contact the employer (if he has questions, claims or any complaints), complete the specified period, and receive his documents, wages and due compensation on the last working day.

It is at the last stage that disputes with the employer most often arise - he most often either does not pay wages or withholds compensation. Legally, he can do this only in one case - if he has documentary evidence that at the moment there is simply no money to issue. In this case, you will receive them as soon as possible along with compensation.

Termination of an employment contract due to circumstances

This method of terminating a contract is quite rare. It is used in cases where an employee for some reason can no longer cooperate with the employer. The most striking examples:

• Dismissal due to health reasons and the employee becoming disabled;
• Recognition of the employee as incompetent;
• An employee serving a sentence in a correctional institution for a crime committed;
• Death of an employee;
• Forced relocation of an employee.

As a rule, in most cases, the employee cannot even submit an application himself, so the dismissal procedure is often carried out by the employer. However, even in this case, he will be obliged to return all papers and pay all compensation.

Termination of an employment contract

It is clear that all cases of possible termination of employment relations are provided for by law. However, situations may arise when a company wishes to dismiss an employee unilaterally by terminating the employment contract with him. In this case, a notification is also sent to him personally or by physical mail, and it is important to take into account several features:

1. The notification must be drawn up in 2 copies, like the contract itself.
2. If we are talking about a fixed-term employment contract, then notice of its termination can be sent no later than 3 calendar days of the end of its validity period.

Thus, the legislation provides for the possibility of unilaterally terminating the contract at any time. However, it is important to justify your position and try to resolve all disputes with the counterparty peacefully.

How can a landlord terminate a lease agreement early?

1. 3.
2. 2.
3. 1.

The procedure for early termination of a lease agreement consists of three stages:

1. the lessor sending a written warning about the need for the tenant to fulfill the obligation within a reasonable time (paragraph
   7, article 619 of the Civil Code of the Russian Federation);

1. proposal to terminate the contract due to the tenant’s failure to comply within a reasonable time with the requirements set out in the warning (clause
   2 of Article 452 of the Civil Code of the Russian Federation);

1. request for termination of the contract in court. The lessor may declare it after receiving a refusal to terminate the contract or in the event of failure to receive a response within the period specified in the proposal to terminate the contract, and if the period is not specified in the proposal, then within thirty days after receiving the said proposal (Clause 2 of Article 452 of the Civil Code of the Russian Federation ).

The law does not require a mandatory sequential completion of all stages of the contract termination procedure.