Change and termination of civil law contracts. - Civil law

Amendment and termination of civil law contracts.

As a rule, the change and cancellation of the contract by agreement of the parties is possible at any time (clause 1, article 450 GK). At the request of one of the parties the contract is terminated by the court only if there is a material breach of the contract by the other party or in cases provided by law or contract. According to paragraph 2 of Art. 450 Civil Code, the violation of a contract by one of the parties that entails for the other party such damage as essential that it is substantially deprived of what it was entitled to count when concluding the contract is recognized as essential. Article 451 of the Civil Code admits unilateral change or termination of the contract in connection with a significant change in the circumstances from which the parties proceeded when concluding the contract. A change in circumstances is recognized as significant when they have changed so much that, if the parties could foresee this, the treaty would not have been concluded at all or would have been concluded under significantly different conditions. For example, by virtue of paragraph 3 of Art. 744 ГК the contractor has the right to demand revision of the estimate if, for reasons beyond its control, the cost of work exceeded the estimate by at least 10%. If the parties fail to reach an agreement on bringing the agreement into line with substantially changed circumstances or on its termination, the contract may be terminated or amended by the court at the request of the interested party, provided that there are simultaneously a number of conditions specified in clause 2 or cl. 451 CC. In particular, for the termination of the contract it is necessary to establish the presence of four simultaneously the following conditions:

1) at the time of the conclusion of the contract, the parties proceeded from the premise that such a change of circumstances would not occur;

2) the change in circumstances is caused by reasons that the interested party could not overcome after their emergence, with the degree of care and discretion required from the nature of the contract and the terms of the turnover;

3) the performance of the contract without changing its conditions would so violate the correlation of the property interests of the parties corresponding to the contract and entail such damage for the interested party that it would lose to a large extent that which it was entitled to count when concluding the contract;

4) the customs of business turnover or the essence of the contract do not imply that the risk of changes in circumstances is borne by the interested party.

According to paragraph 1 of Art. 452 of the Civil Code the agreement on amending and terminating the agreement is made in the same form as the contract , unless otherwise follows from the law, other legal acts, the contract or the customs of business turnover. In the event of a change in the contract, the content of the obligation based on this agreement also changes accordingly. At the same time, the obligation changes in the part in which the underlying agreement was changed. So, if the parties in the contract of work agreed that the contractor will repair only the first two floors instead of repairing the entire four-story building, then the customer will have the right to require the contractor to work on the first two floors, not four. In the rest of the terms of the contract (for example, the terms of production, quality assurance, force majeure) remain in its original form, and therefore the content of the contractual obligation that corresponds to these conditions remains unchanged.

If the amendment of the agreement has occurred by mutual agreement of the parties , then the obligation based on it changes accordingly from the moment of the parties signing the agreement on the contract change. However, another rule may result from the content of the agreement or the nature of the change in the contract.

When a contract is changed in a judicial procedure , the obligation based on it is changed from the moment the court decision on the amendment of the contract comes into force.

Upon the termination of the contract, the obligations of the parties are terminated (paragraph 2 of Article 453 of the Civil Code). In case of cancellation of the contract, the obligations are considered to be terminated from the moment of concluding the agreement of the parties to terminate the contract, and upon termination in court - from the entry into legal force of the court's decision to terminate the contract (clause 3 of article 453 of the Civil Code).

According to the general rule, fixed in paragraph 4 of Art. 453 of the Civil Code, the parties are not entitled to demand the return of what was performed by them under the obligation until the time of the amendment or termination of the contract, unless otherwise provided by law or by agreement of the parties.

If the contract was changed or terminated due to a material breach of its condition by one of the parties , the other party is entitled to claim damages caused by the change or termination of the contract (clause 5, Article 453 GK). The purpose of this rule, as it follows from its wording, is the settlement of the relations of the parties in cases when the basis for the change of the contract was the breach of the contract, but it does not cover the cases when such reason was caused by other reasons, in particular, the impossibility of executing the contract.

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