viii) The Chambers of Advocates are non-profit organizations based on obligatory membership, and are created in the form of the Chamber of Advocates of the Subject of the Russian Federation, or the Chamber of Advocates of the Russian Federation Federal, for the realization of the purposes provided by the legislation on advocacy.
ix) The advocacy formations, being legal entities[41] are non-profit organizations, created in accordance with the advocacy legislation aiming at the implementation of advocacy by the participants.
5.2. Non-Profit Unitary Organizations
i) A fund is a unitary non-profit and non-membership organization, founded by the citizens and/or legal entities, on the basis of voluntary property contributions and pursuing charitable, cultural, educational, or other social or socially useful purposes.
ii) An institution is a unitary non-profit organization created by the owners for the implementation of managerial, socio-cultural, or other functions of a non-commercial nature. A founder is the owner of the property of an established institution. It gets the right to operational management of the property assigned by an owner to an institution, and is acquired by an institution on other bases in accordance with the CC of the RF.
iii) An autonomous non-profit organization is a unitary non-profit and non-membership organization, established on the basis of property contributions of citizens and/or legal entities, aiming at the rendering of services in the spheres of education, health care, culture, science, and other non-commercial activities.
iv) A religious organization is a voluntary association of the citizens of the Russian Federation, permanently and lawfully residing in the territory of the Russian Federation, or other persons, formed by them, aimed at joint confession and spreading of the faith, and registered as a legal entity in accordance with the law (a local religious organization), unions of these organizations (the centralized religious organization), as well as an organization, created by the given union and/or managing or coordinating body of the union. This is in accordance with the law on freedom of conscience and religious associations, and these organizations are aiming at the joint confession and spreading of the faith.
v) The Public-Legal Companies
The public-legal companies are an organizational-legal form of legal entities, which are new to Russia, that appeared in the CC of the RF in 2014. However, currently neither the CC of the RF, nor other laws, contain any norms establishing the legal status of these organizations. This shortcoming is expected to be corrected soon.
vi) The State Corporations
The possibility to create state corporations is provided in Article 3 of the Federal Law No. 99-FZ dated May 5, 2014. State corporations are created for the purposes of the implementation of social, managerial or other socially useful functions. Each state corporation is created on the basis of a separate federal law that establishes features of the legal status thereof.
Currently the following state corporations are operating in Russia:
Rosatom State Corporation of Atomic Energy;
State Corporation for the Promotion of the Development, Production and Export of Hi-Tech Industrial Products Rostec;
State Corporation Bank for Development and Foreign Affairs (Vnesheconombank)
vii) The State Companies.
The only state company currently operating in Russia is the State Company "Russian Highways. It operates under ad hoc federal law. The legislation does not provide a possibility for the creation of new legal entities in the form of state companies.
Svetlana Popova[42]
Chapter 3 Core Business Contracts
1. The Contract As a Basis for Creating Obligations
1.1. The definition of a contract under Russian law
Under Clause 1 of Article 420 of the Civil Code of the Russian Federation, a contract shall be recognized as an agreement, concluded by two or more persons of the institution, upon modification or termination of civil rights and duties. The general provisions on obligations (Articles 307419 of the CC of the RF) shall be applied towards the obligations, arising from the contract, unless otherwise provided in the provisions of the CC of the RF, governing individual types of contracts or in the general provisions on contracts set forth in the CC of the RF.
The contract is also a bilateral or multilateral transaction. Therefore, as a general rule, the provisions on transactions set forth in Chapter 9 of CC of RF are applicable to contractual relations. Nevertheless, two exceptions to this rule have been implemented as a result of the amendments to the CC of the RF, which have been in force since July 1, 2015.[43]
The first exception concerns the application of the provisions on the invalidity of contractual transactions, which are related to entrepreneurial activity undertaken by the parties. Thus, as a general rule, the party which accepted the performance of the business contract from the counterparty, and fully or partially failed to ensure reciprocal performance of that contract, cannot claim the invalidity of the contract. The second exception pertains to the application of general consequences of the invalidity of transactions within business contracts. The parties of such a contract, which is a voidable transaction, may agree on additional consequences of invalidity, other than those provided in Article 167 of the CC of the RF. Furthermore, such an agreement should be concluded after the declaration of the contract as invalid, should not affect the rights of third parties, and should not violate the public interest.
Consequently, the following provisions of the CC of the RF need to be taken into account upon conclusion of the contract:
Subsection 1 of Section 3 of Part 1 of the CC of the RF (general provisions on obligations);
Subsection 2 of Section 3 of Part 1 of the CC of the RF (general provisions on contracts);
Part 2 of the CC of the RF (individual types of obligations);
Chapter 9 of the CC of the RF (transactions) with some exceptions to be discussed below.
Specific regulation of individual types of contracts can be found not only in the CC of the RF, but also in other laws and regulations (e.g. the Urban Planning Code of the RF).
1.2. General Provisions on Contracts
The CC of the RF contains general provisions pertaining to every type of contract, and provisions regulating certain types of contracts (public contract, contract of adhesion, etc.), as well as provisions on individual types of contracts (purchase and sale contracts, rental agreements, etc.). The provisions on individual types of contracts cover the main rights and obligations of the parties, the rules of concluding a contract, formal requirements of a contract, etc.
Furthermore, the parties can conclude not only the types of contracts which are named directly in the CC of the RF, but also contracts which are not specified therein. The latter category can include contracts containing elements of several named contracts (mixed contracts), and special contracts, which do not contain elements of named contracts (unnamed contracts). Depending on the type of concluded contract, different principles can be distinguished with respect to the regulation of the contractual relationships of the parties.
Relationships under named contracts are defined by the parties, taking into consideration the rules on those contracts provided in the CC of the RF. The imperative norms governing the contract cannot be changed by the parties. When there are dispositive rules governing the contract, the parties can agree not to apply those provisions, or to establish different rules. The criteria for imperative norms have been identified in the Decision No. 16 of the Plenum of the Supreme Court of Arbitration of the RF, dated March 14, 2014.[44]
Relationships under named contracts are defined by the parties, taking into consideration the rules on those contracts provided in the CC of the RF. The imperative norms governing the contract cannot be changed by the parties. When there are dispositive rules governing the contract, the parties can agree not to apply those provisions, or to establish different rules. The criteria for imperative norms have been identified in the Decision No. 16 of the Plenum of the Supreme Court of Arbitration of the RF, dated March 14, 2014.[44]
The Decision No. 16 of the Plenum of the Supreme Court of Arbitration of the RF, dated March 14, 2014, "On the Freedom of Contracts and Its Limits," was the first decision to establish the presumption of the dispositive nature of the norms governing individual types of contracts. According to the Plenum of the Supreme Court of Arbitration of the RF, the legal norms governing the rights and obligations under the contract shall be considered to be imperative, if those include a clear prohibition on adding different clauses to the contract. The norm is also of an imperative nature, if it is necessary for the purposes of safeguarding special interests protected by law (interests of the weakest party of the contract, third parties, public interest, etc.), for avoiding a great disparity between the parties interests. In addition, the imperative nature of a legal norm can be implied from the nature of the legislative regulation pertaining to a certain type of contract. In other scenarios, the norm should be considered to be of a dispositive nature.
With respect to the relationship under mixed contracts, or contracts which have elements of a mixed contract, the rules governing these contracts apply in respective portions, unless the parties agreed otherwise, or the rules are implied based on the nature of the mixed contract.
As for unnamed contracts, the rules on individual types of contracts provided in the CC of the RF do not apply directly. However, if the parties do not set in the contract the rules governing a particular aspect of their relationship, then the provisions on the individual types of contracts of the CC of the RF may apply by analogy (analogy of the law Clause 1 of Article 6 of the CC of the RF).
In any of the aforementioned scenarios, the parties have the right to agree that the individual terms of the contract shall be determined by standard terms developed for contracts pertaining to the respective type, and published in the press (Article 427 of the CC of the RF). In the event that the contract does not contain a reference to such standard terms, they can be applied to the relationship of the parties as customs of trade.
The general stipulations of contract law in the CC of the RF includes provisions applicable to certain types of contracts: public contract, contract of adhesion, preliminary contract, framework agreement, option agreement, subscription contract, and the contract for the benefit of third persons.
1.2.1. The Rules for Concluding Contracts
1.2.1.1. General rules for concluding a contract
As a general rule, a contract is concluded by the means of one party sending an offer, and the other party accepting it. The contract shall be considered to be concluded from the moment of receiving the acceptance by the party which has sent the offer.
Furthermore, a contract shall be considered to be concluded, if an agreement in the required form has been reached between the parties on all of the essential terms of the contract (Article 432 of the CC of the RF). The essential terms of the contract are:
the subject matter of the contract;
the terms that are named in a statute, or in other legal acts, as essential or necessary for contracts of the given type;
the terms with respect to which, by declaration of one of the parties, an agreement must be reached.
1.2.1.2. Declaring the contact as unconcluded
If any of the essential terms of the contract have not been agreed on, the contract, as a general rule, shall be deemed to be unconcluded. In this respect, the following factors shall be considered:
the party cannot claim that the contract is unconcluded if: first, that the party has accepted the performance of the contract or otherwise acknowledged the validity of the contract; second, considering the particular circumstances, such a claim will contradict the good faith principle (Clause 3 of Article 432 of the CC of the RF);
the contract shall not be considered as unconcluded, if the essential term, with respect to which an agreement has not been reached, can be covered by the general rules on obligations, or by a framework agreement. The application thereof shall not, however, be in conflict with the nature of the specific contract.[45]
1.2.1.3. State registration of contracts
Some contracts require state registration. Such registration is required, for example, for real estate rental agreements concluded for a period of not less than one year (Clause 2 of Article 609 of the CC of the RF), and for commercial concession contracts (Clause 2 Article 1028 of the CC of the RF). For third parties, the contracts which by law require state registration, shall be considered concluded from the moment of such registration.[46] Such a contract creates obligations for its parties, and cannot be declared by the courts as an unconcluded contract.
In its informative letter No. 165, dated February 25, 2014, the Presidium of the Supreme Court of Arbitration of the RF noted that the contract, which has not been duly registered, does not bear all of the consequences of the contract. Such a contract does not bear consequences which can affect the rights and interests of third parties who are unaware of the conclusion and the content of that contract. On the other hand, all legal consequences arise for the parties of the contract, from the moment an agreement has been reached in relation to all the essential terms. The full range of the consequences of the contract are enforced upon its state registration.[47] Such an interpretation of the provision has previously been conveyed by Decision No. 73 of the Plenum of the Supreme Court of Arbitration of the RF, dated November 17, 2011.[48]
1.2.1.4. Obligatory conclusion of a contract
In certain scenarios, the CC of the RF and other laws provide for an obligation of a party to conclude a contract. For example, such an obligation is set forth for organizations supplying energy, regarding the conclusion of power supply contracts.[49] In case the party/parties have an obligation to conclude a contract, it has to be concluded, in accordance with Article 445 of the CC of the RF. In the event of disagreements regarding the individual terms of the contract, the parties have the right to bring the case to the court, within six months from the moment the conflict arose.
If the party obligated to conclude a contract avoids its conclusion, the counterparty has the right to ask the court to coerce the party to conclude the contract. In this case, the contract is deemed to be concluded with the terms that are determined by the decision of the court, and from the moment that decision has come into force.
1.2.1.5. Conclusion of a Contract at an Auction
Unless otherwise implied from the nature of the contract, it can be concluded at an auction. General provisions on the conclusion of a contract at an auction can be found in Articles 447449.1 of the CC of the RF. The order of organizing auctions in different domains is regulated in specific legislation.[50]