CIVIL CODE OF THE REPUBLIC OF UZBEKISTAN PART TWO DD AUGUST 29, 1996 y

CIVIL CODE OF THE REPUBLIC OF UZBEKISTAN

PART TWO

AUGUST 29, 1996 y

Subsection 3.

SPECIFIC TYPES OF OBLIGATIONS

CHAPTER 29. PURCHASE AND SALE

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§ 1. General provisions on purchase and sale

Article 386. Sale and purchase agreement

Under a purchase and sale agreement, one party (the seller) undertakes to transfer ownership of the goods to the other party (the buyer), and the buyer undertakes to accept the goods and pay a certain amount of money (price) for them.

The provisions provided for in this paragraph apply to the purchase and sale of securities and currency values, unless special rules for their purchase and sale are established law.

In cases provided for by this Code or other law, the specifics of the purchase and sale of certain types of goods are determined law.

A contract for the sale and purchase of motor vehicles subject to state registration in accordance with the procedure established by law must be notarized, except in cases established by the Government of the Republic of Uzbekistan.

The provisions provided for in this paragraph apply to the sale of property rights, unless otherwise follows from the content or nature of these rights.

The provisions provided for in this paragraph apply to certain types of sales contracts (retail purchase and sale, supply of goods, energy supply, sale of an enterprise, etc.), unless otherwise provided by the rules of this Code on contracts of these types.

Article 387. Conditions of the contract for goods

The goods under a sales contract can be anything in compliance with the rules of Article 82 of this Code.

An agreement may be concluded for the purchase and sale of goods available to the seller at the time of conclusion of the agreement, as well as goods that will be created or acquired by the seller in the future, unless otherwise established by law or follows from the nature of the goods.

The terms of a purchase and sale agreement regarding a product are considered agreed upon if the agreement allows the name and quantity of the product to be determined.

Article 388. Obligations of the seller to transfer goods

The seller is obliged to transfer to the buyer the goods provided for in the purchase and sale agreement.

Unless otherwise provided by the purchase and sale agreement, simultaneously with the transfer of the item, the seller is obliged to transfer to the buyer its accessories, as well as related documents (technical passport, quality certificate, operating instructions, etc.) provided for by law or contract.

Article 389. Time limit for fulfilling the obligation to transfer goods

The period for fulfillment by the seller of the obligation to transfer the goods to the buyer is determined by the sales contract, and if the contract does not allow determining this period, in accordance with the rules provided for in Article 242 of this Code.

A purchase and sale agreement is considered concluded with the condition that it be executed by a strictly defined deadline, if it clearly follows from the agreement that if this deadline is violated, the buyer loses interest in fulfilling the agreement. The seller has no right to fulfill such an agreement before or after the expiration of the period specified therein without the consent of the buyer.

Article 390. Moment of fulfillment of the seller’s obligation to transfer the goods

Unless otherwise provided by the purchase and sale agreement, the seller’s obligation to transfer the goods to the buyer is considered fulfilled now:

delivery of the goods to the buyer or the person indicated by him, if the contract provides for the seller’s obligation to deliver the goods;

placing the goods at the disposal of the buyer, if the goods must be handed over to the buyer at the location of the goods. The goods are considered to be placed at the disposal of the buyer when, by the time specified in the contract, the goods are ready for transfer in the appropriate place and the buyer, in accordance with the terms of the contract, is aware of the readiness of the goods for transfer. Goods are not considered ready for transfer if they are not identified for the purposes of the contract by marking or otherwise.

In cases where the seller’s obligation to deliver the goods or transfer the goods at its location to the buyer does not arise from the purchase and sale agreement, the seller’s obligation to transfer the goods to the buyer is considered fulfilled at the moment of delivery of the goods to the carrier or organization of communications for delivery to the buyer, unless otherwise provided by the contract.

Article 391. Obligation of the seller to preserve the sold property

When ownership or other real rights are transferred to the buyer before the transfer of property, the seller is obliged to preserve the property before the transfer, preventing its deterioration. The buyer is obliged to reimburse the seller for the costs necessary for this, unless otherwise provided by agreement of the parties.

Article 392. Transfer of risk of accidental loss or accidental damage to goods

Unless otherwise provided by the purchase and sale agreement, the risk of accidental loss or accidental damage to the goods passes to the buyer from the moment when, in accordance with the law or the contract, the seller is considered to have fulfilled his obligation to transfer the goods to the buyer.

The risk of accidental loss or accidental damage to goods sold while in transit passes to the buyer from the moment the contract is concluded, unless otherwise provided by agreement of the parties.

The condition of the purchase and sale agreement that the risk of accidental loss or accidental damage to the goods passes to the buyer from the moment the goods are delivered to the first carrier may, at the buyer’s request, be declared invalid by the court if at the time of concluding the contract the seller knew or should have known that the goods were lost or damaged and did not inform the buyer about it.

Article 393. Obligation of the seller to transfer the goods free from the rights of third parties

The seller is obliged to transfer the goods to the buyer free from any rights of third parties, unless the buyer agreed to accept the goods encumbered by the rights of third parties. Failure to comply with this rule gives the buyer the right to demand a reduction in the purchase price or termination of the sales contract and compensation for damages, unless it is proven that, the buyer knew or should have known about the rights of third parties to this product.

The rules provided for in this article are correspondingly applied in the case where, at the time of its transfer to the buyer, there were claims of third parties in relation to the goods, of which the seller was aware, if these claims were subsequently recognized as legitimate in the prescribed manner.

Article 394. Obligations of the buyer and seller in the event of a claim for seizure of goods

If a third party, on grounds that arose before the execution of the purchase and sale agreement, brings a claim against the buyer for the seizure of goods, the buyer is obliged to involve the seller in participating in the case, and the seller is obliged to enter into this case on the buyer’s side.

Failure by the buyer to involve the seller in the case relieves the seller of liability to the buyer if the seller proves that by taking part in the case, he could have prevented the seizure of the sold goods from the buyer.

A seller who is invited the buyer to participate in the business, but does not take part in it, is deprived of the right to prove that the buyer conducted the business incorrectly.

Article 395. Responsibility of the seller in case of seizure of goods from the buyer

When the goods are withdrawn from the buyer by third parties on grounds that arose before the execution of the purchase and sale agreement, the seller is obliged to compensate the buyer for losses incurred by him, unless the buyer knew or should have known about the existence of these grounds.

The agreement of the parties to release the seller from liability or to limit it in the event of a demand, for the purchased goods from the buyer by third parties is invalid.

Article 396. Consequences of the seller’s refusal to transfer the goods

If the seller refuses to transfer the sold goods to the buyer, the buyer has the right to refuse to execute the sales contract.

If the seller refuses to transfer an individually defined item, the buyer has the right to present to the seller the requirements provided for in Article 331 of this Code.

Article 397. Consequences of failure to fulfill the obligation to transfer accessories and documents related to the goods

If the seller does not transfer or refuses to transfer to the buyer accessories or documents related to the goods that he must transfer in accordance with the law or the sales contract (part two of Article 388 of this Code), the buyer has the right to assign him a reasonable period for their transfer.

If the accessories or documents, related to the goods are not transferred by the seller within the specified period, the buyer has the right to refuse the goods, unless otherwise provided by the purchase and sale agreement.

Article 398. Quantity of goods

The quantity of goods to be transferred to the buyer is stipulated in the purchase and sale agreement in the appropriate units of measurement or in monetary terms. The condition on the quantity of goods can be agreed upon by establishing in the contract the procedure for its determination.

If the purchase and sale agreement does not allow determining the quantity of goods to be transferred, the agreement is considered not concluded.

Article 399. Consequences of violation of the terms of the contract on the quantity of goods

If the seller, in violation of the terms of the sales contract, has transferred to the buyer a smaller quantity of goods than determined by the contract, the buyer has the right, unless otherwise provided by the contract, either to demand the transfer of the missing quantity of goods, or to refuse the transferred goods and payment for it, and if it has been paid – demand a refund of the amount paid.

In the event that the seller has transferred goods to the buyer in a quantity exceeding that specified in the sales contract, the buyer is obliged to notify the seller about this in the manner prescribed by part one of Article 416 of this Code. If, within a reasonable time after receiving the buyer’s message, the seller does not dispose of the relevant goods, the buyer has the right, unless otherwise provided by the contract, to accept all the goods.

If the buyer accepts goods in quantities, exceeding those specified in the sales contract, the corresponding goods are paid, at the price established by the contract, unless a different price is determined by agreement of the parties.

Article 400. Assortment of goods

If, under a purchase and sale agreement, goods are subject to transfer in a certain ratio by type, model, size, color and other characteristics (assortment), the seller is obliged to transfer to the buyer the goods in the assortment agreed upon by the parties.

If the assortment in the purchase and sale agreement is not defined and the agreement does not establish the procedure for determining it, but from the essence of the obligation it follows that the goods must be transferred to the buyer in assortment, the seller has the right to transfer the goods to the buyer in assortment, based on the needs of the buyer, which were known to the seller at the time of conclusion of the contract, or refuse to perform the contract.

Article 401. Consequences of violation of the terms of the agreement on the assortment of goods

When the seller transfers goods provided for in the purchase and sale agreement in an assortment that does not comply with the agreement, the buyer has the right to refuse to accept and pay for them, and if they have been paid for, to demand the return of the amount of money paid.

If the seller has transferred to the buyer, along with goods whose assortment complies with the purchase and sale agreement, goods in violation of the terms of assortment, the buyer has the right, at his choice:

accept goods that comply with the terms of the assortment agreement and refuse other goods;

refuse all transferred goods;

demand that goods that do not comply with the terms of the assortment agreement be replaced with goods in the assortment stipulated by the agreement;

accept all transferred goods.

If you refuse goods whose assortment does not comply with the terms of the purchase and sale agreement, or present a demand for replacement of goods that do not meet the assortment conditions, the buyer also has the right to refuse to pay for these goods, and if they have been paid for, to demand a refund of the amount paid.

Goods that do not comply with the terms of the assortment agreement are considered accepted if the buyer does not notify the seller of his refusal of the goods within a reasonable time after receiving them.

If the buyer does not refuse goods, the range of which does not correspond to the contract, he is obliged to pay for them at the price agreed with the seller. In the event that the seller does not take the necessary measures to agree on a price within a reasonable time, the buyer pays for the goods at the price that, at the time of conclusion of the contract, under comparable circumstances, was usually charged for similar goods.

The rules of this article apply unless otherwise provided by the purchase and sale agreement.

Article 402. Quality of goods

The seller is obliged to transfer to the buyer the goods, the quality of which corresponds to the purchase and sale agreement.

If there are no conditions in the purchase and sale agreement regarding the quality of the goods, the seller is obliged to transfer to the buyer the goods suitable for the intended purposes.

If the seller has made the contract, was informed the buyer about the specific purposes of purchasing the goods, the seller is obliged to transfer to the buyer the goods suitable for use in accordance with these purposes.

When selling goods based on a sample and (or) description, the seller is obliged to transfer to the buyer the goods that correspond to the sample and (or) description.

If, in accordance with the procedure established by law, mandatory requirements for the quality of the goods being sold are provided, then the seller carrying out entrepreneurial activities is obliged to transfer to the buyer goods that meet these mandatory requirements.

By agreement between the seller and the buyer, goods may be transferred that meet increased quality requirements compared to the mandatory requirements established in the manner prescribed by law.

Article 403. Guarantee of quality of goods

The goods that the seller is obliged transfer to the buyer, must comply with the requirements and provided for in Article 402 of this Code at the time of their transfer to the buyer, unless another moment for determining the goods’ compliance with these requirements is provided for in the sales contract and, within a reasonable period, must be suitable for the intended purposes.

If the purchase and sale agreement provides for the seller to provide a guarantee of the quality of the goods, the seller is obliged to transfer to the buyer the goods, which must meet the requirements provided for in Article 402 of this Code, within the time established by the agreement (guarantee period).

The product quality guarantee also applies to all components, unless otherwise provided by the purchase and sale agreement.

Article 404. Calculation of the warranty period of goods

The warranty period begins to run from the moment the goods are transferred to the buyer, unless otherwise provided by the purchase and sale agreement.

If the buyer is deprived of the opportunity to use a product for which a warranty period is established in the purchase and sale agreement, due to circumstances depending on the seller, the warranty period does not expire until the relevant circumstances are eliminated the seller.

Unless otherwise provided by the purchase and sale agreement, the warranty period is extended by the time during which the goods could not be used due to defects found in them, if the seller is notified of the defects of the goods in the manner established by Article 416 of this Code.

Unless otherwise provided by the purchase and sale agreement, the warranty period for the component product is considered equal to the warranty period for the main product and begins to run simultaneously with the warranty period for the main product.

When replacing a product (component), the warranty period begins to run again.

Article 405. Product expiration date

Legislation, including national standards, may determine the period of time after which the product is considered unsuitable for its intended use (expiration date).

The seller is obliged to transfer a product for which an expiration date has been established to the buyer in such a way that it can be used for its intended purpose before the expiration date.

Article 406. Calculation of the shelf life of goods

The shelf life of a product is determined by the period, calculated from the date of its manufacture, during which the product is suitable for use, or the date before which the product is suitable for use.

Article 407. Checking the quality of goods

If legislation or a sales contract provides for checking the quality of goods, it must be carried out in accordance with the requirements established therein.

Where standards establish requirements for the quality control of goods, the quality must be checked in accordance with their instructions.

If, in the manner established by parts one and two of this article, the conditions for checking the quality of goods are not provided, then the quality check of the goods must be carried out in accordance with business customs or other commonly applied conditions for checking the goods to be transferred under a sales contract.

If legislation, including state standards or a purchase and sale agreement, provides for the seller’s obligation to check the quality of the goods transferred to the buyer (testing, analysis, inspection, etc.), the seller must provide the buyer, upon his request, with evidence of checking the quality of the goods.

Checking the quality of goods by the seller and the buyer must be carried out under the same conditions.

Article 408. Consequences of transfer of goods of inadequate quality

If the defects of the goods were not specified the seller, the buyer to whom the goods of inadequate quality were transferred acquires the rights provided for in Article 434 of this Code.

In case of inadequate quality of a part of the goods included in the kit, the buyer has the right to exercise the rights provided for in Article 434 of this Code in relation to this product.

If the seller of a product of inadequate quality is not its manufacturer, demands for replacement or gratuitous elimination of defects in the product may be presented to the seller or the manufacturer.

The rules provided for in this article are applied unless otherwise established by this Code or other law.

Article 409. Defects in goods for which the seller is responsible

The seller is responsible for defects in the goods if the buyer proves that the defects in the goods arose before its transfer to the buyer or for reasons that arose before that moment.

In relation to goods for which the seller has provided a quality guarantee, the seller is responsible for defects in the goods unless he proves that the defects in the goods arose after its transfer to the buyer as a result of the buyer’s violation of the rules for using the goods or storing them, or the actions of third parties, or force majeure.

Article 410. Time limits for discovering defects in transferred goods

Unless otherwise provided by law or the purchase and sale agreement, the buyer has the right to make claims related to defects in the goods, if they are discovered within the time limits established by this article.

When a warranty period or expiration date is not established for a product, claims related to defects may be presented by the buyer, provided that the defects in the sold product were discovered within a reasonable time, but within two years from the date of transfer of the product to the buyer, unless other deadlines apply established by law or purchase and sale agreement. The period for identifying defects in goods to be transported or sent by a communications organization is calculated from the date of receipt of the goods at their destination.

If a warranty period has been established for the product, the buyer has the right to make claims related to defects in the product if defects in the product are discovered during the warranty period.

If the purchase and sale agreement establishes a warranty period for a component product that is shorter than that for the main product, the buyer has the right to make claims about defects in the component product if they are discovered during the warranty period for the main product.

If the purchase and sale agreement establishes a warranty period for a component product that is longer than the warranty period for the main product, the buyer has the right to make claims for defects in the product if defects in the component product are discovered during the warranty period for it, regardless of the expiration of the warranty period for the main product. product.

In relation to goods for which an expiration date has been established, the buyer has the right to make claims about defects in the goods if they are discovered during the expiration date of the goods.

If defects in the goods are discovered by the buyer outside the warranty period or expiration date, the seller is liable if the buyer proves that the defects in the goods arose before the transfer of the goods to the buyer or for reasons that arose before that moment.

Article 411. Completeness of goods

The seller is obliged to transfer to the buyer the goods that comply with the terms of the purchase and sale agreement regarding completeness.

In the event that the purchase and sale agreement does not specify the completeness of the goods, the seller is obliged to transfer to the buyer the goods, the completeness of which is determined by business customs or other usually imposed requirements.

Article 412. Product set

If the purchase and sale agreement provides for the seller’s obligation to transfer to the buyer a certain set of goods in a set (Product set), the obligation is considered fulfilled from the moment of transfer of all goods included in the set.

Unless otherwise provided by the purchase and sale agreement and does not follow from the essence of the obligation, the seller is obliged to transfer to the buyer all the goods included in the set at the same time.

Article 413. Consequences of transfer of incomplete goods

In case of transfer of incomplete goods, the buyer has the right, at his choice, to demand from the seller:

proportionate reduction in the purchase price;

completing the goods within a reasonable time.

If the seller has not complied with the buyer’s requirements to complete the goods within a reasonable time, the buyer has the right, at his choice:

demand replacement of an incomplete product with a complete one;

refuse to execute the purchase and sale agreement and demand the return of the amount of money paid for it, as well as compensation for losses.

The consequences provided for in parts one and two of this article also apply in the event of a violation by the seller of the obligation to transfer a set of goods to the buyer, unless otherwise provided by the purchase and sale agreement and does not follow from the essence of the obligation.

Article 414. Containers and packaging

Unless otherwise provided by the purchase and sale agreement and does not follow from the essence of the obligation, the seller is obliged to transfer the goods to the buyer in containers and (or) packaging, with the exception of goods that by their nature do not require packaging and (or) packaging.

If the purchase and sale agreement does not specify the requirements for containers and packaging, then the goods must be packaged and (or) packaged in the usual way for such goods, and in the absence of such a way, ensuring the safety of goods of this kind under normal conditions of storage and transportation.

If the procedure established by law provides for mandatory requirements for containers and (or) packaging, then the seller engaged in business activities is obliged to transfer the goods to the buyer in containers and (or) packaging that meet these mandatory requirements.

Article 415. Consequences of transferring goods without containers and (or) packaging or in improper containers and (or) packaging

In cases where a product subject to packaging and (or) packaging is transferred to the buyer without containers and (or) packaging or in improper containers and (or) packaging, the buyer has the right to require the seller to package and (or) package the goods or replace the improper containers and (or) packaging ) packaging, unless otherwise follows from the sales contract, the essence of the obligation or the nature of the goods. Instead of presenting the specified requirements to the seller, the buyer has the right to present other demands to him arising from the transfer of goods of inadequate quality, provided for in Article 434 of this Code.

Article 416. Notification of the seller about improper performance of the purchase and sale agreement

The buyer is obliged to notify the seller of a violation of the terms of the purchase and sale agreement regarding the quantity, assortment, quality, completeness, container and (or) packaging of goods within the period provided for by law or the contract, and if such a period is not established, within a reasonable time after the violation of the relevant term of the contract should have been discovered based on the nature and purpose of the goods.

If the buyer fails to fulfill the obligation specified in part one of this article, the seller has the right to fully or partially refuse to satisfy the relevant requirements of the buyer if he proves that this has resulted in the impossibility of satisfying his requirements or entails disproportionate expenses for the seller compared to those that he would have incurred, if he had been promptly notified of the violation of the terms of the purchase and sale agreement.

If the seller knew or should have known that the goods transferred to the buyer do not comply with the terms of the purchase and sale agreement, he does not have the right to refer to the buyer’s failure to fulfill the obligation provided for in the first part of this article.

Article 417. Obligation of the buyer to accept the goods

The buyer is obliged to accept the goods transferred to him by the seller, except in cases where he has the right to demand replacement of the goods or refuse to execute the sales contract.

Unless otherwise provided by law or the purchase and sale agreement, the buyer is obliged to take actions that, in accordance with the requirements usually presented, are necessary on his part to ensure the transfer and receipt of the relevant goods.

In cases where the buyer, in violation of the law or the purchase and sale agreement, does not accept or refuses to accept the goods, the seller has the right to refuse to fulfill the contract and demand compensation for losses.

Article 418. Price of goods

The buyer is obliged to pay for the goods at the price determined in accordance with Article 356 of this Code, as well as to perform at his own expense actions that, according to the law, the purchase and sale agreement or the usual requirements, are necessary to make the payment.

When the price is set depending on the weight of the goods, it is determined by net weight, unless otherwise provided in the purchase and sale agreement.

If the purchase and sale agreement stipulates that the price of a product is subject to change depending on the indicators that determine the price of the product (cost, expenses, etc.), but the method for revising the price is not determined, the price is determined based on the ratio of these indicators at the time conclusion of the contract and at the time of transfer of goods. If the seller is late in fulfilling the obligation to transfer the goods, the price is determined based on the ratio of these indicators at the time of concluding the contract and at the time of transfer of the goods provided for by the contract, and if the contract does not provide for the moment of transfer of the goods – at the time determined in accordance with Article 242 of this Code.

The rules provided for in part three of this article apply unless otherwise established by law or the purchase and sale agreement, and does not follow from the essence of the obligation.

Article 419. Payment for goods

If the legislation or the terms of the purchase and sale agreement does not imply an obligation to pay the price within a certain period of time, the buyer is obliged to pay it without delay after the seller transfers the goods to him or the goods and administrative documents for these goods.

If the purchase and sale agreement does not provide for payment by installments for the goods, the buyer is obliged to pay the seller an amount equal to the full price of the transferred goods.

If the buyer does not timely pay for the goods transferred in accordance with the purchase and sale agreement, the seller has the right to demand payment for the goods and payment of interest for the use of someone else’s funds.

If the buyer, in violation of the purchase and sale agreement, refuses to accept and pay for the goods, the seller has the right, at his choice, to demand payment for the goods or refuse to fulfill the contract.

In cases where the seller, in accordance with the purchase and sale agreement, is obliged to transfer to the buyer other goods, in addition to unpaid ones, he has the right to suspend the transfer of these goods until full payment for all previously transferred goods, unless otherwise provided by law or the contract.

Article 420. Advance payment for goods

In cases where the purchase and sale agreement provides for the buyer’s obligation to pay the price in full or in part before the seller transfers the goods (advance payment), the buyer must make payment within the period specified in the agreement, and if such a period is not provided for in the agreement, within the period determined in accordance with with Article 242 of this Code.

If the buyer fails to fulfill the obligation to pre-pay for the goods under the sales contract, the rules provided for in Article 256 of this Code are applied.

In the event that the seller, who has received the advance payment amount, does not fulfill the obligation to transfer the goods, the buyer has the right to demand the transfer of the paid goods or the return of the advance payment amount for the goods not transferred by the seller.

In the event that the seller does not fulfill the obligation to transfer pre-paid goods and is not otherwise provided for in the purchase and sale agreement, interest is payable on the amount of prepayment in accordance with Article 327 of this Code, from the day when the transfer of goods should have been made under the contract until the day the goods are transferred to the buyer or the amount previously paid returned to him. The contract may provide for the seller’s obligation to pay interest on the amount of the advance payment from the date of receipt of this amount from the buyer.

Article 421. Payment for goods sold on credit

In the event that the purchase and sale agreement provides for payment for the goods a certain time after its transfer to the buyer (sale of goods on credit), the buyer must make payment within the period specified in the agreement, and if such a period is not provided for in the agreement, within the period determined in accordance with Article 242 of this Code.

If the seller fails to fulfill the obligation to transfer the goods, the rules provided for in Article 256 of this Code are applied.

In the event that the buyer who has received the goods does not fulfill the obligation to pay for it within the period established by the purchase and sale agreement, the seller has the right to demand payment for the transferred goods or the return of the unpaid goods.

In the event that the buyer does not fulfill the obligation to pay for the transferred goods within the period established by the contract, and otherwise is not provided for by this Code or the purchase and sale agreement, interest is payable on the overdue amount in accordance with Article 327 of this Code from the day when the goods are due under the contract must be paid before the day the buyer pays for the goods.

The purchase and sale agreement may provide for the buyer’s obligation to pay interest in an amount corresponding to the price of the goods, starting from the day the goods are transferred by the seller.

Goods are sold on credit at prices valid on the day of sale, unless otherwise provided by law or contract.

From the moment, the goods are transferred to the buyer and until full payment is made, goods sold on credit are recognized as being pledged to the seller to ensure the buyer fulfills his obligation to pay for the goods.

Article 422. Payment for goods in installments

An agreement on the sale of goods on credit may provide for payment for the goods in installments.

An agreement for the sale of goods on credit with the condition of payment in installments is considered concluded if, along with other essential terms of the purchase and sale agreement, it specifies the price of the goods, the procedure, terms and amounts of payments.

When the buyer does not make the next payment within the period established by the contract for the goods sold in installments and transferred to him, the seller has the right to refuse to fulfill the contract and foreclose on the goods in the manner prescribed for the collection of the subject of pledge.

In the case provided for by an agreement on the sale of goods on credit, the buyer has the right to provide the paid part of the share of the received goods as security for the fulfillment of obligations.

Article 423. Insurance of goods

If the contract provides for the obligation of the seller or buyer to insure the goods, but the terms of insurance and the minimum amount for which the goods are insured are not specified, the amount of insurance compensation provided for in the insurance contract cannot be less than the price of the goods.

In cases where the party obligated to insure the goods does not provide insurance in accordance with the terms of the contract, the other party has the right to insure the goods and demand reimbursement of insurance costs from the obligated party or refuse to fulfill the contract.

Article 424. Retention of ownership rights by the seller

In cases where the purchase and sale agreement stipulates that the ownership of the goods transferred to the buyer is retained by the seller until payment for the goods or the occurrence of other circumstances, the buyer does not have the right to alienate the goods or dispose of them in any other way before the transfer of ownership rights to him, unless otherwise provided by law or a contract or does not follow from the purpose and properties of the goods.

In cases where, within the period stipulated by the purchase and sale agreement, the transferred goods are not paid for or other circumstances do not occur in which the ownership right passes to the buyer, the seller has the right to demand that the buyer return the goods to him, unless otherwise provided by the agreement.

§ 2. Retail purchase and sale

Article 425. Retail purchase and sale agreement

Under a retail purchase and sale agreement, the seller engaged in business activities undertakes to transfer to the buyer goods intended for personal, household or other use not related to business activities.

The retail purchase and sale agreement is public.

Article 426. Public offer of goods

Containing all the essential terms of the retail purchase and sale agreement, the offer of goods indicated in advertising of goods, catalogs, as well as other descriptions of goods addressed to an indefinite number of persons, is recognized as a public offer ( part two of Article 369 of this Code).

The display of goods, demonstration of their samples or provision of information about the goods sold (descriptions, catalogs, photographs, etc.) at the place of their sale is recognized as a public offer, regardless of whether the price and other essential terms of the purchase and sale agreement are indicated, except in the case of when the seller has clearly determined that the goods in question are not for sale.

Article 427. Providing the buyer with information about the product

The seller is obliged to provide the buyer with the necessary and reliable information about the product offered for sale, corresponding to the requirements established by law or usually imposed in retail trade on the content and methods of providing such information.

The buyer has the right, before concluding a retail purchase and sale agreement, to inspect the goods, demand that the properties be checked in his presence or a demonstration of the use of the goods, unless this is excluded due to the nature of the goods and does not contradict the rules adopted in retail trade.

If the buyer is not given the opportunity to immediately obtain at the point of sale information about the product specified in parts one and two of this article, he has the right to demand from the seller compensation for losses caused by unjustified avoidance of concluding a retail purchase and sale agreement, and if the agreement is concluded, within a reasonable period to refuse to fulfill the contract, to demand the return of the amount paid for the goods and compensation for losses.

The seller, who did not provide the buyer with the opportunity to obtain relevant information about the product, is also responsible for defects in the product that arose after its transfer to the buyer, in respect of which the buyer proves that they arose due to his lack of such information.

Article 428. Sale of goods with the condition of its acceptance by the buyer within a certain period of time

The parties may enter into a retail purchase and sale agreement with the condition that the buyer accepts the goods within a period specified in the agreement, during which this product cannot be sold to another buyer.

Unless otherwise provided by the retail purchase and sale agreement, the buyer’s failure to appear or failure to take other necessary actions to accept the goods within the period specified in the agreement may be considered by the seller as the buyer’s refusal to fulfill the agreement.

Additional costs of the seller to ensure the transfer of goods to the buyer within the period specified in the retail purchase and sale agreement are included in the price of the goods, unless otherwise provided by law or the contract.

Article 429. Sale of goods based on a sample

The parties may enter into a contract for the purchase and sale of goods based on a sample (description, catalog, etc.).

Execution of a contract for the sale of goods according to a sample is carried out in accordance with the rules of Article 431 of this Code.

Before transferring the goods, the buyer has the right to refuse to fulfill the retail purchase and sale agreement, subject to reimbursement to the seller of the necessary expenses incurred in connection with the performance of actions to fulfill the agreement.

Article 430. Sale of goods using a machine

In cases where the sale of goods is carried out using a machine, the owner of the machine is obliged to provide the buyer with information about the seller of the goods by placing on the machine or otherwise providing the buyer with information about the name (company name) of the seller, his location, operating mode, as well as actions which the buyer must complete to receive the goods.

A retail purchase and sale agreement using a machine is considered concluded from the moment the buyer completes the actions necessary to receive the goods.

If the buyer is not provided with the paid goods, the seller is obliged to ensure immediate provision of the goods to the buyer or return the amount paid by him. In case of failure to fulfill this obligation, the buyer has the right to demand compensation from the seller for damages caused.

In cases where the machine is used to change money, purchase tokens of payment or exchange currency, the rules on retail purchase and sale are applied, unless otherwise follows from the essence of the obligation.

Article 431. Sale of goods with the condition of their delivery to the buyer

In cases where a retail purchase and sale agreement is concluded with the condition of delivery of goods to the buyer, the seller is obliged, within the period established by the agreement, to deliver the goods to the place specified by the buyer, and if the place of delivery of the goods is not indicated by the buyer, to the place of residence of the citizen or the location of the legal entity. person who is the buyer.

A retail purchase and sale agreement is considered executed by the seller from the moment the goods are delivered to the buyer, and in its absence – to any person who presents a receipt or other document evidencing the conclusion of the agreement or the delivery of the goods, unless otherwise provided by law, the contract or follows from the essence of the obligation.

In cases where the retail purchase and sale agreement does not specify the time of delivery of the goods for delivery to the buyer, the goods must be delivered within a reasonable time after receipt of the buyer’s request.

Article 432. Price and payment for goods

The buyer is obliged to pay for the goods at the price announced by the seller at the time of concluding the retail purchase and sale agreement, unless otherwise provided by law or follows from the essence of the obligation.

In cases where the retail purchase and sale agreement provides for advance payment for the goods, the buyer’s failure to pay for the goods within the period established by the agreement is recognized as the buyer’s refusal to fulfill the agreement, unless otherwise provided by agreement of the parties.

Agreements for the retail purchase and sale of goods on credit, including those with the condition that the buyer pays for goods in installments, are not subject to application of the rules provided for in parts four and five of Article 421 of this Code.

The buyer has the right to pay for the goods in full at any time within the installment payment period established by the contract.

Article 433. Exchange of goods of proper quality

The buyer has the right, within ten days from the moment the non-food product is transferred to him, unless a longer period is announced the seller, to exchange the purchased product of proper quality at the place of purchase or other places announced by the seller for a similar product of a different size, shape, dimension, style, color, configurations, etc., and making if necessary recalculation with the seller in case of a difference in price.

If the seller does not have the goods required for exchange, the buyer has the right to return the purchased goods to the seller and receive the amount of money paid for it.

The buyer’s request for an exchange or return of goods must be satisfied if the goods have not been used, their consumer properties are preserved and there is evidence of their purchase from this seller.

The list of goods that are not subject to exchange or return on the grounds specified in this article is determined in the manner prescribed by law.

Article 434. Rights of the buyer in case of sale of goods of inadequate quality

The buyer to whom a product of inadequate quality is sold, if its defects were not specified at the conclusion of the contract, has the right, at his own discretion, to demand:

replacement with a good quality product of a similar brand (model, article);

replacement with the same product of another brand (model, article) with a corresponding recalculation of the purchase price;

free elimination of defects in goods or reimbursement of costs for correcting defects by the buyer or a third party;

proportionate reduction in the purchase price;

termination of the contract with compensation for losses incurred.

When returning to the buyer the amount of money paid for the goods, the seller does not have the right to withhold from it the amount by which the value of the goods has decreased due to full or partial use of the goods, loss of their marketable condition or other similar circumstances.

Article 435. Compensation for the difference in price when replacing goods, reducing the purchase price and returning goods of inadequate quality

When replacing goods of inadequate quality with corresponding goods of proper quality, the seller does not have the right to demand compensation for the difference between the price of the goods established by the retail purchase and sale agreement and the price of the goods existing at the time the goods were replaced or the court made a decision to replace the goods.

When replacing a product of inadequate quality with a product of similar quality, but different in size, style, grade or other characteristics, the difference between the price of the replaced product at the time of replacement and the price of the product transferred in exchange for the product of inadequate quality is subject to compensation. If the buyer’s requirement is not satisfied by the seller, these prices are determined at the time the court makes a decision to replace the goods.

If a demand is made for a proportionate reduction in the purchase price of a product, the price of the product at the time the demand for a discount is presented is taken into account, and if the buyer’s demand is not voluntarily satisfied, at the time the court makes a decision on a proportionate reduction in price.

When returning goods of inadequate quality to the seller, the buyer has the right to demand compensation for the difference between the price of the goods established by the retail purchase and sale agreement and the price of the corresponding goods at the time of voluntary satisfaction of his claim, and if the claim is not voluntarily satisfied, at the time of the court’s decision.

Article 436. Responsibility of the seller and fulfillment of obligations in kind

If the seller fails to fulfill an obligation under a retail purchase and sale agreement, compensation for losses and payment of a penalty do not relieve the seller from fulfilling the obligation in kind.

§ 3. Delivery

Article 437. Supply contract

Under a supply agreement, the supplier-seller engaged in business activities undertakes to transfer, within a specified period or terms, the goods produced or purchased by him to the buyer for use in business activities or for other purposes not related to personal, family, home and other similar use, and The buyer undertakes to accept the goods and pay for them.

Article 438. Duration of the supply agreement

The supply contract can be concluded for one year, for a period of more than one year (long-term contract) or for another period provided for by agreement of the parties.

If the supply contract does not specify its validity period, the contract is considered concluded for one year.

If in a long-term contract the quantity of goods to be supplied or other terms of the contract are determined for a year or a longer period, the contract must establish a procedure for agreeing on these conditions by the parties for subsequent periods until the end of the contract. If there is no such procedure in the contract, the contract is recognized as concluded, respectively, for one year or for the period for which the terms of the contract are agreed upon.

If one of the parties to a long-term contract refuses or evades agreement on the quantity of goods to be supplied or other terms of the contract for subsequent periods in the manner established by the contract, the other party has the right to apply to the court with a demand to determine the conditions for the supply of goods for the corresponding periods or to terminate the contract.

Article 439. Settlement of disagreements when concluding a supply agreement

In the event that one party’s proposal to conclude an agreement for the supply of goods is sent in the form of a draft agreement to the other party, which, having agreed to conclude an agreement on other terms, no later than thirty days after receiving the draft, draws up a protocol of disagreements and returns it with a signed agreement, the party who received the protocol disagreements, is obliged to take measures within thirty days (if possible, together with the other party) to agree on the terms of the agreement or notify the other party in writing of its refusal to conclude it.

A party that has received a protocol of disagreements regarding the terms of a supply agreement, but has not taken measures to agree on the terms of the agreement and has not notified the other party of the refusal to enter into an agreement within the period established by part one of this article, is obliged to compensate for losses caused by avoidance of agreeing on the terms of the agreement.

Article 440. Delivery periods

If the parties provide for the delivery of goods during the term of the contract in separate batches and the delivery dates for individual batches (delivery periods) are not defined in it, then the goods must be supplied in equal batches by month, unless otherwise follows from the legislation, the essence of the obligation or business customs.

Along with defining delivery periods, the contract may establish a schedule for the delivery of goods (ten-day, daily, hourly, etc.).

Early delivery of goods can be made with the consent of the buyer. Goods delivered ahead of schedule and accepted by the buyer are counted towards the quantity of goods to be delivered in the next period.

Article 441. Procedure for delivery of goods

The supply of goods is carried out by the supplier by shipping (transferring) the goods to the buyer under the contract or to the person specified in the contract as the recipient.

In the event that the supply agreement provides for the buyer’s right to give instructions to the supplier about the shipment of goods to recipients (shipping orders), the shipment (transfer) of goods is carried out by the supplier to the recipients specified in the shipping order.

The contents of the shipping order and the period for its sending by the buyer to the supplier are determined by the supply agreement. If the deadline for sending the shipping order is not provided for in the contract, it must be sent to the supplier no later than thirty days before the delivery period.

Failure by the buyer to submit a shipping order within the prescribed period gives the supplier the right to refuse either to fulfill the supply agreement or demand payment from the buyer for the goods. In addition, the supplier has the right to demand compensation for losses caused in connection with failure to provide a shipping order.

Article 442. Delivery of goods

Delivery of goods is carried out the supplier by shipping them by transport provided for in the supply agreement and on the terms determined by him.

If the supply agreement does not specify what type of transport or under what conditions delivery is carried out, the right to choose the type of transport or determine the conditions for delivery of goods belongs to the supplier, unless otherwise follows from the law, the essence of the obligation or business customs.

Article 443. Compensation for shortfalls in goods delivery

A supplier who has allowed a short supply of goods in a separate delivery period is obliged to make up for the short-delivered quantity of goods in the next period (periods) within the validity period of the supply contract, unless otherwise provided by the contract.

Under a long-term contract, the quantity of goods short-supplied by the supplier in a separate delivery period is subject to replenishment in the next period (periods) within the year in which the goods were short-delivered, unless otherwise provided by the supply contract.

In the event that goods are shipped by the supplier to several recipients specified in the supply agreement or in the buyer’s shipping order, goods delivered to one recipient in excess of the quantity provided for in the contract or shipping order are not counted towards covering shortfalls to other recipients and are subject to replenishment the supplier, unless otherwise provided for in the contract.

Article 444. Refusal to accept goods whose delivery is overdue

The buyer has the right, after notifying the supplier, to refuse to accept goods whose delivery is overdue, unless otherwise provided by the contract. The buyer is obliged to accept and pay for goods delivered before the supplier receives notification.

Article 445. Assortment of goods when making up for shortfalls

The range of goods, shortfalls of which are subject to replenishment, is determined by agreement of the parties. In the absence of such an agreement, the supplier is obliged to make up for the under delivered quantity of goods in the assortment established for the period in which the under delivery occurred.

The supply of goods of one name in a larger quantity than provided for in the supply contract does not count toward the shortfall of goods of another name included in the same assortment, and is subject to replenishment, except in cases where such delivery is made with the prior written consent of the buyer.

Article 446. Acceptance of goods by the buyer

The buyer (recipient) is obliged to take all necessary actions to ensure acceptance of the goods delivered in accordance with the contract.

The goods accepted by the buyer (recipient) must be inspected him within the period specified by law, the supply agreement or business customs.

The buyer (recipient) is obliged, within the same period, to check the quantity and quality of the accepted goods in the manner established by law, the supply agreement or business customs, and to immediately notify the supplier in writing of any identified inconsistencies or defects in the goods.

In case of receipt of delivered goods from a transport organization, the buyer (recipient) is obliged to check the compliance of the goods with the information specified in the transport and accompanying documents, and to accept these goods from the transport organization in compliance with the established rules.

Article 447. Responsible storage of goods not accepted by the buyer

When the buyer (recipient), in accordance with the law or the supply agreement, refuses the goods transferred by the supplier, he is obliged to ensure the safety of these goods (secure storage) and immediately notify the supplier.

The supplier is obliged to remove the goods accepted by the buyer (recipient) for safekeeping or dispose of them within a reasonable time. If the supplier does not dispose of the goods within this period, the buyer has the right to sell the goods or return them to the supplier.

Necessary expenses incurred by the buyer in connection with the acceptance of the goods for safekeeping, the sale of the goods or their return to the seller are subject to reimbursement by the supplier. In this case, the proceeds from the sale of goods are transferred to the supplier minus what is due to the buyer.

In cases where the buyer, without grounds established by law or contract, does not accept the goods from the supplier or refuses the goods, the supplier has the right to demand payment for the goods from the buyer.

Article 448. Sampling of goods

If the supply agreement provides for the selection of goods by the buyer (recipient) at the location of the supplier, the buyer (recipient) must inspect the goods transferred to him at the place of their transfer. If it is revealed that the goods do not comply with the contract, he has the right to refuse to receive them.

Failure by the buyer (recipient) to pick up the goods within the time established by the delivery contract, or in its absence, within a reasonable time after receiving the supplier’s notification of the readiness of the goods, gives the supplier the right to refuse to fulfill the contract or demand payment for the goods from the buyer.

Article 449. Payments for goods supplied

The buyer pays for the supplied goods in compliance with the procedure and form of payment stipulated by the contract. If the procedure and form of settlements are not determined by agreement of the parties, then settlements are carried out by payment orders.

If the contract provides for the delivery of goods in separate parts included in the kit, then payment for the goods by the buyer is made after shipment (selection) of the last part included in the kit, unless otherwise provided by the contract.

If the supply agreement stipulates that, the recipient (payer) makes the payment for goods and the latter unreasonably refused payment or did not pay for the goods within the period established by the agreement, the supplier has the right to demand payment from the buyer for the goods delivered.

Article 450. Return of containers and packaging

Unless otherwise provided by the supply agreement, the buyer (recipient) is obliged to return to the supplier the reusable containers and packaging means in which the goods were received, in the manner and within the time limits established by law.

Other containers and packaging must be returned to the supplier only in cases stipulated by the supply agreement.

Article 451. Consequences of supplying goods of inadequate quality

The buyer (recipient) to whom goods of inadequate quality were delivered has the right to present to the supplier the requirements provided for in Article 434 of this Code, except for the case when the supplier, having received the buyer’s notification of the defects of the goods supplied, immediately replaces the delivered goods with goods of proper quality.

The buyer (recipient) who sells the goods supplied to him at retail has the right to demand replacement within a reasonable time of goods of inadequate quality returned by the consumer, unless otherwise provided by the supply agreement.

Article 452. Consequences of delivery of incomplete goods

The buyer (recipient), whom goods were delivered in violation of the terms of the supply contract, legal requirements or the usual requirements for completeness, has the right to present to the supplier the requirements provided for in Article 413 of this Code, except for the case when the supplier, who received the buyer’s notification about the incompleteness of the goods supplied, without delay will complete the goods or replace them with complete goods.

The buyer (recipient) who sells goods at retail has the right to demand that incomplete goods returned by the consumer be replaced within a reasonable time with complete goods, unless otherwise provided by the delivery contract.

Article 453. Buyer’s rights in case of short delivery of goods, failure to comply with requirements for eliminating defects in goods or for replenishment of goods

If the supplier, has not delivered the quantity of goods stipulated by the supply agreement or has not complied with the buyer’s (recipient’s) requirements to replace goods of inadequate quality or to complete the goods within the established period, the buyer has the right to purchase the undelivered goods from other persons with all necessary and reasonable costs for their acquisition being charged to the supplier.

Calculation of the buyer’s expenses for purchasing goods from other persons in cases of short delivery by the supplier or failure to comply with the buyer’s requirements to eliminate defects in goods or to complete the goods is carried out according to the rules provided for in part one of Article 456 of this Code.

The buyer (recipient) has the right to refuse to pay for goods of inadequate quality and incomplete goods, and if such goods have been paid for, to demand a refund of the amounts paid until the defects are eliminated and the goods are completed or replaced.

Article 454. Penalty for short delivery of goods

The penalty established by law or contract for short delivery or delay in delivery of goods is collected from the supplier before the actual fulfillment of the obligation within the term of the contract, unless a different procedure for collecting the penalty is established by law or contract.

Article 455. Unilateral refusal to execute a supply contract

Unilateral refusal to fulfill the supply agreement (in whole or in part) is permitted in the event of a significant violation of the agreement by one of the parties.

A violation of a supply agreement by a supplier may be considered significant in the following cases:

deliveries of goods of inadequate quality with defects that cannot be eliminated within a timeframe acceptable to the buyer;

repeated violation of delivery deadlines.

A violation of the supply agreement by the buyer may be considered significant in the following cases:

repeated violation of payment terms for goods;

repeated non-selection of goods.

The agreement of the parties may provide for other grounds for unilateral refusal to execute the supply agreement or unilateral change thereof.

The supply contract is considered amended or terminated from the moment a party receives a notice from the other party of a unilateral refusal to fulfill the contract in whole or in part, unless a different period for termination or amendment of the contract is provided for in the notification or is not determined by agreement of the parties.

Article 456. Calculation of losses upon termination of a contract

If, within a reasonable period of time after termination of the contract due to a breach of obligation by the seller, the buyer purchased goods from another person at a higher but reasonable price instead of those provided for in the contract, the buyer may present to the seller a claim for compensation for losses in the form of the difference between the price established in the contract and the price for the transaction made in exchange.

If, within a reasonable time after termination of the contract due to a violation of the obligation by the buyer, the seller sold the goods to another person at a price lower than that stipulated by the contract, but reasonable, the seller may present to the buyer a claim for compensation for losses in the form of the difference between the price established in the contract and the price of the transaction made in exchange.

If, after termination of the contract on the grounds provided for in parts one and two of this article, a transaction has not been made to replace the terminated contract and there is a current price for this product, the party may make a claim for compensation for losses in the form of the difference between the price established in the contract and the current price for the moment of termination of the contract.

The current price is the price usually charged under comparable circumstances for a similar product in the place where the transfer of the goods was to take place. If a current price, does not exist at that location, the current price applicable at another location may be used and may serve as a reasonable substitute, taking into account the difference in the cost of transporting the item.

Satisfaction of the requirements provided for by this article does not relieve the party that has not fulfilled or improperly fulfilled the obligation from compensation for other losses caused to the other party on the basis of, Article 14 of this Code.

§ 4. State contract for the supply of goods

Article 457. Supply of goods for state needs

The supply of goods for state needs is carried out based on a state contract for the supply of goods for state needs, as well as contracts for the supply of goods for state needs concluded in accordance with it. State needs are recognized as the needs of the Republic of Uzbekistan, determined in accordance with the procedure established by law, and provided at the expense of the state budget and extra-budgetary sources of financing.

The rules of Articles 437 – 456 of this Code also apply to relations for the supply of goods for state needs. Relations not regulated by this Code are subject to other legislation regulating the supply of goods for government needs.

Article 458. State contract for the supply of goods for state needs

Under a state contract for the supply of goods for state needs (hereinafter referred to as the state contract), the supplier (performer) undertakes to transfer the goods within a specified period to the state customer or, at his direction, on the basis of, a supply agreement to another person, and the state customer undertakes to ensure the established payment terms for the goods supplied.

Article 459. Grounds for concluding a state contract

A government contract is concluded based on an order from a government customer for the supply of goods for government needs, accepted by the supplier (performer).

For a government customer who has placed an order accepted by a supplier (performer), the conclusion of a government contract is mandatory.

The conclusion of a state contract is mandatory for the supplier (performer) only in cases established by law, and on the condition that the state customer will compensate for all losses that may be caused to the supplier (performer) in connection with the implementation of the state contract.

The condition for compensation of losses provided for in part three of this article does not apply to a state-owned enterprise.

If an order for the supply of goods for state needs is placed through a competition, the conclusion of a state contract with the supplier (performer) declared the winner of the competition is mandatory for the state customer.

Article 460. Procedure for concluding a state contract

A draft government contract is developed by the government customer and sent to the supplier (performer), unless otherwise provided by agreement between them.

The party, that received the draft state contract, no later than thirty days, signs it and returns one copy of the state contract to the other party, and if there are disagreements on the terms of the state contract, within the same period draws up a protocol of disagreements and sends it along with the signed state contract to the other party or notifies it on refusal to conclude a government contract.

The party that received a state contract with a protocol of disagreements must, within thirty days, consider the disagreements, take measures to agree on the terms of the contract with the other party and notify it of the acceptance of the state contract in the agreed version or of the rejection of the protocol of disagreements. After this period, the interested party to the court can submit all unresolved disagreements within thirty days.

In cases where a state contract is concluded based on the results of a competition for placing an order for the supply of goods for state needs, the state contract must be concluded no later than thirty days from the date of the competition.

If a party for whom the conclusion of a state contract is mandatory avoids concluding it, the other party has the right to apply to the court with a demand to force the other party to conclude a state contract.

Article 461. Execution of a state contract

In cases where, in accordance with the terms of the state contract, the supply of goods is carried out directly to the state customer or, at his direction (shipment order), to another person (recipient), the relations of the parties to the execution of the contract are regulated by the rules provided for in Articles 437 – 456 of this Code.

If the state contract stipulates, that the supply of goods is carried out by the supplier (performer) to buyers under contracts for the supply of goods for state needs, determined by the state customer, the state customer, no later than thirty days from the date of signing the state contract, sends a notice to the supplier-executor and the buyer about the attachment of the buyer to the supplier ( performer).

Notification of the buyer’s attachment to the supplier (performer) is the basis for concluding an agreement for the supply of goods for government needs.

In cases where the supply of goods for state needs is carried out to recipients specified in shipping orders, the state customer makes payment for the goods, unless a different payment procedure is provided for by the state contract.

When delivering goods to buyers under contracts for the supply of goods for state needs, payment for goods is made by buyers at prices determined in accordance with the state contract, unless a different procedure for determining prices and settlements is provided for by the state contract.

When the buyer pays for goods under a government contract for the supply of goods for government needs, the state customer is recognized as a guarantor for this obligation of the buyer.

Article 462. Conclusion of a contract for the supply of goods for state needs

The supplier (performer) is obliged to send a draft contract for the supply of goods for government needs to the buyer specified in the notice of attachment no later than thirty days from the date of receipt of the notice from the government customer, unless a different procedure for preparing the draft contract is provided for by the government contract or the draft contract is not submitted by the buyer.

The party, that received the draft contract for the supply of goods for state needs, no later than thirty days, signs it and returns one copy of the contract to the other party. If there are disagreements on the terms of the contract, within the same period draws up a protocol of disagreements and sends it along with the signed contract to the other party.

The party that has received a contract for the supply of goods for government needs with a protocol of disagreements must, within thirty days. Consider the disagreements, take measures to agree on the terms of the contract with the other party and notify it of the acceptance of the contract in the agreed version or of the rejection of the protocol of disagreements. Unresolved disagreements may be submitted by the interested party to the court for consideration within thirty days.

If the supplier (performer) refuses to enter into an agreement for the supply of goods for government needs, the buyer has the right to go to court with a demand to force the supplier (performer) to enter into an agreement on the terms of the draft agreement developed by the buyer.

Article 463. Refusal of the buyer to enter into a contract for the supply of goods for state needs

The buyer has the right fully or partially refuse the goods specified in the attachment notice and to enter into an agreement for their supply. In this case, the supplier (performer) must immediately notify the state customer and has the right to demand that the state customer issue a notice of the attachment of another buyer to it.

The state customer, no later than thirty days from the date of receipt of the supplier’s (performer’s) notification, either issues a notice of the attachment of another buyer to the supplier (performer), or sends the supplier (performer) a shipping order indicating the recipient of the goods, or communicates its agreement to accept and pay for the goods.

If the state customer fails to fulfill the obligations provided for either in part two of this article, the supplier (performer) has the right to require the state customer to accept and pay for the goods, or to sell the goods at his own discretion, assigning reasonable costs associated with their sale to the state customer.

Article 464. Compensation for losses caused in connection with the performance or termination of a state contract

Unless otherwise provided by legislation on the supply of goods for state needs or a state contract, losses caused to the supplier (performer) in connection with the implementation of the state contract ( part three of Article 459 of this Code) are subject to compensation by the state customer no later than thirty days from the date of transfer of the goods in accordance with the government contract.

In the event that losses caused to the supplier (performer) in connection with the implementation of a state contract are not compensated in accordance with the state contract, the supplier (performer) has the right to refuse to perform the state contract and demand compensation for losses caused by termination of the state contract.

Upon termination of a government contract on the grounds specified in part two of this article, the supplier has the right to refuse to fulfill the contract for the supply of goods for government needs. The state customer compensates losses caused to the buyer by such refusal of the supplier.

§ 5. Contracting

Article 465. Contract agreement

Under a contracting agreement, the manufacturer of agricultural products undertakes to transfer (transfer) agricultural products to the procurer – the person purchasing such products for processing or sale – within a specified time frame, and the procurer undertakes to accept (accept) these products, pay for them within a specified time frame at a certain price .

The rules on the supply contract are applied to the contracting agreement, and in appropriate cases – on the state contract for the supply of goods for state needs, unless otherwise established by this Code or does not follow from the essence of the obligation.

Article 466. Obligations of the producer of agricultural products

The manufacturer of agricultural products is obliged to transfer to the procurer the grown (produced) agricultural products in the quantity and assortment stipulated by the contract agreement.

If it becomes known that due to the failure of the product manufacturer to fulfill the obligation specified in the first part of this article, agricultural products cannot be obtained in the quantity and assortment provided for by the contract, the procurer has the right to demand termination or modification of the contract and compensation for losses.

Article 467. Obligations of the procurer

The procurer is obliged to accept (accept) agricultural products from the manufacturer at his location and ensure (ensure) their export, unless otherwise established by the contract agreement.

If the acceptance of agricultural products is carried out at the location of the procurer or another place indicated by him, the procurer does not have the right to refuse to accept agricultural products delivered by its manufacturer in accordance with the contract agreement and within the period stipulated by it.

In the event that the procurer has not ensured the export or acceptance of agricultural products, he pays the manufacturer the cost of agricultural products and the costs of their delivery.

The procurer carrying out the processing of agricultural products received under a contracting agreement is obliged to return to the manufacturer, upon his request, waste from the processing of agricultural products with payment at a price agreed upon by the parties.

§ 6. Energy supply

Article 468. Energy supply contract

Under an energy supply agreement, the energy supplying organization undertakes to supply energy to the subscriber (consumer) through the connected network, and the subscriber undertakes to pay for the received energy. To comply with the regime of its consumption stipulated in the agreement, to ensure the safe operation of the energy networks under its control and the serviceability of the devices and equipment used by it related to with energy consumption.

Article 469. Conclusion and extension of an energy supply contract

An energy supply contract is concluded with the subscriber if he has a power receiving installation connected to the networks of the energy supply organization in the manner prescribed by law, as well as the necessary equipment and energy consumption meters.

In the case where the subscriber under an energy supply contract is a citizen who uses energy for domestic consumption, the contract is considered concluded from the moment the subscriber is first actually connected in the prescribed manner to the connected network.

In the absence of an application from one of the parties to terminate or amend the energy supply contract at the end of the term, it is considered extended for the same period and on the same conditions as provided for in the contract. When extending the contract for a new term, its terms may be changed by agreement of the parties.

If one of the parties, before the expiration of the contract, makes a proposal to conclude a new contract, the relations of the parties until the conclusion of a new contract are governed by the previously concluded contract.

Article 470. Amount of energy

The energy supplying organization is obliged to supply energy to the subscriber through the connected network in the quantity stipulated by the energy supply agreement and in compliance with the supply mode agreed upon by the parties. The indicators of the metering devices determine the amount of energy supplied by the energy supply organization and received by the subscriber.

An energy supply agreement may provide for the subscriber’s right to change the amount of energy he receives, determined by the agreement, subject to reimbursement of expenses incurred by the energy supply organization in connection with ensuring the supply of energy in quantities not stipulated by the agreement.

In the case where the subscriber under an energy supply contract is a citizen who uses energy for domestic consumption, he has the right to use energy in the amount he needs.

Article 471. Consequences of violation of the terms of the energy supply contract on the amount of energy

If the energy supplying organization supplies the subscriber with less energy through the connected network than is provided for in the energy supply contract, the rules provided for in Article 399 of this Code are applied, unless otherwise provided by law, the contract or follows from the essence of the obligation.

Article 472. Energy quality

The quality of the energy supplied by the energy supply organization must comply with the requirements established by standardization legislation or the energy supply agreement.

In case of violation by the energy supplying organization of the requirements for energy quality, the rules provided for in Article 408 of this Code are applied, unless otherwise provided by law, the energy supply agreement or does not follow from the essence of the obligation.

Article 473. Obligations of the subscriber for the maintenance and operation of networks, devices and equipment

The subscriber is obliged to ensure the proper technical condition and safety of the operated energy networks, devices and equipment, comply with the established energy consumption regime, and immediately notify the energy supplying organization about accidents, fires, malfunctions of energy metering devices and other violations that arise during the use of energy.

In the case where the subscriber under an energy supply contract is a citizen who uses energy for domestic consumption, the obligation to ensure the proper technical condition and safety of energy networks, as well as energy consumption metering devices, rests with the energy supply organization, unless otherwise established by law.

Requirements for the technical condition and operation of energy networks, devices and equipment, as well as the procedure for monitoring their compliance, are determined by law.

Article 474. Payment for energy

Payment for energy is made for energy actually accepted the subscriber, determined in accordance with Article 470 of this Code, unless otherwise provided by law or the energy supply agreement.

Article 475. Transfer of energy by a subscriber to another person

The subscriber may transfer the energy he received from the energy supplying organization through the connected network to another person (sub subscriber) only with the consent of the energy supplying organization.

The rules of this paragraph apply to the contract for the transfer of energy by a subscriber to a sub-subscriber, unless otherwise provided by law or the energy supply contract.

When transferring energy to a sub-subscriber, the subscriber remains responsible to the energy supplying organization, unless otherwise provided by law.

Article 476. Amendment and termination of an energy supply contract

An interruption in the supply, cessation or limitation of the supply of energy is allowed by agreement of the parties, with the exception of cases where the unsatisfactory condition of the subscriber’s power installations, certified by the state energy supervision body, threatens an accident or poses a threat to the life and safety of citizens. The energy supplying organization must warn the subscriber about an interruption in the supply, termination or limitation of energy supply.

A break in the supply, cessation or limitation of the supply of energy without the consent of the subscriber and without warning him, but with his immediate notification, is permitted if it is necessary to take urgent measures to prevent or eliminate an accident in the system of the energy supplying organization.

In the case where the subscriber under an energy supply contract is a citizen who uses energy for domestic consumption, he has the right to terminate the contract unilaterally, subject to notification of this to the energy supply organization and full payment for the energy used.

In the event that the subscriber under an energy supply contract is a citizen, who uses energy for domestic consumption, than the energy supply organization has the right to unilaterally refuse to fulfill the contract due to the subscriber’s failure to pay for the energy used, provided that the subscriber is notified no later than a month before the refusal to fulfill the contract.

In the event that the subscriber under an energy supply agreement is a legal entity, the energy supply organization has the right to refuse to fulfill the agreement unilaterally on the grounds provided for in Article 455 of this Code, except for cases established by law.

Article 477. Liability under an energy supply contract

In cases of non-fulfillment or improper fulfillment of obligations under the energy supply contract, the energy supplying organization is obliged to compensate for the losses caused by this, and the subscriber is obliged to compensate for the actual damage caused.

If interruptions in the supply of energy were the result of regulation by the energy supplying organization of the consumption regime in the event of a lack of power and energy, carried out based on legislation, the energy supplying organization is liable for non-fulfillment or improper fulfillment of contractual obligations only if it is at fault.

Article 478. Application of the rules of the energy supply agreement to other supply relations through the connected network

The rules of this paragraph apply to relations for the supply of thermal energy through the connected network, unless otherwise established by law.

The rules of this paragraph apply to relations for the supply of gas, oil and petroleum products, water and other goods through the connected network, unless otherwise established by law, agreement or follows from the essence of the obligation.

§ 7. Sale of real estate

Article 479. Contract for the sale of real estate

Under a real estate purchase and sale agreement (real estate sale agreement), the seller undertakes to transfer into the ownership of the buyer a plot of land, a building, a structure, an apartment or other real estate ( Article 83 of this Code).

The rules provided for by this paragraph apply to the sale of enterprises insofar as otherwise is not provided for by the rules on the agreement for the sale of an enterprise (Articles 489 – 496 of this Code).

Article 480. Form of contract for the sale of real estate

The contract for the sale of real estate is concluded in writing by drawing up one document signed by the parties (part four of Article 366 of this Code).

Failure to comply with the form of the contract for the sale of real estate entails its invalidity.

Article 481. State registration of transfer of ownership of real estate

The transfer of ownership of real estate under a real estate sale agreement to the buyer is subject to state registration.

Execution of a contract for the sale of real estate by the parties before state registration of the transfer of ownership is not a basis for changing their relations with third parties.

If one of the parties evades state registration of the transfer of ownership of real estate, the court has the right, at the request of the other party, to make a decision on state registration of the transfer of ownership. A party that unreasonably evades state registration of the transfer of ownership must compensate the other party for losses caused by the delay in registration.

Article 482. Rights to a land plot upon sale of a building, structure or other real estate located on it

Under a contract for the sale of a building, structure or other real estate, the buyer, simultaneously with the transfer of ownership of such real estate, is transferred the rights to that part of the land plot that is occupied by this real estate and is necessary for its use.

In the case where the seller is the owner of the land plot on which the property being sold is located, the buyer is transferred ownership or is given the right to lease or other right to the corresponding part of the land plot provided for in the real estate sale agreement.

If the contract does not define the right to the corresponding land plot transferred to the buyer of the real estate, the buyer is given the right of ownership to that part of the land plot that is occupied by the real estate and is necessary for its use.

The sale of real estate located on a land plot that does not belong to the seller by right of ownership is permitted without the consent of the owner of this plot, unless this contradicts the conditions of use of such a plot established by law or agreement. When selling such real estate, the buyer acquires the right to use the corresponding part of the land plot under the same conditions as the seller of the real estate.

Article 483. Rights to real estate upon sale of a land plot

In cases where the land plot on which a building, structure or other real estate belonging to the seller is located is sold without transferring the ownership of the buyer of this real estate, the seller retains the right to use the part of the land plot that is occupied by the real estate and is necessary for its use, under conditions determined sales agreement.

If the conditions for the use of the relevant part of the land plot are not determined by the contract for its sale, the seller retains the right of limited use (easement) of that part of the land plot that is occupied by real estate and is necessary for its use in accordance with its purpose.

Article 484. Definition of the subject in a contract for the sale of real estate

The contract for the sale of real estate must contain data that makes it possible to definitely identify the real estate to be transferred to the buyer under the contract, including data that determines the location of the real estate on the relevant land plot or as part of other real estate.

In the absence of this data in the contract, the condition regarding the real estate to be transferred is considered not agreed upon by the parties, and the corresponding contract is not considered concluded.

Article 485. Price in a contract for the sale of real estate

The contract for the sale of real estate must stipulate the price of this property.

If the contract does not contain a condition agreed upon in writing by the parties regarding the price of real estate, the contract for its sale is considered not concluded. In this case, the rules for determining the price provided for in part four of Article 356 of this Code do not apply.

Unless otherwise provided by law or a contract for the sale of real estate, the price of a building, structure or other real estate located on a land plot established therein includes the price of the corresponding part of the land plot or the right to it transferred with this real estate.

In cases where the price of real estate in the contract for the sale of real estate is set per unit of its area or other indicator of its size, the total price of such real estate to be paid is determined based on the actual size of the real estate transferred to the buyer.

Article 486. Transfer of real estate

The transfer of real estate by the seller and its acceptance by the buyer is carried out according to a transfer deed or other transfer document signed by the parties.

Unless otherwise provided by law or contract, the seller’s obligation to transfer real estate to the buyer is considered fulfilled after the delivery of this property to the buyer and the signing of the relevant transfer document by the parties.

Failure of one of the parties to sign a document on the transfer of real estate on the terms stipulated by the contract is considered a refusal, respectively, of the seller’s obligation to transfer the property, and the buyer’s refusal of the obligation to accept the property.

Acceptance by the buyer of real estate that does not comply with the terms of the contract for the sale of real estate, including in cases where such non-compliance is specified in the document on the transfer of real estate, is not a basis for releasing the seller from liability for improper performance of the contract.

Article 487. Consequences of transfer of real estate of inadequate quality

If the seller transfers to the buyer real estate that does not comply with the terms of the contract for the sale of real estate on its quality. The rules of Article 434 of this Code are applied, with the exception of the provisions on the buyer’s right to demand the replacement of goods of inadequate quality with goods of proper quality.

Article 488. Peculiarities of the sale of residential premises

An essential condition of the contract for the sale of a residential building, apartment, part of a residential building or apartment in which persons live who, in accordance with the law. Retain the right to use this residential premises after its acquisition by the buyer, is a list of these persons indicating their rights to use the residential premises being sold.

A contract for the sale of a residential building, apartment, and part of a residential building or apartment is subject to notarization and state registration.

§ 8. Sale of an enterprise

Article 489. Contract for the sale of an enterprise

Under an agreement for the sale of an enterprise, the seller undertakes to transfer ownership of the enterprise as a whole to the buyer as a property complex, with the exception of the rights and obligations that the seller does not have the right to transfer to other persons.

The rights to use the company name, trademarks, service marks and other means of individualization of the seller and his products, work performed or services provided are transferred to the buyer, unless otherwise provided by the contract of sale of the enterprise.

The rights of the seller, obtained by him based on a special permit (license) to engage in the relevant activity, are not subject to transfer to the buyer of the enterprise, unless otherwise provided by law. The inclusion in the composition of the obligations transferred under the contract for the sale of an enterprise, the fulfillment of which by the buyer is impossible in the absence of a special permission (license) to do so, does not relieve the seller from corresponding obligations to creditors. For failure to fulfill such obligations, the seller and buyer are jointly and severally liable to creditors.

Article 490. Form and state registration of the agreement for the sale of an enterprise

The contract for the sale of an enterprise is concluded in writing by drawing up one document signed by the parties, with the obligatory attachment to it of the documents specified in part two of Article 491 of this Code, and is subject to notarization and state registration. An agreement for the sale of an enterprise concluded on a competitive (tender) basis by decision of an authorized state body is not subject to notarization, except for the cases provided for in paragraph 2 of part two of Article 110 of this Code.

Failure to comply with the requirements provided for in the first part of this article entails the invalidity of the contract. Such an agreement is considered void, its execution is not allowed and the rules provided for in parts two and three of Article 112 of this Code are not applied to it.

Article 491. Establishing the composition and assessing the value of an enterprise to be sold

The composition and valuation of the enterprise to be sold are determined in the agreement for the sale of the enterprise based on, a complete inventory of the enterprise, carried out in accordance with the established rules for such an inventory.

Before signing a contract for the sale of an enterprise, an inventory report, balance sheet, auditor’s report, valuation report, as well as a list of all debts (liabilities) included in the enterprise, indicating the creditors, the nature, size and timing of their claims must be, drawn up and reviewed by the parties. The property, rights and obligations specified in the above documents are subject to transfer by the seller to the buyer, unless otherwise follows from Article 489 of this Code and is not established by the agreement for the sale of the enterprise.

Article 492. Rights of creditors upon sale of an enterprise

Creditors for obligations included in the enterprise being sold must be notified in writing the seller of the sale of the enterprise before it is transferred to the buyer.

A creditor, who has not informed the seller in writing of his consent to the transfer of debt has the right, within three months from the date of receipt of notification of the sale of the enterprise, to demand either termination or early fulfillment of the obligation and compensation by the seller for losses, or recognition of the agreement for the sale of the enterprise as invalid in whole or in the relevant part.

A creditor, who was not notified of the sale of an enterprise in the manner prescribed by part one of this article may bring a claim for satisfaction of the requirements provided for by part two of this article within a year from the day when he learned or should have learned about the transfer of the enterprise by the seller to the buyer.

After the transfer of the enterprise to the buyer, the seller and the buyer are jointly and severally liable for the debts included in the transferred enterprise, which were transferred to the buyer without the consent of the creditor.

Article 493. Transfer of an enterprise

The transfer, of an enterprise by the seller to the buyer is carried out according to a transfer act, which indicates data on the composition of the enterprise and on the notification of creditors about the sale of the enterprise. Information on identified shortcomings of the transferred property and a list of property, the obligation to transfer which is impossible due to its loss.

Preparing the enterprise for transfer, including drawing up and submitting the transfer act for signing is the responsibility of the seller and is carried out at his expense, unless otherwise provided by the contract.

The enterprise is considered transferred to the buyer from the day the transfer deed is signed by both parties. From this moment on, the risk of accidental loss or accidental damage to the property transferred as part of the enterprise passes to the buyer.

Article 494. Transfer of ownership of an enterprise

The ownership of the enterprise passes to the buyer from the moment of state registration of this right.

State registration of the buyer’s ownership of the enterprise is carried out immediately after the transfer of the enterprise to the buyer, unless otherwise provided by the contract of sale of the enterprise.

In cases, where the contract for the sale of an enterprise provides for the seller to retain ownership of the enterprise transferred to the buyer until payment for the enterprise or until other circumstances occur, the buyer has the right. Before the transfer of ownership rights to him, to dispose of the property that is part of the transferred enterprise, as well as to exercise rights in to the extent necessary to ensure the activities of the enterprise as a property complex.

Article 495. Consequences of transfer and acceptance of an enterprise with defects

The consequences, of the transfer by the seller and acceptance by the buyer under the transfer deed of an enterprise, the composition of which does not correspond to that provided for in the contract of sale of the enterprise, including with regard to the quality of the transferred property, are determined on the basis of the rules provided for in Articles 393 – 395, 399, 402, 408, 412 of this Code, unless otherwise follows from the agreement and is not provided for in parts two , three and four of this article.

In the event, that an enterprise is transferred and accepted under a transfer deed, which contains information about the identified shortcomings of the enterprise and about lost property, the buyer has the right to demand a corresponding reduction in the purchase price of the enterprise, unless the right to present other demands in such cases is provided for in the contract of sale of the enterprise.

The buyer has the right to demand a reduction in the purchase price, if the seller’s debts (obligations) are transferred to him as part of the enterprise, which were not specified in the agreement for the sale of the enterprise or the transfer act, unless the seller proves. The buyer knew about such debts (obligations) at the time of concluding the agreement and transfer of the enterprise.

The seller, in the event of receiving notification from the buyer about the shortcomings of the property transferred as part of the enterprise, or the absence in this composition of certain types of property to be transferred, may immediately replace the property of inadequate quality or provide the buyer with the missing property.

The buyer has the right to demand in court the termination or modification of the contract for the sale of the enterprise and the return of what has been performed by the parties under the contract. If it is established that the enterprise, due to shortcomings for which the seller is responsible, is unsuitable for the purposes specified in the contract for the sale of the enterprise, and these shortcomings are not eliminated by the seller on the terms. in the manner and within the time limits established in accordance with this Code, legislation or agreement, or elimination of such defects is impossible.

Article 496. Application to a contract for the sale of an enterprise of rules on the consequences of invalidity of transactions and on amendment or termination of the contract

The rules of this Code on the consequences of the invalidity of transactions and on the amendment or termination of a purchase and sale agreement, providing for the return or recovery in kind of what was received under the agreement from one or both parties, apply to the agreement for the sale of an enterprise. If such consequences do not significantly violate the rights and interests protected by law creditors of the seller and buyer, other persons and do not contradict the rules of Article 116 of this Code.

CHAPTER 30. EXCHANGE

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Article 497. Exchange agreement

Under an exchange agreement, each party undertakes to transfer one product into the ownership of the other party in exchange for another.

The rules on purchase and sale are applied to the exchange agreement accordingly, if this does not contradict the rules of this chapter and the essence of the exchange. In this case, each of the parties is recognized as the seller of the goods, which it undertakes to transfer, and the buyer of the goods, which it undertakes to accept in exchange.

An agreement for the exchange of motor vehicles subject to state registration in accordance with the procedure established by law must be notarized.

Article 498. Prices and expenses under an exchange agreement

Unless otherwise follows from the exchange agreement, the goods to be exchanged are assumed to be of equal value, and the costs of their transfer and acceptance are borne in each case by the party that bears the corresponding obligations.

In the event that, in accordance with the exchange agreement, that the goods exchanged are recognized as unequal, the party obligated to transfer the goods, the price of which is lower than the price of the goods provided in exchange, must pay the difference in prices without delay after the transfer of the goods or commodity-administrative documents for it, unless otherwise the payment procedure is not provided for in the contract.

If the goods exchanged are recognized as unequal, but the difference in their prices is not provided for in the exchange agreement and cannot be determined based on the terms of the agreement, it is determined according to the rules provided for in part four of Article 356 of this Code.

Article 499. Counter-fulfillment of the obligation to transfer goods under an exchange agreement

In the event that, in accordance with the barter agreement, the terms for the transfer of the exchanged goods do not coincide, the party that must fulfill it after the transfer of the goods by the other party applies the rules on counter-fulfillment of obligations to the fulfillment of the obligation to transfer the goods.

Article 500. Transfer of ownership of goods exchanged

Unless otherwise provided by law or the exchange agreement, the ownership of the exchanged goods passes to the parties acting as buyers under the exchange agreement, simultaneously after the fulfillment of obligations to transfer the relevant goods by both parties.

Article 501. Liability for the seizure of goods purchased under an exchange agreement

The party from whom goods purchased under an exchange agreement are seized by third parties has the right, if there are grounds provided for in Article 395 of this Code, to demand from the other party the return of the goods received by the latter in exchange and (or) compensation for losses.

CHAPTER 31. Gift

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Article 502. Gift agreement

Under a gift agreement, one party (the giver) gratuitously transfers or undertakes to transfer to the other party (the receiver) a thing in ownership, or transfers or undertakes to transfer to it a property right (claim) to itself or to a third party, or releases or undertakes to release it from a property obligation to itself or to a third party.

If there is a counter transfer of a thing or right or a counter obligation, the contract is not recognized as a gift. The rules of part two of Article 124 of this Code apply to such an agreement.

A promise to transfer a thing or property right to someone free of charge or to release someone from a property obligation (promise of gift) is recognized as a gift agreement if it is made in the proper form and contains a clearly expressed intention to make a gratuitous transfer of a thing or property right to a specific person in the future, or release him from property obligations.

A promise to gift all or part of one’s property without indicating a specific object of gift in the form of a thing, property right or release from property obligations is void.

An agreement providing for the transfer of a gift to the receiver after the death of the giver is void. The rules of this Code on inheritance apply to this type of gift.

Article 503. Refusal of the receiver to accept the gift

The recipient has the right to refuse it at any time before the gift is transferred to him. In this case, the gift agreement is considered terminated.

If the gift agreement is concluded in writing, the refusal of the gift must also be made in writing. If the gift agreement is registered, refusal to accept the gift is also subject to state registration.

If the gift agreement was concluded in writing, the donor has the right to demand from the donor compensation for real damage caused by refusal to accept the gift.

Article 504. Form of gift agreement

A gift accompanied by the transfer of a gift to the receiver may be made orally, except for the cases provided for in parts three and five of this article.

The transfer of a gift is carried out through its delivery, symbolic transfer (handing over keys, etc.) or delivery of title documents.

A contract of gift of movable property must be concluded in simple written form in cases where:

the donor is a legal entity;

an agreement is concluded between citizens for an amount of more than ten basic calculated amounts;

the contract contains a promise of a gift in the future.

In the cases provided for in part three of this article, a gift agreement made orally is void.

A real estate gift agreement must be notarized and subject to state registration.

The donation agreement for motor vehicles subject to state registration in accordance with the procedure established by law must be notarized.

Article 505. Restrictions on gift

A legal entity to which a thing belongs under the right of economic management or operational management has the right to donate it with the consent of the owner, unless otherwise provided by law. This restriction does not apply to ordinary gifts of small value.

Gift of property that is in common joint ownership is permitted with the consent of all participants in joint ownership in compliance with the rules provided for in Article 225 of this Code.

The gift of the right of claim belonging to the donor to a third party is carried out in compliance with the rules provided for in Articles 313 – 317, 319 and 320 of this Code.

The gift of a lease right or other right to someone else’s thing without the consent of its owner or a person who has the right of economic management or operational management over it is permitted unless the law or agreement on which such a right is based prohibits its alienation without the consent of these persons.

Gift through the fulfillment of the receiver ‘s obligations to a third party is carried out in compliance with the rules provided for in parts one and two of Article 241 of this Code.

A gift through the transfer by the donor of the receiver’s debt to a third party is carried out in compliance with the rules provided for in parts one and two of Article 322 of this Code.

A power of attorney for making a gift by a representative, in which the receiver is not named and the subject of the gift is not indicated, is void.

Article 506. Refusal to execute a gift agreement

The donor has the right to refuse to fulfill an agreement containing a promise to transfer an item or property right to the receiver in the future, or to release the receiver from a property obligation, if after the conclusion of the agreement his property situation has deteriorated significantly.

The donor has the right to refuse to fulfill an agreement containing a promise to transfer a thing or property right to the receiver in the future, or to release the receiver from a property obligation, on the grounds provided for in part one of Article 507 of this Code.

The donor’s refusal to execute the gift agreement on the grounds provided for in this article does not give the receiver the right to demand compensation for losses.

Article 507. Cancellation of gift

Cancellation of a donation is permitted in court if the receiver commits a deliberate crime against the life or health of the donor, members of his family or close relatives.

In case of intentional deprivation of life of the donor by the receiver, the right to demand in court the cancellation of the donation belongs to the heirs of the donor.

The donor has the right to demand that in court the cancellation of the girt if the recipient’s handling of the donated item, which is of great non-property value to the donor, creates a threat of its irretrievable loss.

At the request of an interested person, the court may cancel a donation made by an individual entrepreneur or a legal and natural person in violation of the provisions of the law on insolvency at the expense of funds related to his business activities during the year preceding the initiation of insolvency proceedings.

The gift agreement may stipulate the donor’s right to cancel the gift if he survives the receiver.

In case of cancellation of the gift, the receiver is obliged to return the donated item if it was preserved in kind at the time of cancellation of the donation.

Article 508. Cases in which refusal to execute a gift agreement and cancellation of a gift are impossible

The rules on refusal to execute a gift agreement and on the cancellation of a gift do not apply to gift agreements made orally.

Article 509. Consequences of gifting property with defects

Damage caused to the life, health or property of the receiver as a result of defects in the donated item is subject to compensation by the donor in accordance with the rules provided for in Chapter 57 of this Code, if it is proven that these defects arose before the transfer of the item to the receiver, are not obvious and the donor, although knew, but did not warn the recipient about them.

Article 510. Succession upon promise of gift

The rights of the receiver, who is promised a gift under a gift agreement, do not pass to his heirs (successors), unless otherwise provided by the gift agreement.

The obligations of the donor who has promised a gift under a gift agreement pass to his heirs (successors), unless otherwise provided by the gift agreement.

Article 511. Donations

A donation is a gift made for generally beneficial purposes.

Donations can be made to citizens, medical, educational institutions, social protection institutions and other similar institutions, charitable, scientific and educational institutions, foundations, museums and other cultural institutions, public associations and religious organizations, as well as the state and other subjects of civil law.

No one’s permission or consent is required to accept a donation.

The donation of property to a citizen must be, and to legal entities – may be conditioned by the donor on the use of this property for a specific purpose. In the absence of such a condition, the donation of property to a citizen is considered an ordinary donation, and in other cases, the receiver in accordance with their purpose uses the donated property.

A legal entity accepting a donation for which a specific purpose has been established must keep separate records of all transactions involving the use of the donated property.

If the use of donated property in accordance with the purpose specified by the donor becomes impossible due to changed circumstances, it can be used for another purpose only with the consent of the donor, and in the event of the death of the citizen who donated the property, or the reorganization or liquidation of the legal entity that donated the property – by court decision.

The use of donated property not in accordance with the purpose specified by the donor or changing this purpose in violation of the rules provided for in part six of this article gives the right to the donor, his heirs or another legal successor to demand cancellation of the donation.

The provisions of Articles 507 and 510 of this Code do not apply to donations.

CHAPTER 32. RENT

§ 1. General Provisions

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Article 512. Rent agreement

Under a rent agreement, one party (rent recipient) transfers ownership of real or movable property to the other party (rent payer), and the rent payer undertakes, in exchange for the received property, to periodically pay rent to the recipient in the form of a certain amount of money or providing funds for its maintenance in another form. .

Under an annuity agreement, it is possible to establish the obligation to pay annuity indefinitely (permanent annuity) or for the life of the annuity recipient (lifetime annuity). Lifetime annuity can be established on the terms of lifelong maintenance of a citizen with a dependent.

Article 513. Form of rent agreement

A rent agreement is subject to notarization, and an agreement providing for the alienation of real estate for the payment of rent is subject to state registration.

Article 514. Alienation of property for payment of rent

Property that is alienated for the payment of rent may be transferred by the recipient of the rent into the ownership of the rent payer for a fee or free of charge.

In cases where the annuity agreement provides for the transfer of property for a fee, the rules on the purchase and sale agreement are applied to the relations of the parties regarding the transfer and payment, and in cases where such property is transferred free of charge, the rules on the gift agreement, unless otherwise established by the rules of this chapter and does not contradict the essence of the rent agreement.

Article 515. Encumbrance of rent on real estate

Rent encumbers the land plot, enterprise, building, structure or other real estate transferred for its payment. In the event of alienation of such property by the rent payer, its obligations under the rent agreement are transferred to the acquirer of the property.

A person, who has transferred real estate encumbered with rent into the ownership of another person bears subsidiary liability with him for the claims of the rent recipient arising in connection with a violation of the rent agreement, unless this Code, another law or agreement provides for joint liability for this obligation.

Article 516. Security for payment of rent

When transferring a plot of land or other real estate for payment of rent, the recipient of the rent, as security for the obligation of the rent payer, acquires the right of pledge over this property.

An essential condition of an agreement providing for the transfer of a sum of money or other movable property for the payment of rent is a condition establishing the obligation of the rent payer to provide security for the fulfillment of his obligations or to insure in favor of the annuity recipient the risk of non-fulfillment or improper fulfillment of these obligations.

If the annuity payer fails to fulfill the obligations provided for in part two of this article, as well as in the event of loss of security or deterioration of the conditions of security due to circumstances for which the annuity recipient is not responsible, the annuity recipient has the right to terminate the annuity contract and demand compensation for losses caused by termination of the contract.

Article 517. Liability for late payment of rent

For late payment of rent, the rent payer shall pay the rent recipient the interest provided for in Article 327 of this Code, unless a different amount of interest is established by the rent agreement.

§ 2. Constant rent

Article 518. Recipient of permanent annuity

Recipients of permanent annuity can only be citizens and non-profit organizations, if this does not contradict the law and corresponds to the goals of their activities.

The rights of the annuity recipient under a permanent annuity agreement may be transferred to the persons specified in the first part of this article by assigning a claim and transferred by inheritance or during the reorganization of legal entities, unless otherwise provided by law or agreement.

Article 519. Form and amount of permanent annuity

Permanent rent is paid in money in the amount established by the contract within the limits of the average rate of payment for the use of property applied when leasing property similar to that transferred for the payment of rent, and when transferring a sum of money for payment of rent – within the limits of the properly established bank interest rate provided for Article 327 of this Code.

The contract may provide for the payment of rent by providing things, performing work or providing services corresponding in value to the monetary amount of the rent.

Unless otherwise provided by the permanent annuity agreement, the amount of the annuity paid changes in proportion to the change in the corresponding rate of payment for the use of property or the bank interest rate.

Article 520. Terms for payment of permanent annuity

Unless otherwise provided by the contract, permanent annuity is paid at the end of each calendar quarter.

Article 521. The right of the payer to repurchase permanent annuity

The payer of a permanent annuity has the right to refuse further payment of annuity by repurchasing it. Such a refusal is valid provided, that it is stated in writing by the rent payer no later than three months before the termination of rent payment or for a longer period stipulated by the contract. In this case, the obligation to pay rent does not terminate until the annuity recipient receives the entire redemption amount, unless a different procedure for redemption is provided for in the contract.

The condition of the agreement on the renunciation of the permanent annuity payer’s right to repurchase it is void.

The contract may provide that the right to repurchase a permanent annuity cannot be exercised during the life of the annuity recipient or for another period not exceeding thirty years from the date of conclusion of the contract.

Article 522. Redemption of permanent annuity at the request of the annuity recipient

The recipient of a permanent annuity has the right to demand redemption of the annuity by the payer in cases where:

the rent payer is overdue for payment by more than one year, unless otherwise provided by the contract;

the rent payer violated its obligations to ensure payment of rent;

the rent payer has been declared insolvent, or other circumstances have arisen indicating that the rent will not be paid to him in the amount and within the terms established by the agreement;

real estate transferred for payment of rent came into common ownership or was divided between several persons;

as well as in other cases provided for by the contract.

Article 523. Redemption price of permanent annuity

The redemption of permanent annuity in the cases provided for in Articles 521 and 522 of this Code is made at the price established by the agreement.

In the absence of a condition on the redemption price in the permanent annuity agreement, under which the property is transferred for a fee against the payment of rent, the redemption is carried out at a price corresponding to the annual amount of rent payments.

In the absence of a condition on the redemption price in a permanent annuity agreement, under which the property is transferred free of charge for the payment of rent, the redemption price, along with the annual amount of rent payments, includes the price of the transferred property, determined according to the rules provided for in part four of Article 356 of this Code.

Article 524. Risk of accidental loss or accidental damage to property transferred for payment of permanent annuity

The risk of accidental loss or accidental damage to property transferred free of charge for the payment of permanent rent is borne by the rent payer.

In the event of accidental destruction or accidental damage to property transferred for payment under the payment of permanent annuity, the payer has the right to demand, accordingly, termination of the obligation to pay annuity or change the terms of its payment.

§ 3. Lifetime annuity

Article 525. Recipients of life annuity

Lifetime annuity can be established for the life of the citizen transferring property for payment of annuity, or for the life of another citizen specified by him.

It is allowed to establish a life annuity in favor of several citizens, whose shares in the right to receive annuity are assumed to be equal, unless otherwise provided by the contract.

In the event of the death of one of the annuity recipients, his share in the right to receive annuity passes to the surviving annuity recipients, unless otherwise provided by the agreement, and in the event of the death of the last annuity recipient, the obligation to pay the annuity is terminated.

An agreement establishing a life annuity in favor of a citizen who has died at the time of conclusion of the agreement is void.

Article 526. Amount of life annuity

A life annuity is defined in the contract as a sum of money paid periodically to the annuitant during his life.

The amount of life annuity determined in the contract per month must be no less than the basic calculated value established by law, and in the cases provided for in Article 247 of this Code, it is subject to increase.

Article 527. Terms of payment of life annuity

Lifetime annuity is paid at the end of each calendar month, unless otherwise provided by the contract.

Article 528. Termination of a life annuity contract at the request of the annuity recipient

In cases of a significant violation of the life annuity agreement by the payer, the annuity recipient has the right to demand from the annuity payer the redemption of the annuity under the conditions provided for in Article 523 of this Code, or termination of the agreement and compensation for losses.

If an apartment, residential building or other property is alienated free of charge for the payment of life rent, the rent recipient has the right, in the event of a significant violation of the essential terms of the contract by the rent payer, to demand the return of this property with its value offset against the redemption rent.

Article 529. Risk of accidental loss or accidental damage to property transferred for rent payment

Accidental destruction or accidental damage to property transferred for payment of life annuity does not relieve the annuity payer from the obligation to pay it on the terms stipulated by the contract.

CHAPTER 33. ALIENATION OF A RESIDENTIAL BUILDING (APARTMENT) WITH THE CONDITION OF LIFELONG MAINTENANCE

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Article 530. Agreement on the alienation of a residential building (apartment) with the condition of lifelong maintenance

Under an agreement for the alienation of a residential building (part of a house), an apartment with the condition of lifelong maintenance, one party (the acquirer) undertakes to provide the other party, who is disabled due to age or health reasons (the alienator), with lifelong material support in kind (in the form of housing, food, care and necessary assistance), and the alienator – transfer the residential building (part of the house), apartment into the ownership of the acquirer.

Article 531. Form and terms of the contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance

The contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance must indicate what types of material support are provided to the alienator, their monetary value per month and indicate the cost of the residential building (part of the house), apartment.

The valuation of the transferred residential building (part of the house), apartment and material support is determined by agreement of the parties.

A contract for the alienation of a residential building (part of a house), an apartment with the condition of lifelong maintenance must be concluded in writing and notarized in compliance with the rules of Article 110 of this Code.

Article 532. Rights and obligations of the parties

Under an agreement for the alienation of a residential building (part of a house), an apartment with the condition of lifelong maintenance, the acquirer does not have the right, during the validity of the agreement, to sell this house (part of a house), give away an apartment, give it away. Pledge it as collateral or perform other actions that encumber the right of ownership of the house (part houses), apartment. This house (part of the house) or apartment is not subject to foreclosure for the debts of the acquirer.

Accidental destruction of a house (part of a house), apartment, received from the alienator under an agreement for the alienation of a residential building (apartment) with the condition of lifelong maintenance, does not relieve the acquirer from the obligations assumed under the agreement.

Article 533. Change or termination of a contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance

If the acquirer of a residential building (part of a house) or apartment does not fulfill his obligations under the contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance or fulfills them improperly, the alienator may demand replacement of the maintenance with periodic payments or termination of the contract.

A contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance can be terminated at the request of the acquirer if, due to circumstances beyond his control, his financial situation has changed to such an extent that he cannot provide the alienator with the conditional maintenance or if the alienator has restored his ability to work.

In the event of termination of the contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance on the grounds provided for in parts one and two of this article, the house (part of the house), the apartment shall be returned to the alienator.

In the event of termination of a contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance at the request of the alienator, the acquirer has the right to demand compensation for the expenses incurred by him for the maintenance of the alienator and the house (part of the house) of the apartment during the validity of the agreement.

Article 534. Transfer of obligations under a contract for the alienation of a residential building (apartment) with the condition of lifelong maintenance to the heirs

In the event of the death of the acquirer, the obligations under the agreement for the alienation of a residential building (part of a house), apartments with the condition of lifelong maintenance pass to his heirs. If the acquirer does not have heirs or if they refuse to fulfill the contract of alienation of a residential building (part of a house), apartment with the condition of lifelong maintenance, the house (part of a house), apartment transferred to the acquirer are returned to the alienator.

CHAPTER 34. PROPERTY RENT

§ 1. General Provisions

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Article 535. Property rent agreement

Under a property rental agreement, the renter undertakes to provide the tenant with property for a fee for temporary possession and use or for use.

Article 536. Ownership rights of the employer to products, fruits and income from rented property

Products, fruits and other income received by the tenant as a result, of the use of rented property are his property, unless otherwise provided by law or a property rental agreement.

Article 537. Property rental objects

Land plots, subsoil plots and other isolated natural objects, enterprises and other property complexes, buildings, structures, equipment, vehicles and other things that do not lose their natural properties during the process of their use (non-consumable things) can be transferred for property rent.

Legislation may establish types (groups) of enterprises and types of property, the rental of which is not permitted or limited.

Article 538. Renter

The right to rent property belongs to its owner. Renters can also be persons authorized by law or the owner to rent out property.

Article 539. Form of a property rent agreement

A property rent agreement for a period of more than one year, and if at least one of the parties to the agreement is a legal entity, regardless of the term, must be concluded in writing.

A property rent agreement for real estate is subject to state registration.

A property rental agreement, providing for the subsequent transfer of ownership of this property to the tenant, is concluded in the form provided for the purchase and sale agreement of such property.

Article 540. Duration of a property renter agreement

A property rental agreement is concluded for a period specified in the agreement.

If the term of the property lease is not specified in the agreement, the agreement is considered to be concluded for an indefinite period. Moreover, each of the parties has the right to cancel the contract at any time by giving the other party one month’s written notice, and when renting real estate – three months in advance. The law or agreement may establish a different period for warning of termination of a property rental agreement concluded for an indefinite period.

The law may establish maximum (limit) terms of the contract for certain types of property rental, as well as for the rental of certain types of property. In these cases, if the rental period is not specified in the contract and neither party refused the contract before the expiration of the deadline established by law, the contract is terminated upon expiration of the deadline. A rent agreement for such property concluded for a period exceeding the maximum period established by law is considered concluded for a period equal to the maximum period.

Article 541. Provision of property to the tenant

The renter is obliged to provide the tenant with property in a condition consistent with the terms of the contract and the purpose of the property.

Preparing property for transfer, including drawing up and submitting a transfer deed for signing is the responsibility of the renter and is carried out at his expense.

The property is rented together with all its accessories and related documents (technical passport, quality certificate, etc.), unless otherwise provided by the contract. If such supplies and documents were not handed over, and without them the tenant cannot use the property in accordance with its purpose or is significantly deprived of what he had the right to count on when concluding the contract, he may demand that the renter provide him with such supplies and documents or terminate contract, as well as compensation for damages.

If the renter does not provide the rented property to the tenant within the period specified in the contract. In addition, if such a period is not specified in the contract, within a reasonable period, the tenant has the right to demand this property from him in accordance with Article 331 of this Code and demand compensation for losses caused by the delay performance or demand termination of the contract and compensation for losses caused by its non-performance.

Article 542. Liability of the renter for shortcomings of rented property

The renter is responsible for defects in the leased property that completely or partially prevent the use of it, even if at the time of concluding the contract he was not aware of these defects. If such deficiencies are discovered, the employer has the right, at his own discretion, to demand:

from the renter either to eliminate the defects of the property free of charge, or to proportionately reduce the fee for the use of the property, or to reimburse his expenses for eliminating the defects of the property;

directly withhold the amount of expenses incurred by him to eliminate these shortcomings from the payment for the use of the property, having previously notified the renter about this;

demand early termination of the contract.

The renter, notified of the tenant’s requirements or of his intention to eliminate the defects of the property at the expense of the renter, may without delay replace the rented property with other similar property that is in proper condition, or eliminate the defects of the property free of charge.

If satisfying the tenant’s demands or deducting the costs of eliminating deficiencies from the payment for the use of the property does not cover the losses caused to the tenant, he has the right to demand compensation for the uncovered part of the losses.

The renter is not responsible for those shortcomings of the leased property that were agreed upon by him at the conclusion of the contract, were known to the tenant in advance, or should have been discovered by him during an inspection of the property or checking its serviceability when concluding the contract or transferring the property for rent.

Article 543. Rights of third parties to rented property

The transfer of property for rent is not a basis for terminating or changing the rights of third parties to this property.

When concluding an agreement, the property owner is obliged to warn the tenant about all the rights of third parties to the property being rented (easement, right of lien, etc.). Failure of the property owner to fulfill this obligation gives the tenant the right to demand a reduction in fees for the use of property or termination of the contract and compensation for rent.

Article 544. Payment for the use of property

The tenant is obliged to pay fees for the use of the property on time.

The procedure, conditions and terms of payment for the use of property are determined by the property rent agreement. In cases where they are not specified in the contract, it is considered that the procedure, conditions and terms usually applied when renting similar property under comparable circumstances have been established.

Payment for the use of property is established for all rented property as a whole or separately for each of its components in the form of:

defined in a fixed amount of payments made periodically or at a time;

the established share of products, fruits or income received as a result of the use of the hired property;

provision of certain services by the employer;

transfer by the tenant to the renter of the thing stipulated by the contract for ownership or rent;

imposing on the tenant the costs stipulated by the contract for improving the rented property.

The parties may provide in the property rent agreement a combination of forms of payment for the use of property specified in part three of this article, or other forms of payment.

Unless otherwise provided by the property rental agreement, the amount of payment for the use of property may be changed by agreement of the parties within the time period specified in the agreement, but not more than once a year. The legislation may provide for other minimum terms for revising the amount of payment types of property rental, as well as for the rental of certain types of property.

Unless otherwise provided by law, the tenant has the right to demand a corresponding reduction in fees for the use of property if, due to circumstances for which he is not responsible, the conditions of use provided for in the contract or the condition of the property have significantly deteriorated.

Unless otherwise provided by the contract, in the event of a significant violation by the tenant of the terms for payment of fees for the use of property, the renter has the right to demand from him early payment of the fee within the period established by the renter. In this case, the renter has no right to demand early payment of payment for the use of property for more than two consecutive terms.

Article 545. Use of hired property

The tenant is obliged to use the property in accordance with the terms of the contract, and if such conditions are not specified in the contract, in accordance with the purpose of the property.

If the tenant does not use the property in accordance with the terms of the contract or the purpose of the property, despite a written warning from the property owner, the latter has the right to demand early termination of the contract and compensation for losses.

Article 546. Disposal of hired property

The tenant has the right, with the consent of the renter, to sublease the rented property (sublease), transfer his rights and obligations under the property rental agreement to another person (release), provide the rented property free use. As well as pledge these rights and make them as a contribution to the authorized capital (capital) of business partnerships and societies or a share contribution to a production cooperative, unless otherwise established by this Code or other legislation. In these cases, with the exception of re-hiring, the rent remains liable under the contract to the renter. An agreement on the transfer of property to other persons cannot be concluded for a period exceeding the term of the rent agreement.

The rules on property rental agreements apply to a sublease agreement, unless otherwise provided by law.

Article 547. Obligations of the renter for the maintenance of rented property

The renter is obliged to carry out major repairs of the rented property at his own expense, unless otherwise provided by law or the contract.

The renter is obliged to carry out at his own expense repairs caused by an urgent need arising due to circumstances for which the rental is not responsible.

Major repairs must be carried out within the period established by the property rent agreement, and if it is not specified in the agreement or is caused by urgent need, within a reasonable time.

Violation by the property owner of the obligation to carry out major repairs gives the tenant the right, at his own discretion, to:

carry out major repairs provided for in the contract or caused by urgent need, and recover the cost of repairs from the renter or offset it against the fee for the use of the property;

demand a corresponding reduction in fees;

demand early termination of the contract and compensation for losses.

Article 548. Obligations of the tenant for the maintenance of rented property

The tenant is obliged to maintain the property in good condition, carry out routine repairs at his own expense and bear the costs of maintaining the property, unless otherwise provided by law or contract.

Article 549. Maintaining a property rent agreement in force when the parties change

The transfer of ownership (economic management, operational management and lifelong inheritable ownership) of rental property to another person is not grounds for changing or terminating the property rent agreement.

In the event of the death of a citizen who is a tenant of real estate, his rights and obligations under the rent agreement for this property, pass to the heir, unless otherwise provided by law or agreement. The renter has no right to refuse such an heir to enter into the contract for the remaining term of its validity, except in cases where the conclusion of the contract was conditioned by the personal qualities of the tenant.

Article 550. Termination of a sublease agreement upon early termination of a property rent agreement

Unless otherwise provided by the property rent agreement, early termination of the property rent agreement entails the termination of the sublease agreement concluded in accordance with it. In this case, the subtenant may enter into an agreement for the rent of property that was in his use in accordance with the sublease agreement, within the remaining period of the sublease on conditions corresponding to the terms of the terminated property rent agreement.

If a property rent agreement is declared invalid on the grounds provided for by this Code, sublease agreements concluded in accordance with it are also recognized as invalid.

Article 551. Early termination of a property rent agreement at the request of the renter

At the request of the renter, the property rent agreement may be terminated early by the court in cases where the rent:

uses the property with a significant violation of the terms of the contract or the purpose of the property or with repeated violations, despite a written warning from the renter;

significantly deteriorates the property;

fails to pay fees for the use of the property more than two times in a row after the expiration of the payment period established by the contract;

does not carry out major repairs of the property within the time limits established by the contract, and if they are not included in the contract, within a reasonable time in cases where, in accordance with the law or the contract, major repairs are the responsibility of the tenant.

The property rent agreement may establish other grounds for early termination of the agreement at the request of the renter in accordance with part two of Article 382 of this Code.

The renter has the right to demand early termination of the contract only after a written warning to the rental and giving him the opportunity to fulfill his obligation.

Article 552. Early termination of a property rent agreement at the request of the tenant

At the request of the tenant, the property rent agreement may be terminated early by the court in cases where:

the renter does not provide the property for use by the tenant or creates obstacles to the use of the property in accordance with the terms of the contract or the purpose of the property;

the property transferred to the tenant has defects that prevent its use, which were not specified by the landlord when concluding the contract, were not known to the tenant in advance and could not be discovered by him during an inspection of the property or checking its serviceability at the conclusion of the contract;

the renter does not carry out capital repairs of the property within the terms established by the contract, and in the absence of them in the contract, within a reasonable time;

Due to circumstances for which the tenant is not responsible, the property will be in a condition unsuitable for use.

The property rent agreement may establish other grounds for early termination of the agreement at the request of the tenant in accordance with part two of Article 382 of this Code.

Article 553. Preemptive right of the tenant to conclude a property rent agreement for a new term

Unless otherwise provided by law or contract, the tenant, who has properly fulfilled his duties, has, upon expiration of the contract, other things being equal, a priority right over other persons to conclude a property rental agreement for a new term. The tenant is obliged to notify the lessor in writing of his desire to conclude such an agreement within the period specified in the property rent agreement, and if such a period is not specified in the agreement, within a reasonable time before the end of the agreement.

When concluding a property rent agreement for a new term, the terms of the agreement may be changed by agreement of the parties.

If the renter has refused the tenant to enter into an agreement for a new term, renter would be within a year from the date of expiration of the agreement he has entered into a property rent agreement with another person, than the tenant has the right, at his own discretion, to demand in court the transfer of rights and obligations under the concluded agreement and compensation for losses. Caused by the refusal to renew the contract with him, or only compensation for such losses.

If the tenant continues to use the property after the expiration of the property rent agreement in the absence of objections from the renter, the agreement is considered renewed on the same terms for an indefinite period.

Article 554. Return of property to the renter

Upon termination of a property rental agreement, the tenant is obliged to return the property to the renter in the condition in which he received it, taking into account normal wear and tear or in the condition stipulated by the agreement.

If the tenant does not return the rented property or returns it untimely, the renter has the right to demand payment for the use of the property for the entire period of delay. If the specified fee does not cover the losses caused to the renter, he may demand compensation for them.

In the event that the contract provides for a penalty for untimely return of the rented property, losses may be recovered in full in excess of the penalty, unless otherwise provided by the contract.

Article 555. Improvement of rental property

Separable improvements to property made by the tenant are his property, unless otherwise provided by the property rent agreement.

In the case where the tenant has made, at his own expense and with the consent of the landlord, improvements to the rental property that are inseparable without harm to the property, the tenant, after termination of the contract, has the right to compensation for the cost of these improvements, unless otherwise provided by the contract.

The cost of inseparable improvements to the rental property made by the tenant without the consent of the renter is not subject to compensation, unless otherwise provided by law.

Improvements to the rental property, both separable and inseparable, made at the expense of depreciation deductions from this property are the property of the renter.

Article 556. Redemption of rental property

A property rent agreement may provide that the rental property becomes the property of the tenant upon the expiration of the property renter period or before its expiration, if the tenant pays the entire redemption price stipulated by the agreement.

If the condition for the redemption of the rental property is not provided, in the contract, it can be established by an additional agreement of the parties, who in this case have the right to agree on the offset of previously paid fees for the use of the property into the redemption price.

Legislative acts may establish cases of prohibition of repurchase of rental property.

Article 557. Features of certain types of property rental and rental of certain types of property

The provisions provided for in this paragraph apply to certain types of property rent agreements and rent agreements for certain types of property (hire, vehicle rent, enterprise rent, financial rent, etc.), unless otherwise provided by the rules of this Code.

§ 2. Rental

Article 558. Rental agreement

Under a rental agreement, the lessor, who rents out property as a permanent business activity, undertakes to provide the tenant with movable property for a fee for temporary possession and use.

Property provided under a rental agreement is used for consumer purposes, unless otherwise provided by the agreement or follows from the essence of the obligation.

The rental agreement is concluded in writing. The rental agreement is public.

Article 559. Duration of the rental agreement

The rental agreement is concluded for a period of up to one year.

The rules on the renewal of a property rental agreement for an indefinite period and on the tenant’s pre-emptive right to renew a property rental agreement do not apply to the rental agreement.

The rent has the right to refuse to fulfill the rental agreement at any time.

Article 560. Provision of property to the tenant

The renter who enters into a rental agreement is obliged, in the presence of the rent, to check the serviceability of the property being rented, as well as familiarize him with the rules for operating the property or issue written instructions on the use of this property.

Article 561. Elimination of deficiencies in rental property

If the shortcomings of the rental property were the result of a violation by the tenant of the rules for the operation and maintenance of the property, the tenant shall pay the property owner the cost of repairs and transportation of the property.

Article 562. Payment for the use of property under a rental agreement

Payment for the use of property under a rental agreement is established in the form of fixed payments, made periodically or at a time.

In case of early return of property by the tenant, the renter returns to him the corresponding part of the payment received for the use of the property, calculated from the day following the day of actual return of the property.

Collection from the tenant of debt for payment for the use of property is carried out in an indisputable manner based on a notary’s writ of execution.

Article 563. Use of hired property

Major and current repairs of property leased under a rental agreement are the responsibility of the renter.

Subletting of property provided to the tenant under a rental agreement, transfer by the tenant of his rights and obligations under the rental agreement to another person, provision of this property for free use, pledge of the rights of the tenant and making them as a contribution to the authorized capital (capital) of business partnerships and companies, share Contributions to cooperatives are not allowed.

§ 3. Rental of vehicles

Article 564. Vehicle rental agreement

Under a rental agreement for a vehicle with a crew, the lessor provides the rent with a vehicle for a fee for temporary possession and use and provides its own services for its management and technical operation.

Under a rental agreement for a vehicle without a crew, the renter provides the rent with a vehicle for a fee for temporary possession and use without providing services for its management and technical operation.

The rules of this chapter on the renewal of a rent agreement for an indefinite period and on the tenant’s pre-emptive right to renew the rent agreement for a new term do not apply to a vehicle rent agreement.

Article 565. Form of a vehicle rental agreement

A vehicle rental agreement, regardless of its term, must be concluded in writing.

A rent agreement for motor vehicles subject to state registration in accordance with the procedure established by law must be notarized, except for the cases provided for in parts three and four of this article.

Legal entities providing rental services for cars and motor vehicles may enter into rent agreements for cars and motor vehicles with physical person in simple written form for a period of up to thirty days.

When renting motor vehicles through an electronic online auction via an electronic trading platform, notarization of rental agreements is not required. In this case, the protocol drawn up based on the results of the electronic online auction has the force of a rental agreement.

Article 566. Obligations of the renter when renting a vehicle with the provision of services for maintenance, management and technical operation

During the entire term of the contract, the renter is obliged to maintain the leased vehicle in proper condition, including carrying out routine and major repairs and providing the necessary accessories.

The scope of services provided to the rent by the renter for the management and technical operation of the vehicle must ensure its normal and safe operation in accordance with the purposes of the rent specified in the agreement. The rental agreement may provide for a wider range of services provided to the tenant.

The composition of the vehicle crew and its qualifications must comply with the rules and terms of the contract that are binding on the parties, and if such requirements are not established by the rules that are binding on the parties, then the requirements of the usual practice of operating a vehicle of this type and the terms of the contract.

Crewmembers maintain an employment relationship with the renter. They are subject to the renter‘s instructions regarding the management and technical operation, and the rental‘s instructions regarding the commercial operation of the vehicle.

Unless otherwise provided by the vehicle rental agreement, the costs of paying for the services of crewmembers, as well as the costs of their maintenance, are borne by the renter.

Unless otherwise provided by the vehicle rental agreement, the obligation to insure the vehicle and (or) insure liability for damage that may be caused by it or in connection with its operation rests with the renter in cases where such insurance is mandatory by law or agreement.

Article 567. Rental’s obligation to pay expenses related to the commercial operation of the vehicle

Unless otherwise provided by the vehicle rental agreement, the rent bears the costs of paying for fuel and other materials consumed during operation, paying fees and other expenses arising in connection with the commercial operation of the vehicle.

Article 568. Obligations of the rent when renting a vehicle without providing services for maintenance, management and technical operation

During the entire period of validity of the vehicle rental agreement, the rent is obliged to maintain the proper condition of the rented vehicle, including carrying out routine repairs, as well as, unless otherwise provided by the agreement, major repairs.

The rent independently manages the rented vehicle, as well as its commercial and technical operation.

Unless otherwise provided by the contract, the rent bears the costs of maintaining the rented vehicle, it’s insurance, including liability insurance, as well as costs associated with its operation.

Article 569. Agreements with third parties on the use of a vehicle

The rent has the right to sublease the rented vehicle under the terms of a rental agreement with or without a crew with the consent of the renter, unless otherwise provided by the rental agreement.

The rent has the right, without the consent of the renter, on his own behalf, to enter into transportation and other agreements with third parties, if they do not contradict the purposes of using the vehicle specified in the rental agreement, and if such purposes are not established, the purpose of the vehicle.

Article 570. Liability for damage caused to a vehicle

In the event of the loss or damage of a rented vehicle, the lessee is obliged to compensate the renter for rent incurred if the latter proves that the loss or damage to the vehicle occurred due to circumstances for which the rent is responsible in accordance with the law or the contract.

Article 571. Liability for damage caused by a vehicle

Responsibility for damage caused to third parties by a rented vehicle, its mechanisms, devices, equipment, etc. when renting with a crew is borne by the lessor in accordance with the rules of Chapter 57 of this Code. He has the right to make a recourse claim against the tenant for reimbursement of amounts paid to third parties if he proves that the damage arose through the fault of the tenant.

Responsibility for damage caused to third parties by the vehicle, its mechanisms, devices, equipment, etc. when renting without providing services for maintenance, management and technical operation lies with the rent in accordance with the rules of Chapter 57 of this Code.

Article 572. Peculiarities of renting certain types of vehicles

Peculiarities of renting certain types of vehicles, in addition to those provided for in this paragraph, might be established law.

§ 4. Rental of buildings and structures

Article 573. Rental agreement for a building or structure

Under a rental agreement for a building or structure, the lessor undertakes to transfer the building or structure for temporary possession and use or for temporary use to the rent.

The rules of this paragraph apply to the rent of enterprises, unless otherwise provided by the rules of this Code on the rent of an enterprise.

Article 574. Form and state registration of a rental agreement for a building or structure

A rental agreement for a building or structure is concluded in writing by drawing up one document signed by the parties.

Failure to comply with the form of the rental agreement for a building or structure entails its invalidity.

A rental agreement for a building or structure or part thereof between citizens is subject to registration with the state tax authorities.

A rental agreement for a building or structure concluded for a period of at least a year is subject to state registration and is considered concluded from the moment of such registration.

Article 575. Rights to a land plot when renting a building or structure located on it

Under a rental agreement for a building or structure, the tenant, simultaneously with the transfer of rights of ownership and use of such real estate, is transferred the rights to that part of the land plot that is occupied by this real estate and is necessary for its use.

In cases where the renter is the owner of the land plot on which the building or structure being rented is located, the tenant is granted the right to rent or other right provided for in the rent agreement of the building or structure to the corresponding part of the land plot.

If the agreement does not define the right to the corresponding land plot transferred to the tenant, the right to use that part of the land plot that is occupied the building or structure and is necessary for its use in accordance with its purpose is transferred to him for the period of rent of the building or structure.

Renting a building or structure located on a land plot that is not owned by the renter is permitted without the consent of the owner of this plot, unless this contradicts the conditions for use of such a plot established by law or an agreement with the owner of the land plot.

Article 576. Retention by the tenant of a building or structure of the right to use the land plot upon its sale

In cases, where the land plot on which the rented building or structure is located is sold to another person, the tenant of this building or structure retains the right to use the part of the land plot that is occupied by the building or structure and is necessary for its use, under the conditions in force before the sale of the land plot.

Article 577. Amount of rent

The rental agreement for a building or structure must stipulate the amount of rent. In the absence of a condition agreed upon in writing by the parties regarding the amount of rent, the rental agreement for a building or structure is considered not concluded. In this case, the rules for determining the price provided for in part four of Article 356 of this Code do not apply.

The payment for the use of the building or structure established in the rent agreement for a building or structure includes payment for the use of the land plot on which it is located, or the corresponding part of the plot transferred along with it, unless otherwise provided by law or agreement.

In cases where the rent for a building or structure is established in the contract per unit area of ​​the building (structure) or another indicator of its size, the rent is determined based on the actual size of the building or structure transferred to the tenant.

Article 578. Transfer of a building or structure

The transfer of a building or structure by the renter and its acceptance by the tenant is carried out under a transfer deed or other transfer document signed by the parties.

Unless otherwise provided by law or the rental agreement for a building or structure, the renter‘s obligation to transfer the building or structure to the rental is considered fulfilled after it is provided to the rent for possession or use and the parties sign the relevant transfer document.

Failure by one of the parties to sign a document on the transfer of a building or structure on the terms stipulated by the contract is considered as a refusal, respectively, by the renter to fulfill the obligation to transfer the property, and by the tenant to accept the property.

Upon termination of a rental agreement for a building or structure, the rental building or structure must be returned to the renter in compliance with the rules provided for in this article.

§ 5. Renting an enterprise

Article 579. Enterprise rental agreement

Under an enterprise rental agreement, the renter undertakes to provide the rent for a fee with temporary possession and use of the enterprise as a whole as a property complex or part of it, with the exception of those rights and obligations that the renter has no right to transfer to other persons.

The renter is obliged to notify his creditors in writing about the transfer of debts to the rent, who, in case of disagreement with such transfer, have the right, within three months from the date of receipt of the notice, to demand from the renter termination or early fulfillment of the relevant obligations and compensation for losses caused by this. If any of these demands are not presented within the specified period, the creditor is deemed to have given consent to transfer the corresponding debt to the tenant.

The enterprise can be transferred to the rent only after completion of settlements with creditors who have demanded that the renter terminate or early fulfill obligations and compensate for losses.

After the transfer of an enterprise as a property complex for rent, the renter and the rent are jointly and severally liable for the debts included in the transferred enterprise, which were transferred to the rent without the consent of the creditor.

The rights of the renter, obtained by him based on a special permit (license) to engage in the relevant activity, are not subject to transfer to the rent, unless otherwise provided by law. The inclusion of obligations in the enterprise transferred under the agreement, the fulfillment of which by the rent is impossible in the absence of such a special permit (license), does not relieve the renter from corresponding obligations to creditors.

Article 580. Form of an enterprise rental agreement

The rental agreement for an enterprise is concluded in writing by drawing up one document signed by the parties and is subject to state registration.

The rental agreement for an enterprise is considered concluded from the moment of state registration.

Failure to comply with the form of the enterprise rental agreement entails its invalidity.

Article 581. Transfer of a rental enterprise

The transfer of the rental enterprise to the rent is carried out under a transfer deed.

Preparing the rental enterprise for transfer, including drawing up and submitting the transfer deed for signing is the responsibility of the renter and is carried out at his expense, unless otherwise provided by the rental agreement.

Article 582. Obligations of the tenant for the maintenance of the enterprise and payment of expenses for its operation

The rent of an enterprise is obliged to maintain the enterprise in proper technical condition throughout the entire term of the rental agreement, including its current and, in cases provided for by the agreement, major repairs.

The rent is responsible for the costs associated with the operation of the rent enterprise, unless otherwise provided by the contract, as well as payment of payments for insurance of the rental property, taxes and other obligatory payments.

Article 583. Use of the property of a rental enterprise

Unless otherwise provided by law or agreement, that the tenant has the right, with the consent of the renter, to sell, exchange and, without his consent, provide for temporary use or loan material assets included in the property of the rented enterprise. Sub rent them and transfer his rights and obligations under the rental agreement to in relation to such valuables to another person, provided that this does not entail a decrease in the value of the enterprise and does not violate other provisions of the contract.

Unless otherwise provided by the rental agreement for an enterprise, the tenant has the right, without the consent of the renter, to carry out reconstruction of the rented enterprise, its expansion, or technical re-equipment, which increases its value.

Article 584. Introduction by the tenant of improvements to the rented enterprise

The rent of an enterprise has the right to compensation for the cost of inseparable improvements to the rented property, regardless of the renter‘s permission for such improvements, unless otherwise provided by the enterprise rental agreement.

The renter may be released by the court from the obligation to compensate the rent for the cost of such improvements if he proves that the rent’s costs for these improvements increase. The cost of the rented property disproportionately to the improvement in its quality and (or) operational properties, or the principles of good faith and reasonableness were violated when making such improvements.

Article 585. Application to an enterprise rental agreement of the rules on the consequences of invalidity of transactions, on amendment and termination of the agreement

The rules of this Code on the consequences of the invalidity of transactions, on the amendment and termination of an agreement, providing for the return or recovery in kind, of what was received under the agreement on one side or on both sides. Apply to an enterprise rent agreement, if such consequences do not violate the essential rights and legally protected interests of the renter‘s creditors and the tenant, other persons and do not contradict the rules of Article 116 of this Code.

Article 586. Return of a rental enterprise

Upon termination of the rental agreement for an enterprise, the rented property complex must be returned to the renter in compliance with the rules provided for in Articles 579 and 581 of this Code.

§ 6. Leasing

Article 587. Leasing agreement

Under a leasing agreement, one party, the lessor (lessor), on behalf of the other party, the lessee (lessee), undertakes to enter into an agreement with a third party, the seller, to purchase property from the latter for the lessee, and the lessee undertakes to pay lease payments to the lessor for this.

Article 588. Leased object

The object of leasing can be any non-consumable things used for business activities, except for land plots and other natural objects.

Article 589. Leasing entities

A lessor is a person who acquires ownership of property for the purpose of its subsequent transfer to the lessee under leasing.

The lessee is the person who acquires the leased object for his own possession and use.

The seller is the person from whom the lessor purchases the leased object.

It is allowed to combine the lessee and the seller in one person, in the event that the lessor acquires property from a future user or when the lessor finances the manufacturer in order to purchase property from him for subsequent leasing to the same person.

Article 590. Lease payment

The lease payment represents the reimbursement by the lessee to the lessor of the cost of the leased object, as well as the interest income of the lessor.

Article 591. Notification of the seller about leasing of property

The lessor, when purchasing property for the lessee, must notify the seller that the property is intended to be leased to a specific person.

Article 592. Transfer of the subject of the leasing agreement to the lessee

Unless otherwise provided by the leasing agreement, the property that is the object of this agreement is transferred by the seller directly to the lessee at the latter’s location.

If the property that is the subject of a leasing agreement is not transferred to the lessee within the period specified in this agreement. If such a period is not specified in the agreement – within a reasonable time, the lessee has the right, if the delay is due to circumstances for which the lessor is responsible, to demand termination of the agreement and compensation for losses.

Article 593. Transfer to the lessee of the risk of accidental loss or accidental damage to property

The risk of accidental loss or accidental damage to leased property passes to the lessee at the time of transfer of this property to him, unless otherwise provided by the leasing agreement.

Article 594. Obligations and responsibilities of the lessor

The lessor is obliged to provide the leased object to the lessee in a condition that complies with the terms of the agreement and within the terms stipulated by it.

The lessor is liable to the lessee for non-delivery, short delivery, late delivery and delivery of property of inadequate quality if they are the result of his guilty actions and omissions.

Article 595. Rights of the lessee

In case of non-delivery, short delivery, late delivery or delivery of property of inadequate quality, the lessee has the right, unless otherwise provided by the contract:

delay payment of lease payments;

refuse the supplied property and demand termination of the leasing agreement.

In the event of early termination of the leasing agreement, the lessee has the right to demand the return of payments previously paid as an advance, minus the cost of the benefits that he received from using the leased object.

In the case provided for by the leasing agreement, the lessee may provide the leased object to ensure the fulfillment of other obligations in the part by which the cost of the leased object exceeds the remaining amount of lease payments payable to the lessor.

Upon expiration of the leasing agreement, the leased object becomes the property of the lessee, unless otherwise specified in the agreement.

Article 596. Subleasing

The lessee has the right to sublease the property received under a leasing agreement with the consent of the lessor, while remaining liable to him under the agreement.

Article 597. Duties and responsibilities of the lessee

The lessee is obliged to make lease payments on time, use the property in accordance with the conditions under which it was delivered, keep it in good condition, carry out routine repairs at its own expense, and bear other expenses for its maintenance, unless otherwise provided by the leasing agreement.

Upon termination of the leasing agreement, the lessee is obliged to return the property in the condition in which he received it from the lessor, taking into account its normal wear and tear and changes caused by agreement of the parties.

If the lessee fails to fulfill his obligations to pay lease payments, the lessor may receive the payments due to him along with interest.

If the lessee commits a significant violation of its obligations, the lessor may demand accelerated payment of future lease payments, unless otherwise provided by the leasing agreement, or demand termination of the agreement with foreclosure of the leased object in the manner prescribed for recovery of the collateral and recovery of damages.

Article 598. Responsibility of the seller

The lessee has the right to present directly to the seller of the property that is the subject of the leasing agreement, requirements arising from the purchase and sale agreement concluded between the seller and the lessor, in particular with regard to the quality and completeness of the property. The timing of its delivery and in other cases of improper performance of the agreement by the seller. In this case, the lessee has the rights and bears the obligations (except for the obligation to pay for the acquired property) provided for by this Code for the buyer, as if he were a party to the purchase and sale agreement for the specified property. However, the lessee cannot terminate the purchase and sale agreement with the seller without the consent of the lessor.

In relations with the seller, the lessee and the lessor act as joint and several creditors.

Unless otherwise provided by the leasing agreement, the lessor is not responsible to the lessee for the seller’s fulfillment of the requirements arising from the purchase and sale agreement, except in cases where the responsibility for choosing the seller lies with the lessor. In the latter case, the lessee has the right, at his own discretion, to present claims arising from the purchase and sale agreement, both directly to the seller of the property and to the lessor, who are jointly and severally liable.

Article 599. Preservation of the force of a leasing agreement upon transfer of the leased object to another owner

When the ownership of leased property is transferred from the lessor to another person, the leasing agreement remains valid for the new owner.

Chapter 35. Renting residential premises

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Article 600. Residential rental agreement

Under a residential rental agreement, one party – the owner of the residential premises or a person authorized by him (renter) – undertakes to provide the other party (tenant) with residential premises for a fee for possession and use for living in it.

Legal entities may be provided with possession and (or) use of residential premises based on a rent or other agreement. A legal entity may use residential premises only for the residence of citizens.

Article 601 Rental agreement for residential premises in a public housing stock for a specific purpose

In the communal housing stock for special purposes, residential premises are provided to citizens under a residential rental agreement. Members of his family living under such a residential tenancy agreement together with the tenant enjoy all rights and bear all obligations under the residential tenancy agreement on an equal basis with the tenant.

At the request of the employer and his family members, the contract may be concluded with one of the family members. In the event of the death of the tenant or his departure from the residential premises, the contract is concluded with one of the family members living in the residential premises.

An agreement for the rental of residential premises in a communal housing stock for a specific purpose is concluded on the grounds, on the terms and in the manner provided for by housing legislation. The rules of Articles 603, 604, 607, 609, 610, as well as parts one, two and three of Article 613 of this Code apply to such an agreement. Other provisions of this Code apply to an agreement for the rental of residential premises in a communal housing stock for a special purpose, unless otherwise provided by housing legislation.

Article 602. Object of a residential rental agreement

The object of a residential rental agreement may be isolated residential premises suitable for permanent residence (apartment, residential building, and part of an apartment or residential building).

The suitability of residential premises for living is determined in the manner prescribed by housing legislation.

The tenant of residential premises in an apartment building, along with the use of residential premises, has the right to use the property specified in Article 211 of this Code.

Article 603. Form of a residential rental agreement

The rental agreement for residential premises is concluded in writing.

A residential rental agreement between citizens is subject to registration with state tax authorities.

Article 604. Preservation of a rental agreement for residential premises during the transfer of ownership of residential premises

The transfer of ownership of residential premises occupied under a rental agreement does not entail changes or termination of the agreement. In this case, the new owner becomes a renter under the terms of the previously concluded rental agreement.

Article 605. Obligations of the property owner of residential premises

The property owner is obliged to provide the tenant with free residential premises in a condition suitable for permanent residence.

The property owner is obliged to carry out proper operation of the residential building in which the rented residential premises are located, to provide or ensure the provision of necessary utilities to the tenant for a fee, to ensure the repair of the common, property of the apartment building and devices for providing utilities located in the residential premises, and also to accept measures to ensure that the premises are used only for the purposes specified in the rental agreement.

Article 606. Employer and citizens permanently residing with him

Only a citizen can be a tenant under a residential rental agreement.

The contract must indicate citizens permanently residing in the residential premises with the tenant. In the absence of such instructions in the contract, the accommodation of these citizens is carried out in accordance with the rules of Article 608 of this Code.

Citizens who permanently live with the tenant have equal rights to use residential premises. The relationship between the employer and such citizens is determined by law.

The tenant is responsible to the property owner for the actions of citizens permanently residing with him who violate the terms of the rental agreement.

Citizens permanently residing with the tenant may, after notifying the property owner, enter into an agreement with the tenant that all citizens permanently residing in the residential premises are jointly and severally liable with the tenant to the property owner. In this case, such citizens are co-tenants.

Article 607. Obligations of the tenant of residential premises

The tenant is obliged to use the residential premises only for its intended purpose, ensure the safety of the residential premises and maintain it in proper condition.

The tenant does not have the right to carry out reconstruction and reconstruction of residential premises without the consent of the property owner.

The tenant is obliged to pay rent for the premises on time. Unless otherwise established by the contract, the tenant is obliged to pay for utilities independently.

Article 608. Inclusion of new family members of the tenant in the rental agreement for residential premises

The tenant of a residential premises, as well as members of his family, have the right to demand that other citizens be included in the rental agreement as a family member. The procedure and conditions for including such citizens in a residential rental agreement are determined law.

Article 609. Temporary residents

The tenant and citizens permanently residing with him, by common agreement and with prior notice to the landlord, have the right to allow temporary residents (users) to live in residential premises free of charge. The property owner may prohibit the residence of temporary residents if they fail to comply with the requirements of the law on the standard of living space per person. The period of stay of temporary residents cannot exceed six months.

Temporary residents do not have independent rights to use residential premises. The tenant is responsible for their actions to the property owner.

Temporary residents are required to vacate the residential premises upon expiration of the period of residence agreed upon with them, and if the period is not agreed upon, no later than seven days from the date of presentation of the corresponding demand by the tenant or any citizen permanently residing with him.

Article 610. Repair of rented residential premises

Current repairs of rented residential premises are the responsibility of the tenant, unless otherwise provided by the rental agreement.

Major repairs of rented residential premises are the responsibility of the property owner, unless otherwise provided by the rental agreement.

Re-equipment of a residential building in which rented residential premises are located, if such re-equipment significantly changes the conditions of use of the residential premises, is not permitted without the consent of the tenant.

Article 611. Payment for residential premises

The amount of payment for residential premises is established by agreement of the parties in the rental agreement for residential premises. If, in accordance with the law, a maximum amount of payment for residential premises is established, the payment established in the contract should not exceed this amount.

Unilateral changes for payment for residential premises are not permitted, except in cases provided for law or agreement.

Payment for residential premises must be paid the tenant within the time limits stipulated in the rental agreement for residential premises. If the contract does not provide for deadlines, the payment must be paid the employer monthly in the manner prescribed law.

Article 612. Term in a residential rental agreement

The rental agreement for residential premises is concluded for a period not exceeding five years. If the term is not specified in the contract, it is considered to be concluded for five years.

The rules provided for in parts two and three of Article 606, Article 609 , part three of this Article, Articles 613 and 614 of this Code are not applied to a residential rental agreement concluded for a period of up to one year (short-term rental), unless otherwise provided by the agreement.

The tenant has a pre-emptive right to conclude a contract for a new term.

The property owner may refuse to enter into a contract for a new term if he has decided not to rent out the premises for at least a year.

Article 613. Subletting of residential premises

Under a residential sub rental agreement, the tenant, with the consent of the renter, transfers for a period of time part or all of the premises he has rented for use to the subtenant. The subtenant does not acquire independent rights to use the residential premises. The tenant remains liable to the property owner under the residential rental agreement.

A sub rental agreement for residential premises can be concluded subject to compliance with the requirements of the law on the standard of living space per person.

The sub rental agreement for residential premises is paid.

The term of the residential sublease agreement cannot exceed the term of the residential rental agreement.

In case of early termination of a residential rental agreement, the sub rental agreement for residential premises is terminated simultaneously.

The rules on the preemptive right to conclude an agreement for a new term do not apply to a residential sublease agreement.

Article 614. Replacement of a tenant in a residential rental agreement

At the request of the tenant and other citizens permanently residing with him, and with the consent of the property owner, the tenant in the rental agreement for residential premises may be replaced one of the adult citizens permanently residing with the tenant.

In the event of the death of the tenant or his departure from the residential premises, the contract continues to be valid on the same terms, and the tenant becomes one of the citizens permanently residing with the previous tenant, by common agreement between them. If such agreement is not reached, all citizens permanently residing in the residential premises become co-tenants.

Article 615. Termination of a rental agreement

Termination of a residential lease agreement is carried out by agreement of the parties.

The tenant of residential premises has the right, with the consent of other citizens permanently residing with him, to terminate the rental agreement at any time with a written warning to the property owner three months in advance.

A residential rental agreement may be terminated in court at the request of the property owner in the following cases:

failure by the tenant to pay for the residential premises for six months, unless a longer period is established by the contract, and in case of short-term rental, in case of failure to pay the payment more than twice after the expiration of the payment period established by the contract;

destruction or damage to residential premises by the tenant or other citizens for whose actions he is responsible;

use of residential premises to commit illegal acts.

A residential rental agreement may be terminated in court at the request of any of the parties to the agreement:

if the premises cease to be suitable for permanent residence, as well as in the event of an emergency;

in other cases provided for by housing legislation.

If the tenant of a residential premises or other citizens for whose actions he is responsible use the residential premises for other purposes or systematically violate the rights and interests of neighbors, the landlord may warn the tenant about the need to eliminate the violation.

If the tenant or other citizens for whose actions he is responsible continue to use the residential premises for other purposes after warning or violate the rights and interests of neighbors, the property owner has the right to terminate the rental agreement in court.

The procedure and period for eliminating violations that served as the basis for termination of a residential rental agreement are established law.

Article 616. Consequences of termination of a residential rental agreement

In the event of termination of a residential tenancy agreement, the tenant and other citizens living in the residential premises at the time of termination of the contract are subject to eviction from the residential premises based on a court decision.

CHAPTER 36. FREE USE

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Article 617. The concept of a contract for free use

Under an agreement for gratuitous use (loan agreement), one party (the lender) undertakes to transfer or transfers an item for gratuitous temporary use to the other party (the borrower), and the latter undertakes to return the same item in the condition in which it received it, taking into account normal wear and tear, or in a condition stipulated the contract.

The rules provided for in Article 537, parts one and two of Article 540, Article 545, part four of Article 553, parts one and three of Article 555 of this Code are respectively applied to a contract for gratuitous use.

Article 618. Lender

The right to transfer a thing free use belongs to its owner and other persons authorized to do so by law or by the owner.

A commercial organization does not have the right to transfer things free use to a person who is its founder, participant (shareholder), manager, member of its management or control bodies.

Article 619. Providing a thing for free use

The lender is obliged to provide the thing in a condition that complies with the terms of the agreement for gratuitous use and its purpose.

The item is provided for free use with all its accessories and related documents (instructions for use, technical passport, etc.), unless otherwise provided by the contract.

If such accessories and documents were not transferred, but without them the thing cannot be used for its intended purpose or its use significantly loses value for the borrower, the latter has the right to demand the provision of such accessories and documents or termination of the contract and compensation for actual damage suffered by him.

Article 620. Consequences of failure to provide a thing for free use

If the lender does not provide the thing to the borrower, the latter has the right to demand termination of the agreement for gratuitous use and compensation for actual damage suffered by him.

Article 621. Liability for defects of a thing transferred free use

The lender is responsible for defects in the property that he intentionally or through gross negligence did not stipulate when concluding the agreement for gratuitous use.

If such defects are discovered, the borrower has the right, at his choice, to demand from the lender the elimination of the defects of the thing free of charge or reimbursement of expenses for eliminating the defects of the thing, or early termination of the contract for gratuitous use and compensation for actual damage.

The lender, notified of the requirements of the borrower or of his intention to eliminate the defects of the thing at the expense of the lender, may without delay replace the defective thing with another similar thing that is in proper condition.

The lender is not responsible for defects of the thing that were agreed upon when concluding the agreement for gratuitous use, or were known to the borrower in advance or should have been discovered by the borrower during the inspection of the thing or checking its serviceability when concluding the agreement or when transferring the thing.

Article 622. Rights of third parties to a thing transferred free use

The transfer of an item for free use is not a basis for changing or terminating the rights of third parties to this item.

When concluding an agreement for gratuitous use, the lender is obliged to warn the borrower about all the rights of third parties to this thing (easement, right of pledge, etc.). Failure to fulfill this obligation gives the borrower the right to demand termination of the contract and compensation for actual damage.

Article 623. Obligations of the borrower regarding the maintenance of the thing

The borrower is obliged to maintain the thing received free use in good condition. Unless otherwise provided by the agreement, the borrower is obliged to carry out current and major repairs of the property and bear all expenses for its maintenance.

Article 624. Risk of accidental loss or accidental damage to a thing

The borrower bears the risk of accidental death or accidental damage to an item received for free use if the item is lost or damaged due to the fact that he did not use it in accordance with the agreement or the purpose of the item or transferred it to a third party without the consent of the lender. The borrower also bears the risk of accidental death or accidental damage to an item if he could have prevented its death or damage by sacrificing his item.

Article 625. Liability for damage caused to a third party by the use of a thing

The lender is liable for damage caused to a third party by the use of an item, unless he proves that the damage was caused due to the intent or gross negligence of the borrower or the person in whose possession. The item ended up with the consent of the lender, or if the harm was caused by the use of an item that was removed from the possession of the borrower without consent.

Article 626. Transfer of a thing received for free use to a third party

The borrower has the right to transfer for the use of a third party an item received for free use only with the consent of the lender, while remaining responsible to him.

Article 626¹. Form of agreement for the provision of residential premises free use

An agreement on the provision of residential premises for free use is concluded in writing, except in cases where residential premises are provided for free use to close relatives (parents, blood and half-brothers and sisters, spouses, children, including adopted children, grandparents, grandchildren, as well as parents, blood and half-brothers and sisters of spouses).

The rules provided for in part two of Article 606, parts one and two of Article 607, articles 609, 610, part one of Article 612, part one, paragraphs three and four of part three, parts four and five of Article 615 apply to an agreement for the provision of residential premises free use. Article 616 of this Code.

Article 627. Early termination of a contract for gratuitous use

The lender has the right to demand early termination of the agreement for gratuitous use in cases where the borrower:

uses the thing not in accordance with the contract or the purpose of the thing;

fails to fulfill obligations to maintain the thing in good condition or its contents;

significantly worsens the condition of the thing;

transferred the item to a third party without the consent of the lender.

The borrower has the right to demand early termination of the agreement for gratuitous use:

upon discovery of defects that make the normal use of the thing impossible or burdensome, the presence of which he did not know and could not know at the time of concluding the contract;

if the thing, due to circumstances for which he is not responsible, turns out to be in a condition unsuitable for use;

if, when concluding the agreement, the lender did not warn him about the rights of third parties to the transferred item;

if the lender fails to fulfill the obligation to transfer the thing or its accessories and documents related to it.

Article 628. Refusal of a contract for free use

If the period for gratuitous use of a thing is not specified in the contract, each party has the right to cancel the contract at any time by notifying the other party one month in advance, unless the contract provides for a different notice period.

Unless otherwise provided by the agreement for gratuitous use, the borrower has the right at any time to refuse the agreement concluded with an indication of the period, in the manner prescribed by part one of this article.

Article 629. Change of parties to a gratuitous use agreement

The lender has the right to alienate the thing or transfer it for compensated use to a third party. In this case, the rights under the previously concluded agreement for gratuitous use are transferred to the new owner or user, and his rights in relation to the thing are encumbered by the rights of the borrower.

In the event of the death of a citizen-lender or reorganization or liquidation of a legal entity-lender, their rights and obligations under the agreement for gratuitous use pass to the heir or other legal successor or to another person, whom the ownership of the thing or other right on the basis of which the thing was transferred to free use.

In the event of reorganization of a legal entity-borrower, its rights and obligations under the agreement are transferred to the legal successor, unless otherwise provided by the agreement of gratuitous use.

Article 630. Termination of a contract for free use

The agreement for gratuitous use is terminated in the event of the death of the citizen-borrower or the liquidation of the legal entity-borrower, unless otherwise provided by the agreement.

CHAPTER 37

§ 1. General provisions on contracts

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Article 631. Contract

Under a work contract, one party (contractor) undertakes to perform certain work on the instructions of the other party (customer) and deliver the result to the customer within a specified time, and the customer undertakes to accept and pay for the result of the work. The work is performed at the contractor’s risk, unless otherwise provided by law or by agreement of the parties.

To certain types of contract (household contract, construction contract, contract for design or survey work, contract for research, development and technological work), the provisions provided for in this paragraph apply, unless otherwise established by the rules of this Code on these types contracts.

Article 632. Work performed under a contract

A contract is concluded for the manufacture or processing (processing) of a thing or for the performance of other work with the transfer of its result or delivery of it in another way to the customer.

Unless otherwise provided by the contract, the work is performed using materials and by the contractor.

The contractor independently determines the methods of fulfilling the customer’s assignment, unless otherwise provided by the contract.

The Contractor is responsible for the inadequate quality of the materials and equipment provided by him, as well as for the provision of materials and equipment encumbered by the rights of third parties.

Article 633. Risk of accidental loss or accidental damage to materials

The risk of accidental loss or accidental damage to materials before the deadline for the contractor to deliver the work stipulated by the contract is borne by the party that provided the materials, and after this deadline – by the overdue party, unless otherwise provided by law or the contract.

Article 634. General contractor and subcontractor

If the legislation or the contract does not provide for the contractor’s, obligation to perform the work provided for in the contract personally, the contractor has the right to involve other persons (subcontractors) in fulfilling part of his obligation. In this case, the contractor acts as a general contractor.

The general contractor is liable to the subcontractor for the failure or improper performance by the customer of its obligations under the work contract, and to the customer is responsible for the consequences of the failure or improper performance of its obligations by the subcontractor in accordance with parts two and three of Article 241 and Article 334 of this Code.

Unless otherwise provided by law or the contract, the customer and the subcontractor have no right to make claims against each other related to the violation of contracts concluded by each of them with the general contractor.

A contractor who has engaged a subcontractor to perform a contract in violation of the provisions of part one of this article or a contract shall be liable to the customer for losses caused by the participation of such a subcontractor in the performance of the contract.

With the consent of the general contractor, the customer has the right to enter into an agreement for the performance of certain works with other persons. In this case, these persons are responsible for non-performance or improper performance of the work directly to the customer.

Article 635. Time limits for completing work

The work contract specifies the start and end dates for the work. By agreement between the parties, the contract may also stipulate deadlines for completing individual stages of work (interim deadlines).

Unless otherwise provided by the contract, the contractor is responsible for violation of both the initial and final, as well as intermediate deadlines for the work.

The initial, final and intermediate deadlines for completing the work specified in the contract may be changed in cases and in the manner provided for by the contract.

The consequences of delay in execution specified in part two of Article 337 of this Code occur when the deadline for completing the work is violated.

Article 636. Price of work

The contract specifies the price of the work to be performed or the methods for determining it. If there are no such instructions in the contract, the price is determined in accordance with part four of Article 356 of this Code.

The price of work in the contract includes compensation for the contractor’s costs and the remuneration due to him.

The price of the work can be determined by drawing up an estimate.

In the event that the work is carried out in accordance with the estimate drawn up by the contractor, the estimate becomes valid and becomes part of the contract from the moment it is confirmed by the customer.

The price of the work (estimate) can be approximate or fixed. In the absence of these instructions in the contract, the price of the work (estimate) is considered fixed.

If there is a need to carry out additional work and, for this reason, a significant excess of the approximately determined price of the work (approximate estimate), the contractor is obliged to promptly notify the customer about this. A customer who does not agree to exceed the price of work (estimate) specified in the contract has the right to withdraw from the contract. In this case, the contractor may require the customer to pay him the price for the completed part of the work.

A contractor who fails to promptly warn the customer about the need to exceed the price of work (estimate) specified in the contract is obliged to fulfill the contract, retaining the right to pay for the work at the price specified in the contract.

The contractor, as a rule, does not have the right to demand an increase in the fixed price (fixed estimate), and the customer – to reduce it, including in the case when at the time of concluding the work contract it was impossible to provide for the full scope of the work to be performed or the expenses necessary for this.

If there is a significant increase in the cost of materials and equipment that must be provided by the contractor, as well as services provided to him by third parties that could not be provided for at the conclusion of the contract, the contractor has the right to demand an increase in the established price of the work (estimate), and if the customer refuses to fulfill this requirement – termination of the contract in accordance with Article 383 of this Code.

Article 637. Contractor’s savings

In cases where the contractor’s actual expenses turned out to be less than those taken into account when determining the price of the work (drawing up the estimate), the contractor retains the right to pay for the work at the price stipulated in the contract, unless the customer proves that the savings received by the contractor affected the quality of the work performed.

The contract may provide for the distribution of savings received by the contractor between the parties.

Article 638. Procedure for payment for work

If the contract does not provide for advance payment for the work performed or its individual stages, the customer is obliged to pay the contractor the agreed price after the final delivery of the work results, provided that the work is completed properly and on time, or with the customer’s consent – ahead of schedule.

The contractor has the right to demand payment of an advance or deposit only in cases and in the amount specified in the legislation or the contract.

Article 639. Contractor’s right to withhold

If the customer fails to fulfill the obligation to pay the established price or other amount due to the contractor in connection with the execution of the contract, the contractor has the right to withhold, in accordance with Articles 290 and 291 of this Code, the result of the work, as well as equipment belonging to the customer transferred for processing (processing) the thing, the balance of unused material and other property of the customer in his possession until the customer pays the appropriate amounts.

Article 640. Performing work using the customer’s material

The contractor is obliged to use the material provided by the customer economically and prudently, after completion of the work, provide the customer with a report on the consumption of the material, and also return the remainder or, with the consent of the customer, reduce the price of the work taking into account the cost of the unused material remaining with the contractor.

The contractor is responsible for improper performance of work caused by defects in the material provided by the customer, unless he proves that he could not have discovered the defects when the material was properly accepted.

Article 641. Liability of the contractor for failure to preserve the property provided by the customer

The contractor is responsible for the failure to preserve the material, equipment provided by the customer, things transferred for processing (processing), or other property that comes into the contractor’s possession in connection with the execution of the contract.

Article 642. Rights of the customer during the performance of work by the contractor

The customer has the right to check the progress and quality of work at any time without interfering with the contractor’s activities.

If the contractor does not begin to fulfill the work contract in a timely manner or performs the work so slowly that completing it on time becomes clearly impossible, the customer has the right to refuse the contract and demand compensation for losses. In this case, the customer must prove his loss of interest in the contract if it is completed late.

If during the execution of the work it becomes obvious that it will not be completed properly, the customer has the right to assign the contractor a reasonable period to eliminate the deficiencies and, if the contractor fails to fulfill this requirement within the appointed period, refuse the contract or entrust the correction of the work to another person at the expense of the contractor, as well as demand compensation for losses.

Unless otherwise provided by the contract, the customer may, that at any time before delivery of the result of the work to him, withdraw from the contract by paying the contractor part of the established price in proportion to the part of the work performed before receiving notification of the customer’s refusal from the contract. The customer is also obliged to compensate the contractor for losses caused by termination of the contract, to the extent of the difference between the part of the price paid for the work performed and the price determined for the entire work.

Article 643. Circumstances about which the contractor is obliged to warn the customer

The contractor is obliged immediately to warn the customer and, until receiving instructions from him, to suspend work upon detection of:

unsuitability or poor quality of the material, equipment, technical documentation provided by the customer or the item transferred for processing (processing);

possible adverse consequences for the customer of following his instructions on the method of performing the work;

other circumstances beyond the control of the contractor that threaten the suitability or durability of the results of the work performed or make it impossible to complete it on time.

A contractor who did not warn the customer about the circumstances specified in part one of this article, or continued work without waiting for the expiration of the period specified in the contract, and in the absence of a reasonable period for responding to the warning, or despite the customer’s timely instructions to suspend work, does not have the right upon presentation to him or them to the customer of the relevant requirements to refer to the specified circumstances.

If the customer, despite timely and reasonable warning from the contractor about the circumstances specified in part one of this article, does not replace unsuitable or substandard material within a reasonable time, does not change instructions on the method of performing the work, or does not take other necessary measures to eliminate the circumstances threatening suitability or durability of the work, the contractor has the right to refuse to perform the contract and demand compensation for damages.

Article 644. Failure of the customer to fulfill counter-obligations under a work contract

The contractor has the right not to start work, but to suspend the work begun in cases where the customer’s violation of his counter-obligations under the work contract, in particular the failure to provide material, equipment, technical documentation or things to be reprocessed (processed), prevents the contractor from fulfilling the contract. If circumstances clearly indicating that the fulfillment of these duties will not be carried out within the prescribed period (Article 256 of this Code).

Unless otherwise provided by the contract, the contractor, in the presence of the circumstances specified in part one of this article has the right to refuse to perform the contract and demand compensation for losses.

Article 645. Assistance of the customer

The customer is obliged, in cases, to the extent and in the manner provided for in the contract, to provide assistance to the contractor in performing the work.

If the customer fails to fulfill this obligation, the contractor has the right to demand compensation for losses caused, including additional costs caused by downtime, rescheduling the work, or increasing the price of the work specified in the contract.

In cases where the performance of work under a contract has become impossible due to the actions or omissions of the customer, the contractor retains the right to pay him the price specified in the contract, taking into account the completed part of the work.

Article 646. Acceptance of completed work by the customer

The customer is obliged, within the time frame and in the manner prescribed by the contract, with the participation of the contractor, to inspect and accept the work performed (its result), and if deviations from the contract are discovered that worsen the result of the work, or other shortcomings in the work, immediately report this to the contractor.

A customer who discovers deficiencies in the work upon acceptance has the right to refer to them only if the act or other document-certifying acceptance stipulates these deficiencies or the possibility of subsequently filing a demand for their elimination.

A customer who accepts a work without checking is deprived of the right to refer to defects in the work that could have been identified during the usual method of accepting it (obvious defects).

The customer, who, after accepting the work, discovers deviations from the work contract or other defects in it that could not be identified during the usual method of accepting it (hidden defects), including those that were deliberately hidden by the contractor, is obliged to notify the contractor about this within ten days upon their discovery.

If a dispute arises between the customer and the contractor regarding deficiencies in the work performed or their causes, an examination must be appointed at the request of either party. The costs of the examination are borne by the contractor, except in cases where the examination establishes the absence of violations of the contract or a causal connection between the actions of the contractor and the detected deficiencies. In these cases, the costs of the examination are borne by the party that requested its appointment, and if the examination is appointed by agreement between the parties, both parties equally.

Unless otherwise provided by the contract, if the customer evades acceptance of the work performed, the contractor has the right, after one month from the day when, according to the contract. The result of the work should have been transferred to the customer, and subject to subsequent double warning to the customer, sell the result of the work, and the proceeds, minus all payments due to the contractor, deposit it at the notary’s office in the name of the customer. The contractor has the right, instead of selling the subject of the contract, to exercise the right to retain it or to recover damages from the customer.

If the customer’s evasion from accepting the completed work resulted in a delay in delivery of the work, the risk of accidental death on the manufactured (processed) item is recognized as having passed to the customer now when the delivery of the item should have taken place.

Article 647. Quality of work

The work performed by the contractor must comply with the terms of the contract, and in their absence or incompleteness, the requirements usually applied to work of the corresponding type. Unless otherwise provided by law or the contract, the result of the work performed must, at the time of transfer to the customer, have the properties specified in the contract, or certain usually imposed requirements, and within a reasonable period of time be suitable for the use established by the contract, and if it is not provided for by the contract, for normal use of the result of work of this kind.

If the law provides for mandatory requirements for work performed under a work contract, the contractor, acting as an entrepreneur, is obliged to perform the work in compliance with these mandatory requirements.

The contractor may undertake, under the contract, the obligation to perform work that meets higher quality requirements than the established mandatory requirements.

Article 648. Guarantee of quality of work

In the event that legislation or a contract provides for the contractor to provide the customer with a guarantee of the quality of work, the contractor is obliged to transfer to the customer the result of the work, which must comply with the requirements of part one of Article 647 of this Code during the entire warranty period.

The guarantee of the quality of the work result, unless otherwise provided by the contract, applies to everything that makes up the result of the work.

Article 649. Procedure for calculating the warranty period

Unless otherwise provided by the contract, the warranty period begins to run from the moment when the result of the work performed was accepted or should have been accepted by the customer.

The rules contained in parts two , three , four and five of Article 404 of this Code are applied to the calculation of the warranty period under a work contract , unless otherwise provided by law or by agreement of the parties or does not follow from the specifics of the work contract.

Article 650. Contractor’s liability for poor quality of work

In the event that the work was performed by the contractor with deviations from the work contract that worsened the result of the work, or with other shortcomings that make it unsuitable for the use specified in the contract, or in the absence of a corresponding condition in the contract for unsuitability for normal use, the customer has the right, unless otherwise established by law or contract, at its option, require the contractor to:

elimination of deficiencies free of charge within a reasonable time;

a proportionate reduction in the price set for the work;

reimbursement of their expenses for eliminating defects when the customer is right to eliminate them is provided for in the contract.

The contractor has the right, instead of eliminating the defects of the work for which he is responsible, to perform the work again free of charge with compensation to the customer for losses caused by the delay in performance. In this case, the customer is obliged to return the previously transferred work result to the contractor, if the nature of the work makes such a return possible.

If deviations in the work from the terms of the work contract or other shortcomings in the result of the work are significant and irreparable, or if the deficiencies found were not eliminated within a reasonable period established by the customer, the customer has the right to refuse to perform the contract and demand compensation for damages caused.

The condition of the contract to release the contractor from liability for certain defects does not relieve him of liability if it is proven that such defects arose as a result of the contractor’s guilty actions or inactions.

The contractor who provided the material to perform the work is responsible for its quality in accordance with the rules on the seller’s liability for goods of inadequate quality.

Article 651. Time limits for detecting inadequate quality of work results

Unless otherwise established by law or a contract, the customer has the right to make claims related to the inadequate quality of the work result, provided, that it is identified within the time limits established by this article.

In the event that there is no warranty period established for the result of the work, claims related to defects in the result of, the work may be presented by the customer. If they were discovered within a reasonable time, but within two years from the date of delivery of the result of the work, established by law, contract or business custom, unless other deadlines apply.

The customer has the right to make claims related to defects in the work result discovered during the warranty period.

In the event that the warranty period provided for in the contract is less than two years and defects in the work result are discovered by the customer after the expiration of the warranty period, but within two years from the date provided for in part five of this article, the contractor shall be liable if the customer proves that the defects arose before the transfer. The result of the work to the customer or for reasons that arose before this point.

Unless otherwise provided by the contract, the warranty period begins to run from the moment when the result of the work performed was accepted or should be accepted by the customer.

The rules contained in parts two, three, four and five of Article 404 of this Code are applied to the calculation of the warranty period under a work contract, unless otherwise provided by law, agreement of the parties or follows from the specifics of the work contract.

Article 652. Limitation period for claims of inadequate quality of work

The limitation period for claims caused by inadequate quality of work is determined according to the rules of Article 150 of this Code.

If the law or the contract provides for the contractor to provide a guarantee of the quality of work, a warranty period is established and a statement regarding defects in the work is made within the warranty period, the limitation period begins from the date of the statement of defects.

If, in accordance with the contract, the customer in parts accepts the work, the limitation period begins from the day the work is accepted as a whole.

Article 653. Obligation of the contractor to convey information to the customer

The contractor is obliged to transfer to the customer, along with the result of the work, information relating to the operation or other use of the subject of the contract, if this is provided for by the contract or the nature of the information is such that without it is impossible to use the result of the work for the purposes specified in the contract.

Article 654. Confidentiality of information received by the parties

If a party, due to the fulfillment of its obligation under a work contract, has received from the other party information about new solutions and technical knowledge, including those that do not enjoy legal protection, as well as information that may be considered a trade secret, then it does not have the right to disclose it to third parties without consent the other side. The procedure and conditions for using such information are determined by agreement of the parties.

Article 655. Return of materials and equipment to the customer

In cases where the customer, on the basis of part four of Article 642 or part three of Article 650 of this Code, refuses to fulfill the contract, the contractor is obliged to return the materials, equipment provided by the customer, the thing transferred for processing (processing) and other property or transfer them to the person specified by the customer, and if this turns out to be impossible, reimburse the cost of materials, equipment, items and other property.

§ 2. Household contract

Article 656. Household contract

Under a household contract, a contractor engaged in business activities undertakes to perform, on the instructions of a citizen-customer, certain work designed to satisfy the household or other personal needs of the customer, and the customer undertakes to accept the work and pay for it.

Unless otherwise provided by law or the contract, including the terms of the forms or other standard forms to which the customer subscribes, the household contract is considered concluded from the moment the contractor issues to the customer a receipt or other document confirming acceptance of the order.

The absence of the specified documents from the customer does not deprive him of the right to refer to witness testimony in confirmation of the fact of concluding a household contract or its terms.

A household contract is a public contract.

Article 657. Guarantees of customer rights

The contractor does not have the right to force the customer to include additional paid work or services in the household contract. If this requirement is violated, the customer has the right to refuse payment for the relevant work or service.

The customer has the right, at any time before the delivery of the work to him, to refuse to fulfill the contract for domestic work, by paying the contractor part of the established price in proportion to the part of the work completed before receiving notification of the customer’s refusal to perform the contract, and by reimbursing him for the expenses incurred up to this point in order to fulfill the contract, if they are not included in the specified part of the price of the work. The terms of the contract that deprive the customer of this right are void.

Article 658. Providing the customer with information about the proposed work

The contractor is obliged, before concluding a domestic work contract, to provide the customer with the necessary and reliable information about the proposed work, its types and features, the price and form of payment, as well as inform the customer, at his request, of other information related to the contract and the relevant work. If this is important due to the nature of the work, the contractor must indicate to the customer a specific person who will perform it.

The customer has the right to demand termination of a domestic contract without payment for work performed and compensation for losses in cases where, due to incompleteness or unreliability of information received from the contractor, a contract was concluded to perform work that does not have the properties that the customer had in mind.

Article 659. Warning to the customer about the conditions for using the work performed

When handing over the work to the customer, the contractor is obliged to inform him of the requirements that must be observed for the effective and safe use of the work result, as well as the possible consequences for the customer and other persons of non-compliance with the relevant requirements.

Article 660. Performing work using contractor’s material

If work under a household contract is performed from the contractor’s material, the material is paid by the customer upon conclusion of the contract in full or in part specified in the contract, with final payment upon receipt by the customer of the work performed by the contractor.

In accordance with the household contract, the material can be provided by the contractor on credit, including with the condition that the customer pays for the material in installments.

A change in the price of the material provided by the contractor after the conclusion of a household work contract does not entail recalculation.

Article 661. Performing work from the customer’s material

If work under a household contract is performed from the customer’s material, the receipt or other document issued by the contractor to the customer upon conclusion of the contract must indicate the exact name, description and price of the material, determined by agreement of the parties. The assessment of material in a receipt or other similar document subsequently may be challenged by the customer in court.

Article 662. Price and payment for work

The price of work in a household contract is determined by agreement of the parties and cannot be higher than that indicated in the price list announced by the contractor. The work is paid by the customer, after its final delivery by the contractor. By agreement of the parties, the work can be paid for by the customer upon conclusion of the contract in full or by issuing an advance.

Article 663. Consequences of discovering deficiencies in the work performed

The customer may exercise one of the rights provided for in Article 650 of this Code in the event that he discovered deficiencies during the acceptance of the work result or during the use of the subject of the contract – within the general terms provided for in part one of Article 652 of this Code, and in the presence of warranty periods – within these periods.

A demand for the gratuitous elimination of defects in work performed under a domestic contract, which may pose a danger to the life or health of the customer himself and other persons, may be made by the customer or his legal successor within ten years from the date of acceptance of the result of the work, if not in accordance with the procedure established by law. Longer terms (service periods) are provided. Such a claim may be made regardless of when these defects are discovered, including if they are discovered after the end of the warranty period. If the contractor fails to comply with this requirement, the customer has the right, within the same period, to demand either the return of part of the price paid for the work, or reimbursement of expenses incurred in connection with the elimination of deficiencies on its own or with the help of third parties.

Article 664. Consequences of the customer’s failure to appear to receive the result of the work

If the customer fails to appear to receive the result of the work performed or the customer otherwise evades its acceptance, the contractor has the right, after warning the customer in writing, after two months from the date of such warning, to sell the result of, the work for a reasonable price, and to pay the proceeds, minus all payments due to the contractor in the name of the customer as a deposit in accordance with Article 249 of this Code.

In the cases specified in part one of this article, the contractor may, instead of selling the result of the work, exercise the right to retain it or recover damages from the customer.

Article 665. Rights of the customer in case of improper performance or non-performance of work under a household contract

In case of improper performance or non-performance of work under a household contract, the customer may exercise the rights granted to the buyer in accordance with Articles 434 – 436 of this Code.

§ 3. Construction contract

Article 666. Construction contract

Under a construction contract, the contractor undertakes, within the period established by the contract, to build a specific object on the customer’s instructions or to perform other construction work, and the customer undertakes to create the necessary conditions for the contractor to perform the work, accept it and pay the agreed price.

A construction contract is concluded for the construction or reconstruction of an enterprise, building (including a residential building), structure or other object, as well as for the performance of installation, commissioning and other work inextricably related to the object under construction. The rules on construction contracts also apply to major repairs of buildings and structures, unless otherwise provided by the contract.

In cases provided for in a construction contract, the contractor assumes the obligation to ensure the operation of the facility after its acceptance by the customer for the period specified in the contract.

The owner of the unfinished construction until it is delivered to the customer and paid by him is the contractor.

Article 667. Risk of accidental death or accidental damage to the contracted object

If the contracted object is lost or damaged, the contractor bears the risk of accidental loss or accidental damage to the object before its acceptance.

Article 668. Responsibility for the safety of work performed

The contractor is responsible for the safety of the work performed.

Article 669. Insurance of a construction project

The contractor is obliged, at his own expense, to insure the object or set of works provided for in the contract, unless a different procedure and conditions are determined by the parties to the contract.

The party charged with insurance must provide the other party, in the manner prescribed by the construction contract, with evidence that it has concluded an insurance contract in accordance with the terms of the contract, including information about the insurer, the amount of the insured amount and the insured risks.

Insurance does not relieve the relevant party from the obligation to take the necessary measures to prevent the occurrence of an insured event.

Article 670. Design and estimate documentation

The contractor is obliged to carry out construction and related work in accordance with the design and estimate documentation defining the volume and content of the work and other requirements for it.

In the absence of other instructions in the construction contract, it is assumed that the contractor is obliged to perform all the work specified in the design and estimate documentation.

The construction contract must determine the composition and content of the design and estimate documentation, and must also stipulate which party must provide the relevant documentation and within what time frame.

A contractor who discovers during construction that work is not taken into account in the design and estimate documentation and, in connection with this, the need for additional work and an increase in the estimated cost of construction, is obliged to inform the customer about this.

If the customer does not receive a response to his message within ten days, unless the law or the construction contract provides for a different period for this, the contractor is obliged to suspend the relevant work, attributing losses caused by downtime to the customer’s account. The customer is exempt from compensation for these losses if he proves that there is no need for additional work.

A contractor who fails to fulfill the obligations established by parts four and five of this article is deprived of the right to demand from the customer payment for additional work performed and compensation for losses caused by this, unless he proves the need for immediate action in the interests of the customer, in particular due to the fact that the suspension of work could lead to death or damage to the construction site.

If the customer agrees to additional work and payment for it, the contractor has the right to refuse to perform said work only in cases where they are not within the scope of the contractor’s professional activities or cannot be performed by the contractor for reasons beyond his control.

Article 671. Amendments to design and estimate documentation

The customer has the right to make changes to the technical documentation, if the additional work caused by this does not exceed ten percent of the total, cost of construction indicated in the estimate and does not change the nature of the work provided for in the construction contract.

Changes to the technical documentation greater than those specified in part one of this article are made based on an additional estimate agreed upon by the parties.

The contractor has the right to demand, in accordance with Article 382 of this Code, a revision of the estimate if, for reasons beyond his control, the cost of the work exceeded the estimate by at least ten percent.

The Contractor has the right to demand compensation for reasonable expenses incurred in connection with the identification and elimination of defects in the design and estimate documentation.

Article 672. Providing construction with materials and equipment

The contractor is responsible for providing the construction with materials, including parts and structures, as well as equipment, unless the contract stipulates that the customer provide the material support for the construction in whole or in a certain part.

The party whose responsibility is to ensure construction is responsible for the discovered impossibility of using the materials (parts, structures) provided by it, as well as equipment without deteriorating the quality of the work performed, unless it proves that the impossibility of use arose due to circumstances for which the other party is responsible.

If it is discovered that it is impossible to use materials or equipment provided by the customer without deteriorating the quality of the work performed and the customer refuses to replace them. The contractor has the right to withdraw from the construction contract and require the customer to pay the contract price in proportion to the completed part of the work.

Article 673. Payment for work

Payment for work performed by the contractor is made by the customer in the amount provided for in the estimate, within the time limits and in the manner established by law or the construction contract. In the absence of appropriate instructions in the law or contract, payment for work performed by the contractor is made in accordance with Article 638 of this Code.

A construction contract may provide for payment for work at a time and in full after acceptance of the project by the customer.

Article 674. Provision of land for construction

The customer is obliged to promptly, provide for construction a plot of land of such area and in such condition as specified in the construction contract. In the absence of such instructions in the contract, the area and condition of the land plot must ensure the timely start of work, its normal conduct and completion on time.

Article 675. Additional obligations of the customer in a construction contract

The customer is obliged, in the cases and in the manner provided for in the construction contract, to transfer to the contractor for use the buildings and structures necessary for the implementation of the work, to ensure the transportation of goods to his address, temporary installation of power supply networks, water and steam pipelines and to provide other services.

Article 676. Control and supervision of the customer over the performance of work under a construction contract

The customer has the right to exercise control and supervision over the progress and quality of the work performed, compliance with the deadlines for their completion (schedule), the quality of materials provided by the contractor, as well as the correct use of the customer’s materials by the contractor, without interfering with the operational and economic activities of the contractor.

The customer, who, while monitoring and supervising the performance of work, discovers deviations from the terms of the construction contract that may worsen the quality of the work, or other shortcomings, is obliged to immediately notify, the contractor about this. The customer who has not made such a statement loses the right to subsequently refer, to the deficiencies discovered by him.

The contractor is obliged to comply with the customer’s instructions received during construction, unless such instructions contradict the terms of the construction contract and do not constitute interference in the operational and economic activities of the contractor.

A contractor who has performed work improperly does not have the right to refer to the fact that the customer did not exercise control and supervision over their implementation, except in cases where the obligation to exercise such control and supervision is assigned to the customer by law.

Article 677. Cooperation of the parties to a construction contract

If, during construction and related work, obstacles to the proper execution of the construction contract are discovered, each party is obliged to take all measures within its power to eliminate such obstacles. The party that fails to fulfill this obligation loses the right to compensation for losses caused by the fact that the relevant obstacles were not eliminated.

The party’s expenses related to the performance of the obligations specified in part one of this article are subject to reimbursement by the other party when this is provided for in the construction contract.

Article 678. Obligations of the contractor for environmental protection and safety of construction work

When carrying out construction and related work, the Contractor is obliged to comply with the requirements of legislation on environmental protection and safety of construction work and is liable to third parties for violation of these requirements.

The contractor has no right to use materials (parts, structures) and equipment provided by the customer during the work, or to follow his instructions, if this may lead to a violation of the requirements for environmental protection and safety of construction work that are mandatory for the parties.

Article 679. Obligations of the customer during construction conservation

If, for reasons beyond the control of the parties, work under a construction contract is suspended and the construction project is mothballed, the customer is obliged to pay the contractor in full for the work completed up to the moment of mothballing, as well as to reimburse expenses caused by the need to stop work and mothball construction.

Article 680. Delivery and acceptance of work

The customer, having received the contractor’s message about the readiness for delivery of the result of work completed under the construction contract or, if provided for in the contract, the completed stage of work, is obliged to immediately begin, accepting it.

The customer organizes and accepts the result of the work at his own expense, unless otherwise provided by the construction contract. In cases provided for by law, representatives of state bodies and self-government bodies of citizens must participate in the acceptance of the work result.

The customer, who has previously accepted individual stages of work, bears the risk of their loss or damage through no fault of the contractor, including in cases where the construction contract provides for the work to be performed at the contractor’s risk.

The delivery of the work result by the contractor and its acceptance by the customer is formalized by an act signed by both parties. If one of the parties refuses to sign the act, a note to this effect is made in it and the act is signed by the other party.

A unilateral act of delivery or acceptance of the result of work can be declared invalid by the court only if the reasons for refusing to sign the act are recognized by it as justified.

In cases where this is provided for by law or a construction contract or follows from the nature of the work performed under the contract, acceptance of the work result must be preceded by preliminary tests. In these cases, acceptance of the work can only be carried out if the preliminary tests have a positive result.

The customer has the right to refuse to accept the result of the work if deficiencies are discovered that exclude the possibility of use for the purpose specified in the construction contract and cannot be eliminated by the contractor, customer or third party.

Article 681. Contractor’s responsibility for the quality of work

The contractor is responsible to the customer for any deviations from the requirements stipulated by the construction contract, technical design and building codes and regulations binding on the parties, as well as for failure to achieve the indicators of the construction project specified in the design and estimate documentation, including such as the production capacity of the enterprise.

When reconstructing (updating, rebuilding, restoring, etc.) a building or structure, the contractor is responsible for the reduction or loss of strength, stability, reliability of the building, structure or part thereof.

The contractor is not responsible for minor deviations from the design documentation made without the customer’s consent that do not affect the customer’s significant interests, if he proves that they did not affect the quality of construction.

Article 682. Quality guarantees in a construction contract

The contractor, unless otherwise provided by the construction contract, guarantees that the construction project will achieve the indicators specified in the design and estimate documentation and the ability to operate the facility in accordance with the contract during the warranty period. The warranty period is ten years from the date of acceptance of the object by the customer, unless law or contract provides for a different warranty period.

The contractor is responsible for shortcomings (defects) discovered within the warranty period, unless he proves that they arose as a result, of normal wear and tear of the object or its parts, improper operation or incorrect instructions for its operation developed by the customer himself. Third parties involved by him, improper repair of an object carried out by the customer himself or by third parties attracted by him.

The warranty period is interrupted for the entire time during which the facility could not be operated due to defects for which the contractor is responsible.

If defects specified in parts one and two of Article 681 of this Code are discovered during the warranty period, the customer must report them to the contractor within a reasonable time after their discovery.

Article 683. Elimination of defects at the expense of the customer

A construction contract may provide for the contractor’s obligation to eliminate, at the customer’s request and at the customer’s expense, defects for which the contractor is not responsible.

The contractor has the right to refuse to fulfill the obligation specified in part one of this article in cases where the elimination of deficiencies is not directly related to the subject of the construction contract or cannot be performed by the contractor for reasons beyond his control.

Article 684. Mortgage of a land plot

Along with the right of retention in cases provided for in a construction contract, the fulfillment of any obligations of the customer under the contract, including payment for work performed, can also be secured by a mortgage of the land plot on which construction or related work is carried out.

Article 685. Legal regulation of construction contracts

Relations under a construction contract are regulated by this Code, as well as the legislation on construction contracts.

§ 4. Contract for design and survey work

Article 686. Contract for design and survey work

Under a contract for design and survey work, the contractor (designer, surveyor) undertakes to develop design and estimate documentation and (or) carry out survey work within the established period on the customer’s instructions, and the customer undertakes to accept and pay for them.

Unless otherwise provided by law or contract, the risk of accidental impossibility of fulfilling the contract for design and survey work lies with the customer.

Article 687. Initial data for design and survey work

Under a contract for design and survey work, the customer is obliged to transfer to the contractor the design task, as well as other initial data necessary for the preparation of design and estimate documentation. The design assignment on behalf of the customer can be prepared the contractor. In this case, the task becomes binding on the parties from the moment it is approved by the customer.

The contractor is obliged to comply with the requirements contained in the assignment and other initial data for performing design and survey work, and has the right to deviate from them only with the consent of the customer.

Article 688. Obligations of the customer

Under a contract for design and survey work, the customer is obliged, unless otherwise provided by the contract:

pay the contractor the established price in full after completion of all work or pay it in installments after completion of individual stages of work;

use the design and estimate documentation received from the contractor only for the purposes specified in the contract, do not transfer the design and estimate documentation to third parties and do not disclose the data contained in it without the consent of the contractor;

provide services to the contractor in performing design and survey work to the extent and on the terms provided for in the contract;

participate together with the contractor in coordinating the finished design and estimate documentation with the relevant government bodies and self-government bodies of citizens;

reimburse the contractor for additional expenses caused by changes in the initial data for performing design and survey work due to circumstances beyond the control of the contractor;

involve the contractor in the case of a claim brought against the customer, by a third party of connection with deficiencies in the drawn up design and estimate documentation or the survey work performed.

Article 689. Obligations of the contractor

Under a contract for design and survey work, the contractor is obliged to:

carry out work in accordance with the assignment and other initial design data;

coordinate the finished design and estimate documentation with the customer, as well as, together with the customer, with the relevant government bodies and self-government bodies of citizens;

within the terms established by the contract, transfer to the customer the finished design and estimate documentation and the results of survey work;

do not transfer design and estimate documentation to third parties without the consent of the customer.

Article 690. Contractor guarantees

The contractor, under a contract for design and survey work, guarantees to the customer that third parties will not have the right to hinder or restrict the performance of work based on the design and estimate documentation prepared by the contractor.

Article 691. Contractor’s liability for deficiencies in documentation and work

The contractor under a contract for design and survey work is responsible for deficiencies in the design and estimate documentation and survey work, including deficiencies subsequently discovered during construction, as well as during the operation of the facility created based on the completed design and estimate documentation and survey data.

If deficiencies are discovered in the design and estimate documentation or in the survey work, the contractor, at the request of the customer, is obliged to redo the design and estimate documentation free of charge and, accordingly, carry out the necessary additional survey work, as well as compensate the customer for losses caused, unless otherwise provided by law or contract.

Article 692. Legal regulation of contracts for design and survey work

Relations under a contract for design and survey work are regulated along with this Code, as well as the legislation on contract for design and survey work.

§ 5. Contract for research, development and technological work

Article 693. Contracts for research, development and technological work

Under a contract for research and development work, the contractor (performer) undertakes to carry out scientific research specified by the customer, and under a contract for development and technological work – to develop a sample of a new product, design documentation for it, new technology, or to produce a sample. In this case, the customer undertakes to issue technical specifications to the contractor (performer), accept the work and pay for it.

An agreement with a contractor can cover both the entire cycle of research, development and production of samples, as well as its individual stages (elements).

Article 694. Performance of work

The contractor is obliged to carry out scientific research personally. Unless otherwise provided by the contract for scientific research work, he has the right, with the consent of the customer, to involve third parties in the execution of the contract.

When performing experimental design and technological work, the contractor has the right, unless otherwise provided by the contract, to involve third parties in its execution as subcontractors. The rules provided for in Article 634 of this Code apply to the relations of the performer with third parties.

Article 695. Confidentiality of information about the contract

Unless otherwise provided by the contract for research work or experimental design and technological work, the parties are obliged to ensure the confidentiality of information relating to the subject of the contract, the progress of its execution and the results obtained. The scope of information considered confidential is determined in the contract. The contractor has the right, with the written consent of the customer, to patent the results of work obtained under these contracts.

Article 696. Rights of the parties to the results of work

Parties to contract agreements for research, development and technological work have the right to use the result of the work, including those capable of legal protection, within the limits and on the conditions stipulated by the contract.

Unless otherwise provided by the contract, the customer has the right to use the results of work transferred to him by the contractor, including those capable of legal protection, and the contractor has the right to use the results of work received by him for his own needs.

Article 697. Obligations of the customer

The customer under contract agreements for research, development and technological work is obliged to:

issue technical specifications to the contractor and agree with him on the program (technical and economic parameters) or scope of work;

transmit to the contractor the information necessary to perform the work;

accept the work performed and pay for it.

Article 698. Obligations of the contractor

The contractor under a contract for research work or development and technological work is obliged to:

carry out work in accordance with the program (technical and economic parameters) or subject matter agreed with the customer and deliver the result to the customer within the period stipulated by the contract;

comply with requirements related to the legal protection of intellectual property;

on his own and at his own expense, eliminate deficiencies in the work performed due to his fault, which may lead to deviations from the technical and economic parameters provided for in the customer’s technical specifications or in the contract;

immediately inform the customer about the detected impossibility of obtaining the expected results or about the inappropriateness of continuing the work;

guarantee to the customer that third parties do not have exclusive rights to the results transferred based on such contracts.

Unless otherwise provided for in contracts for research or development and technological work, the contractor is obliged to:

refrain from publishing scientific and technical results obtained during the performance of work without the consent of the customer;

take measures to protect the results obtained during the performance of work that are capable of legal protection and inform the customer about this;

provide the customer with an exclusive license to use legally protected scientific and technical results applied in the work performed.

Article 699. Consequences of failure to achieve a result in a research contract

If during the research work it is discovered that it is impossible to achieve a result due to circumstances beyond the control of the contractor, than the customer is obliged to pay the cost of the work carried out before it was discovered that it was impossible to obtain the results stipulated by the contract, but not more than the corresponding part of the price of the work specified in the contract.

Article 700. Consequences of failure to achieve a result in a contract for development and technological work

If during the implementation of experimental design and technological work, it is discovered that it is not the fault of the contractor that it is impossible or impractical to continue the work, of the customer is obliged to pay the costs incurred by the contractor.

Article 701. Liability of the contractor for violation of the contract

The contractor is liable to the customer for non-fulfillment and improper unless he proves that, the violation of the contract was not his fault fulfillment of the contract for scientific research work or for experimental design and technological work.

The contractor is obliged to compensate the customer’s losses in the form of actual damage within the cost of the work, unless otherwise provided by the contract.

Article 702. Legal regulation of contract agreements for research, development and technological work

Relations under contracts for research work or for experimental design and technological work are regulated, along with this Code, also by the legislation on contracts for scientific research, development and technological work.

CHAPTER 38. PAID PROVISION OF SERVICES

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Article 703. Contract for paid services

Under a contract for the provision of paid services, the contractor undertakes, on the instructions of the customer, to provide services (perform certain actions or carry out certain activities) that do not have a material form, and the customer undertakes to pay for these services.

The rules of this chapter apply to contracts for the provision of communication services, medical, veterinary, auditing, consulting, information services, training services, tourism services and others, with the exception of services provided under contracts provided for in Chapters 37, 39, 40, 43, 44, 45, 46, 48, 49 and 51 of this Code.

Article 704. Execution of a contract for paid services

If there are no other instructions in the contract, the contractor is obliged to provide the service(s) stipulated by the contract personally.

Article 705. Payment for services

The customer is obliged to pay for the services provided to him within the period and in the manner specified in the contract for the provision of paid services.

In case of impossibility of performance, which arose not through the fault of the contractor, the customer is obliged to reimburse the contractor for the expenses incurred by him minus the benefits that the contractor acquired or could acquire because of his release from the provision of the service (services). In the event that the impossibility of performance arose due to the fault of the customer, the price of services is subject to payment in full, unless otherwise provided by law or the contract.

Article 706. Liability of the contractor for violation of the contract for the provision of paid services

In cases of non-fulfillment or improper fulfillment of the contract for the provision of paid services, the contractor is obliged to compensate the customer for the losses caused in full, but not more than twice the price of services provided for in the contract.

In cases where the contractor did not fulfill or improperly fulfilled the obligation when carrying out business activities, the contract for the provision of paid services may provide for increased liability compared to that specified in the first part of this article.

Article 707. Termination of a contract for paid services

The customer has the right to demand termination of the contract for the provision of services for a fee, subject to payment of the full-established price, except in cases where the termination of the contract is caused the guilty actions of the contractor.

The Contractor has the right to demand termination of the contract for the provision of services for a fee only subject to full compensation to the customer for losses caused by termination of the contract, except in cases where this was due to the fault of the customer.

Article 708. Legal regulation of a contract for paid services

General provisions on contracts and provisions on household contracts apply to a contract for the provision of services for a fee, unless this contradicts the rules of this chapter.

CHAPTER 39. TRANSPORTATION

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Article 709. General provisions on transportation

Transportation of passengers, luggage and cargo is carried out based on a contract of carriage.

The general conditions of transportation are determined this Code, transport charters and codes, other laws and rules issued in accordance with them.

The conditions for the transportation of passengers, baggage and cargo by certain types of transport, as well as the responsibility of the parties for these transportations, are determined by agreement of the parties, unless otherwise established by this Code, transport charters and codes, other laws and rules issued in accordance with them.

Article 710. Contract for the carriage of passengers

Under the contract for the carriage of a passenger, the carrier undertakes to transport the passenger to the destination, and if the passenger checks in luggage to deliver the luggage to the destination and hand it over to the person authorized to receive the luggage. In this case, the passenger undertakes to pay the established fare, and when checking in baggage for the carriage of baggage.

The conclusion of a contract for the carriage of passengers and baggage is certified a ticket and a baggage receipt, respectively.

The passenger has the right, in the manner prescribed by the relevant transport charter and code:

transport children with you free of charge or on other preferential terms;

carry free luggage within the established limits;

check in luggage for transportation free of charge within the established norms, and if the norms are exceeded, for a fee according to the tariff.

Article 711. Contract for the carriage of goods

Under a contract for the carriage of goods, the carrier undertakes to deliver the cargo entrusted to him by the sender to the destination and deliver it to the person authorized to receive the goods (recipient), and the sender undertakes to pay the established fee for the carriage of goods.

The conclusion of a contract for the carriage of goods is confirmed the preparation and issuance to the sender of the goods of a document (bill of lading, bill of lading or other document for the goods) provided for by the relevant transport charter or code.

Article 712. Charter agreement

Under a charter agreement, one party (charterer) undertakes to provide the other party (charterer) for a fee with all or part of the capacity of one or more vehicles for one or more voyages for the transportation of passengers, luggage and cargo.

The procedure for concluding a charter agreement (chartering), its form and types are established transport charters and codes.

Article 713. Direct mixed message

The relationships of transport organizations when transporting passengers, baggage and cargo by different modes of transport under a single transport document (direct mixed traffic), as well as the procedure for organizing these transportations, are determined by agreements between organizations of the relevant modes of transport, concluded in accordance with the legislation on direct mixed (combined) transport.

Article 714. Transportation by public transport

Transportation carried out by a commercial organization is recognized as transportation by public transport if it follows from the legislation or the permit (license) issued to this organization that this organization is obliged to carry out transportation of passengers, baggage and (or) cargo at the request of any citizen or legal entity.

The contract of carriage by public transport is a public contract.

Article 715. Freight charge

For the transportation of passengers, baggage and cargo, a fee established by agreement of the parties is charged, unless otherwise provided by law.

Payment for the transportation of passengers, baggage and cargo by public transport is determined based on tariffs approved in the manner established by transport charters and codes.

Work and services performed by the carrier at the request of the cargo owner and not covered by tariffs are paid for by agreement of the parties.

The carrier has the right to retain the goods transferred to him for transportation as security for the carriage charge due to him and other payments for transportation, unless otherwise established by law, the contract of carriage or does not follow from the essence of the obligation.

Article 716. Delivery of vehicles, loading (unloading) of goods

The carrier is obliged to provide the sender of the cargo for loading within the period established by the application (order) accepted from him, the contract of carriage or the contract for the organization of transportation, serviceable vehicles in a condition suitable for the transportation of the relevant cargo.

The sender of the cargo has the right to refuse submitted vehicles that are not suitable for transporting the relevant cargo.

Loading (unloading) of goods is carried out by the transport organization or the sender (recipient) in the manner prescribed by the contract of carriage, in compliance with the rules established by transport charters, codes and rules issued in accordance with them.

Loading (unloading) of cargo, carried out by the forces and means of the sender (recipient) of the cargo, must be carried out within the time limits stipulated by the contract of carriage, unless such terms are established by transport charters and codes and rules issued in accordance with them.

Article 717. Delivery time for passengers, baggage and cargo

The carrier is obliged to deliver the passenger, baggage or cargo to the destination within the time limits determined in the manner prescribed by transport charters, codes or agreements, and in the absence of such terms – within a reasonable time.

Article 718. Liability for obligations arising from transportation

In case of non-fulfillment or improper fulfillment of obligations arising from transportation, the parties bear responsibility established by this Code, transport charters and codes, as well as the agreement of the parties.

Agreements between transport organizations and passengers and cargo owners to limit or eliminate the carrier’s statutory liability are invalid.

Article 719. Responsibility of the carrier for failure to deliver vehicles and the sender for failure to use provided vehicles

The carrier for failure to provide vehicles for the transportation of goods in accordance with the accepted application (order) or other transportation contract, and the sender for failure to present cargo or failure to use the provided vehicles for other reasons, bear responsibility established by transport charters and codes, as well as by agreement of the parties.

The carrier and sender of the cargo are released from liability in the event of failure to deliver or untimely delivery of vehicles or non-use of vehicles, if this occurred due to:

force majeure or other natural phenomena, as well as military actions;

termination or restriction of cargo transportation in certain directions established in the manner prescribed by the relevant transport charter or code.

Article 720. Responsibility of the carrier for delay in departure of a passenger

For a delay in the departure of a vehicle to transport a passenger or a delay in the arrival of such a vehicle at its destination, with the exception of transportation in urban and suburban services. The carrier shall pay the passenger a penalty in the form of a fine unless he proves that the delay or delay was due to force majeure or other circumstances beyond the control of the carrier. The amount and procedure for paying a fine are established by transport charters and codes.

Payment of a fine to a passenger does not relieve the carrier from the obligation to compensate the passenger for losses incurred by him as a result, of the delay in the departure of the vehicle or its delay in arriving at the destination.

If a passenger refuses transportation due to a delay in the departure of vehicles, the carrier is obliged to return the passenger fare and other expenses incurred by him.

Article 721. Responsibility of the carrier for loss, shortage and damage (spoilage) of cargo or luggage

The carrier is responsible for the loss, shortage or damage (spoilage) of cargo and luggage accepted for transportation, unless he proves that the loss, shortage or damage (spoilage) of the cargo or luggage was not his fault.

Damage caused during the transportation of cargo or luggage is compensated the carrier in the following amount:

in case of loss or shortage of cargo or luggage – in the amount of the cost of the lost or missing cargo or luggage;

in case of damage (damage) to cargo or luggage – in the amount by which its value has decreased, and if it is impossible to restore the damaged (damaged) cargo or luggage – in the amount of its value;

in case of loss of cargo or luggage handed over for transportation with a declaration of its value – in the amount of the declared value of the cargo or luggage.

The transport organization, along with compensation for actual damage, returns to the sender (recipient) the freight charge collected for the transportation of lost, missing or damaged (spoiled) cargo, if this fee is not included in the price of the cargo.

The sender has the right to demand compensation from the carrier for other losses caused by loss, shortage or damage (spoilage) of goods.

For loss, shortage, damage (spoilage) of cargo, carriers in direct mixed traffic are jointly and severally liable to the consignor (consignee).

The last carrier is responsible for the delay unless he proves that the delay was not the fault of the carriers.

Article 722. Contracts on the organization of transportation

If it is necessary to carry out systematic transportation, the carrier and the cargo owner may enter into long-term agreements on the organization of transportation.

Under an agreement on the organization of transportation of goods, the carrier undertakes to accept within the established time limits, and the cargo owner to present for transportation goods in a specified volume. The agreement on the organization of transportation of goods determines the volumes, terms and other conditions for the provision of vehicles and the presentation of goods for transportation, the payment procedure, as well as other conditions for the organization of transportation.

Article 723. Agreements between transport organizations

Between organizations of various types of transport, agreements can be concluded on the organization of work to ensure the transportation of goods (nodal agreements, contracts for the centralized delivery (export) of goods and others). The procedure for concluding such agreements is determined by transport charters, codes, and other legislation.

Article 724. Claims and suits for the transportation of goods

Before filing a claim against the carrier arising from the transportation of goods, it is mandatory to present a claim to him in the manner prescribed by the relevant transport charter or code.

A claim against, the carrier may be brought by the consignor or consignee in the event of a complete or partial refusal of the carrier to satisfy the claim or failure to receive a response from the carrier within thirty days.

The limitation period for claims arising from the transportation of cargo is established at one year from the date determined in accordance with Article 154 of this Code.

The rules of this article do not apply to claims arising from the carriage of passengers or baggage.

Article 725. Carrier’s liability for causing harm to the life or health of a passenger

The carrier’s liability for harm caused to the life or health of a passenger is determined according to the rules of Chapter 57 of this Code, unless the law or agreement provides for increased liability of the carrier.

CHAPTER 40. TRANSPORT EXPEDITION

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Article 726. Transport expedition agreement

Under a transport expedition agreement, the forwarder undertakes, for a fee and at the expense of the client (shipper or consignee), to perform or organize the performance of services related to the transportation of goods specified in the forwarding agreement.

A transport expedition agreement may provide for the forwarder’s obligations to organize the transportation of cargo by transport and along the route chosen by the forwarder or the client, the forwarder’s obligation to conclude on behalf of the client or on his own behalf an agreement (agreements) for the carriage of goods, to ensure the sending and receipt of cargo, as well as other obligations related with transportation.

As additional services, the transport expedition contract may provide for the implementation of operations necessary for the delivery of cargo, such as obtaining documents required for export or import, performing customs and other formalities, checking the quantity and condition of cargo, loading and unloading it, paying duties, fees and others, expenses imposed on the client, storing the cargo, receiving it at the destination, as well as performing other operations and services provided for by the contract.

The rules of this chapter also apply to cases where, in accordance with the transport expedition agreement, the duties of the forwarder are performed the carrier.

The conditions for fulfilling the transport expedition contract are determined by agreement of the parties, unless otherwise established by the legislation on transport and forwarding activities.

Article 727. Form of agreement

The transport expedition agreement is concluded in writing.

The client must issue a power of attorney to the forwarder if it is necessary to perform his duties.

Article 728. Responsibility of the forwarder under a transport expedition agreement

For non-fulfillment or improper fulfillment of obligations under the transport expedition contract, the forwarder is liable on the grounds and in the amounts determined in accordance with the rules of Chapter 24 of this Code.

If the forwarder proves that the violation of the obligation is caused by improper execution of transportation contracts, the freight forwarder’s liability to the client is determined by the same rules according to which the corresponding carrier is responsible to the freight forwarder.

Article 729. Documents and other information provided to the forwarder

The client is obliged to provide the forwarder with documents and other information about the properties of the cargo, the conditions of its transportation, as well as other information necessary for the forwarder to fulfill the obligations provided for in the freight forwarding agreement.

The forwarder is obliged to inform the client about any deficiencies found in the information received, and in case of incomplete information, request the necessary additional data from the client.

If the client fails to provide the necessary information, the freight forwarder has the right not to begin performing the relevant duties until such information is provided.

The client is responsible for losses caused to the forwarder in connection with violation of the obligation to provide information specified in part one of this article.

Article 730. Performance of duties of a freight forwarder by a third party

If the forwarding agent’s obligation to fulfill his duties personally does not follow from the transport expedition agreement, the forwarding agent has the right to involve other persons in the performance of his duties.

Assigning the fulfillment of an obligation to a third, party does not relieve the forwarder from responsibility to the client for the fulfillment of the transport expedition agreement.

Article 731. Refusal of the expedition agreement

The client or forwarder has the right to refuse to fulfill the transport expedition agreement by notifying the other party ten days in advance.

In case of unilateral refusal to fulfill the transport expedition contract, the party that declared the refusal shall compensate the other party for losses caused by termination of the contract.

CHAPTER 41. LOAN AND CREDIT

§ 1. Loan

Article 732. Loan agreement

Under a loan agreement, one party (the lender) transfers into the ownership of the other party (the borrower) money or other things determined by generic characteristics, and the borrower undertakes to return to the lender in a lump amount or in installments the same amount of money or an amount equal to the borrowed quantity of things of the same kind and quality (loan amount).

The loan agreement is considered concluded from the moment the money or things are transferred.

Article 733. Form of loan agreement

A loan agreement between citizens must be concluded in simple written form if its amount exceeds ten times the established amount of the basic calculated amount and in the case where a party to the agreement is a legal entity – regardless of the amount.

Failure to comply with the written form of the loan agreement entails the consequences provided for in Article 109 of this Code.

A loan agreement is recognized as concluded in writing if there is a receipt from the borrower or another document certifying the transfer by the lender of a certain amount or a certain number of things.

The written form of the loan agreement is considered to be complied with if the loan obligation is certified by a promissory note, than bond or other security issued by the borrower, which determines the amount of the loan and the lender’s right to collect it.

Article 734. Interest on a loan agreement

Unless otherwise provided by law or the loan agreement, the lender (legal entity or citizen) has the right to receive interest from the borrower on the loan amount in the amount and manner specified in the agreement.

If, under a loan agreement, things defined by generic characteristics are transferred to the borrower, interest is payable if their size and form (monetary or in kind) are provided for by the agreement.

The procedure and timing of interest payments are established by the loan agreement. If the procedure and terms for paying interest are not established by the agreement, then they are paid in the manner and terms provided for in the agreement for the return of the principal debt.

Article 735. Obligation of the borrower to repay the loan amount

The borrower is obliged to return the loan amount received to the lender on time and in the manner prescribed by the loan agreement.

If the deadline for repayment of the loan amount is not established by the agreement, it must be returned the borrower within thirty days from the date the lender submits a request for this.

The borrower ahead of schedule can repay the interest-free loan amount.

The loan amount provided with interest can be repaid ahead of schedule if this is permitted by the loan agreement or with the consent of the lender.

Article 736. Consequences of violation by the borrower of the loan agreement

Unless otherwise provided by law or the loan agreement, in cases where the borrower does not repay the loan amount on time, interest is payable on this amount in the amount provided for in parts one and two of Article 327 of this Code, from the day on which it should have been repaid by the day of its return to the lender, regardless of the payment of interest provided for in part one of Article 734 of this Code.

If the loan agreement provides for the return of the loan in installments (in installments), then if the borrower violates the deadline established for the return of the next part of the loan, the lender has the right to demand early repayment of the entire remaining loan amount along with the interest due.

If the loan agreement provides for the payment of interest on the loan within a timeframe that is ahead of the repayment deadline for the loan itself, then if this obligation is violated, the lender has the right to demand from the borrower an early repayment of the loan amount along with the interest due.

Article 737. Challenging a loan agreement

The borrower has the right to challenge the loan agreement by proving that the money or other things actually were not received by him from the lender or were received in a smaller quantity than specified in the agreement.

A loan agreement, which must be concluded in writing, cannot be challenged with the help of witness testimony, except in cases where the agreement was concluded under the influence of deception, violence, threat, malicious agreement between the borrower’s representative and the lender, or a combination of difficult circumstances.

If, in the process of challenging the loan agreement by the borrower, it is established that the money or other things were not actually received from the lender, the loan agreement is considered not concluded. When money or other things actually are received by the borrower from the lender in a smaller quantity than specified in the contract, the contract is considered concluded for this amount of money or things.

Article 738. Ensuring the fulfillment of the borrower’s obligations

If the borrower fails to fulfill the obligations stipulated by the loan agreement to ensure repayment of the loan amount. In the event of loss of collateral or deterioration of its conditions due to circumstances for which the lender is not responsible, the lender has the right to demand from the borrower early repayment of the loan amount and payment of interest due, unless otherwise provided by the agreement .

Article 739. Targeted loan

If a loan, agreement is concluded with the condition that the borrower use the funds received purposes (targeted loan), the borrower is obliged to provide the lender with the opportunity to exercise control over the intended use of the loan amount.

If the borrower fails to comply with the terms of the loan agreement on the intended use of the loan amount, the lender has the right to demand from the borrower early repayment of the loan amount and payment of interest due, unless otherwise provided by the agreement.

Article 740. Bill of exchange

In cases where, in accordance with the agreement of the parties, the borrower issued a bill of exchange certifying the unconditional obligation of the drawer (promissory note). Another payer specified in the bill of exchange (bill of exchange) to pay the borrowed amounts upon the arrival of the period stipulated by the bill of exchange, the relations of the parties to the bill of exchange are regulated by law.

Article 741. Bond

In cases provided for by law, a loan agreement may be concluded issuing and selling bonds.

A bond is a security that certifies the right of its holder to receive from the person who issued the bond, within the period specified by it, the nominal value of the bond or other property equivalent. The bond also provides its holder with the right to receive a fixed percentage of the nominal value of the bond or other property rights.

Article 742. Novation of a debt into a loan obligation

By agreement of the parties, any debt arising from the purchase and sale, lease of property or from any other basis may be replaced by a loan obligation.

The replacement of a debt with a loan obligation is carried out in compliance with the rules on novation provided for in Article 347 of this Code, and is carried out in the form established for the loan agreement.

Article 743. State loan agreement

Under a government loan agreement, the borrower is the state, and the lender is a citizen or legal entity.

Government loans are voluntary.

A government, loan agreement is concluded through the acquisition by the lender of issued government bonds or other government securities, certifying the lender’s right to receive from the borrower the funds loaned to him or, depending on the terms of the loan, other property, established interest or other property rights within the time limits stipulated conditions for issuing a loan into circulation.

Changing the terms of a loan issued for circulation (loan conversion), including on the grounds provided for in Article 383 of this Code, and is not allowed, except in cases provided for by law.

The state bears responsibility under the state loan agreement in accordance with the rules of this Code.

§ 2. Credit

Article 744. Loan agreement

Under a loan agreement, one party – a bank or other credit organization (lender) undertakes to provide funds (loan) to the other party (borrower) in the amount and on the terms stipulated by the agreement, and the borrower undertakes to return the amount received and pay interest on it.

In cases where, in accordance with the law, lending is allowed by commercial organizations that are, not credit organizations, the rules on the loan agreement apply to lending relations carried out by such commercial organizations.

When a court decision is made to collect debt on a loan, the accrual of interest stipulated by parts one and two of Article 327 and part one of Article 734 of this Code, as well as penalties, ceases in relation to the amount recovered on the loan specified in the court decision.

The rules of paragraph 1 of this chapter apply to relations under a loan agreement, unless otherwise provided the rules of this paragraph and does not follow from the essence of the loan agreement.

Article 745. Form of loan agreement

The loan agreement must be concluded in writing.

Failure to comply with the written form entails the invalidity of the loan agreement. Such an agreement is considered void.

Article 746. Refusal to provide or receive a loan

The lender has the right to refuse to provide the borrower with the loan provided for in the loan agreement in whole or in part if the borrower is declared insolvent, fails to fulfill his obligations to secure the loan, violates the obligation for the intended use of the loan stipulated in the agreement, as well as in other cases provided for by the agreement.

The borrower has the right to refuse to receive the loan in completely or in part. He must notify the lender about this before the deadline for granting the loan established by the loan agreement, unless otherwise provided by law or the agreement. If the borrower violates the obligation for the intended use of the loan provided for in the loan agreement, the lender has the right to refuse further lending to the borrower under the agreement.

Article 747. Agreement on provision of things on credit

The parties may enter into an agreement providing for the obligation of one party to provide the other party, under the terms of the loan agreement, with things defined by generic characteristics.

Unless otherwise provided by the agreement on the provision of things on credit, its terms on the quantity, assortment, completeness, quality, container and (or) packaging of the things provided must be fulfilled in accordance with the rules on the contract for the sale of goods.

Article 748. Commercial loan

Agreements, the execution of which is associated with the transfer to the ownership of another party of money or other things determined by generic characteristics, may provide for the provision of a loan, including in the form of an advance, prepayment, deferment and installment payment for goods, work or services (commercial loan), unless otherwise provided by law.

The rules of this chapter are accordingly applied to a commercial loan, unless otherwise provided by the rules of the agreement from which the corresponding obligation arose and does not contradict the essence of this obligation.

CHAPTER 42. FINANCING AGAINST THE ASSIGNMENT OF A MONETARY CLAIM

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Article 749. Financing agreement for the assignment of a monetary claim

Under a financing agreement for the assignment of a monetary claim, one party (financial agent) transfers or undertakes to transfer to the other party (client) funds to offset the client’s (creditor) monetary claim against a third party (debtor), arising from the client’s provision of goods, performance of work or provision of services to a third party, and the client assigns or undertakes to assign this monetary claim to the financial agent.

A monetary claim against a debtor may be assigned by a client to a financial agent also in order to ensure the fulfillment of the client’s obligation to the financial agent.

The obligations of the financial agent under a financing agreement for the assignment of a monetary claim may include maintaining accounting records for the client, as well as providing the client with other financial services related to the monetary claims that are the subject of the assignment.

Article 750. Financial agent

As a financial agent, financing agreements for the assignment of monetary claims can be concluded by banks and other credit organizations.

Article 751. Monetary claim assigned in order to obtain financing

The subject of the assignment for which financing is provided can be either a monetary claim for which the payment term has already arrived (existing claim) or the right to receive funds that will arise in the future (future claim).

The monetary claim that is the subject of the assignment must be defined in the client’s agreement with the financial agent in a way that allows the existing claim to be identified at the time the contract is concluded, and the future claim to be identified no later than at the time it arises.

When assigning a future monetary claim, it is considered transferred to the financial agent after the very right to receive from the debtor the funds that are the subject of the assignment of the claim provided for by the agreement has arisen. If the assignment of a monetary claim is conditioned by a certain event, it comes into force after the occurrence of this event. In these cases, no additional formalization of the assignment of a monetary claim is required.

Article 752. Responsibility of the client to the financial agent

Unless otherwise provided for in the financing agreement for the assignment of a monetary claim, the client is responsible to the financial agent for the validity of the monetary claim that is the subject of the assignment.

A monetary claim that is the subject of an assignment is recognized as valid if the client has the right to transfer the monetary claim and at the time of assignment of this claim, he is unaware of the circumstances due to which the debtor has the right not to fulfill it.

The client is not responsible for the failure to fulfill or improper fulfillment by the debtor of the claim that is the subject of the assignment if it is presented for execution by the financial agent, unless otherwise provided by the agreement between the client and the financial agent.

Article 753. Invalidity of the prohibition on assignment of a monetary claim

The assignment of a monetary claim to a financial agent is valid even if there is an agreement between the client and his debtor to prohibit or restrict it.

The provision established by part one of this article does not relieve the client from obligations or liability to the debtor in connection with the assignment of a claim in violation of the existing agreement between them on its prohibition or limitation.

Article 754. Subsequent assignment of a monetary claim

Unless otherwise provided for in the financing agreement for the assignment of a monetary claim, subsequent assignment of a monetary claim by the financial agent is not permitted.

In cases where a subsequent assignment of a monetary claim is permitted by agreement, the provisions of this chapter are applied to it accordingly.

Article 755. Fulfillment of a monetary claim by a debtor to a financial agent

The debtor is obliged to make a payment to the financial agent, provided that he has received from the client or from the financial agent a written notice of the assignment of a monetary claim to this financial agent and the notice specifies the monetary claim to be executed, as well as the financial agent to whom the payment must be made.

At the request of the debtor, the financial agent is obliged to provide the debtor with evidence within a reasonable time that the assignment of the monetary claim to the financial agent actually took place. If the financial agent fails to fulfill this obligation, the debtor has the right to make a payment to the client in accordance with this requirement in fulfillment of his obligation to the latter.

Fulfillment of a monetary claim by a debtor to a financial agent in accordance with the rules of this article releases the debtor from the corresponding obligation to the client.

Article 756. Rights of the financial agent to amounts received from the debtor

If, under the terms of a financing agreement for the assignment of a monetary claim, the client’s financing is carried out by purchasing this claim from him by a financial agent, the latter acquires the right to all amounts that he will receive from the debtor in fulfillment of the claim, and the client is not responsible to the financial agent for the fact that received their amounts turned out to be less than the price for which the agent purchased the claim.

If the assignment of a monetary claim to a financial agent is made in order to ensure the fulfillment of the client’s obligation and the financing agreement for the assignment of the claim does not provide otherwise, the financial agent is obliged to submit a report to the client and transfer to him an amount exceeding the amount of the client’s debt secured by the assignment of the claim. If the funds received by the financial agent from the debtor turn out to be less than the amount of the client’s debt to the financial agent, secured by the assignment of the claim, the client remains liable to the financial agent for the balance of the debt.

Article 757. Counterclaims of the debtor

If a financial agent approaches the debtor with a demand to make payment, the debtor has the right, in accordance with Articles 343 – 345 of this Code, to present for offset his monetary claims based on an agreement with the client, which the debtor already had by the time he received notification of assignment of a claim to a financial agent.

Requirements that the debtor could present to the client in connection with the latter’s violation of the agreement to prohibit or restrict the assignment of the claim are not valid against the financial agent.

Article 758. Repayment to the debtor of amounts received by the financial agent

If the client violates his obligations under an agreement concluded with the debtor, the latter does not have the right to demand from the financial agent the return of amounts already paid to him on a claim transferred to the agent, if the debtor has the right to receive such amounts directly from the client.

The debtor, who has the right to receive directly from the client the amounts paid to the financial agent as a result of the assignment of the claim, nevertheless has the right to demand the return of these amounts by the financial agent. If it is proven that the latter has not fulfilled its obligation to make the promised payment to the client associated with the assignment of the claim, or has made such payment, knowing that the client has violated the obligation to the debtor to which the payment related to the assignment of the claim relates.

CHAPTER 43. BANK DEPOSIT

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Article 759. Bank deposit agreement

Under a bank deposit agreement, one party (the bank), which has accepted the amount of money (deposit) received from the other party (depositor) or received for it, undertakes to return the deposit amount and pay interest on it under the conditions and in the manner prescribed by the agreement.

The bank deposit agreement is considered concluded from the day the deposit amount is received by the bank.

A bank deposit agreement in which the depositor is a citizen is recognized as a public contract.

The rules on the bank account agreement apply to the relationship between the bank and the depositor on the account to which the deposit is made, unless otherwise provided by the rules of this chapter or follows from the essence of the bank deposit agreement.

The rules of this chapter relating to banks also apply to other credit institutions that accept deposits from legal entities in accordance with the law.

Article 760. The right to attract funds on deposits

The right to attract funds on deposits is granted to banks that are granted such a right by a license issued in the manner prescribed by law.

If a deposit is accepted from a citizen by a person, who does not have the right to do so, the depositor may demand immediate return of the deposit amount. Payment of interest on it, provided for in Article 327 of this Code, and compensation in addition to the amount of interest for all losses caused to the depositor.

If such a person accepts funds from a legal entity under the terms of a bank deposit agreement, the relevant rules of this Code on the grounds and consequences of invalidity of transactions are applied.

Unless otherwise established by law, the consequences provided for in parts two and three of this article also apply in cases where anyone attracts funds from citizens and legal entities into deposits:

against bills of exchange or other securities that do not allow their holders to receive deposits on demand and for the depositor to exercise other rights provided for by the rules of this chapter;

by selling them shares and other securities, the issue of which has been declared illegal.

Article 761. Form of bank deposit agreement

The bank deposit agreement must be concluded in writing.

The written form of a bank deposit agreement is considered to be complied with if the deposit is certified by a savings book, savings (deposit) certificate or other document issued by the bank to the depositor that meets the requirements provided for such documents by law, the banking rules established in accordance with it and business customs applied in banking turnover practice.

Failure to comply with the written form of a bank deposit agreement entails the invalidity of this agreement. Such an agreement is void.

Article 762. Types of deposits

A bank deposit agreement is concluded on the terms of issuing the deposit on demand (demand deposit) or on the terms of returning the deposit after the expiration of a period specified in the agreement (time deposit).

A bank deposit agreement may provide for making deposits on other conditions for their return that do not contradict the law.

Under a bank deposit agreement, regardless of the type of deposit, the bank is obliged to issue the deposit amount or part thereof at the request of the depositor, with the exception of deposits made by legal entities on other return conditions provided for by the agreement.

The condition of a bank deposit agreement that a citizen waives the right to receive a demand deposit on demand, and a time or other deposit after the expiration of the notice period established by law, is void.

If the depositor intends to demand the return of a time deposit or another deposit, with the exception of a demand deposit, before the expiration of the term or before the occurrence of other circumstances specified in the bank deposit agreement, he is obliged to notify the bank of his intention no later than one month before the expected date of withdrawal.

In cases where a time deposit or another deposit, with the exception of a demand deposit, is returned to the depositor upon his request before the expiration of the term or before the occurrence of other circumstances specified in the bank deposit agreement, interest on the deposit is not paid, unless otherwise provided by the agreement.

In cases where the depositor does not require the return of the amount of a time deposit upon expiration of the term or the amount of a deposit made on other terms of return upon the occurrence of circumstances provided for in the bank deposit agreement, the agreement is considered extended on the terms of a demand deposit, unless otherwise provided by the agreement.

Article 763. Interest on deposits

The bank pays the depositor interest on the deposit amount in the amount determined by the bank deposit agreement.

If there is no provision in the bank deposit agreement regarding the amount of interest to be paid, the bank is obliged to pay interest in the amount paid by the bank on demand deposits.

Unless otherwise provided by the bank deposit agreement, the bank has the right to change the amount of interest paid on demand deposits.

If the bank reduces the interest rate, the new interest rate is applied to deposits made after informing depositors about the interest reduction. For deposits made before this message, the reduced interest rate is applied after a month from the date of the corresponding message, unless a different period is provided for in the bank deposit agreement.

The amount of interest on a deposit made on the terms of its return after a certain period or upon the occurrence of circumstances stipulated by the agreement, determined by the bank deposit agreement, cannot be unilaterally reduced by the bank, unless otherwise provided by the agreement.

Article 764. Procedure for calculating and paying interest on deposits

Interest on the amount of a bank deposit is accrued from the day following the day it was received by the bank until the day before it is returned to the depositor or written off from the depositor’s account on other grounds. Interest is not accrued during the period when the bank, due to the seizure of the depositor’s account, was unable to use the funds available in this account.

Unless otherwise provided by the bank deposit agreement, interest on the amount of the bank deposit is paid to the depositor upon his request at the end of each month separately from the deposit amount, and interest unclaimed during this period increases the amount of the deposit on which interest is accrued.

When the deposit is returned, all interest accrued up to that time is paid.

Article 765. Ensuring the return of the deposit

The means and methods that the bank is obliged to use to ensure the return of deposits received by it are determined by law and the bank deposit agreement.

The bank is obliged to provide, at the request of the depositor, information about the security of the return of the deposit.

If the bank fails to fulfill its obligations to ensure the return of the deposit, as well as in the event of loss of the security or deterioration of its conditions, than the depositor has the right to demand from the bank the immediate return of the deposit amount, payment of interest on it and compensation for losses caused to him in accordance with Article 327 of this Code.

Article 766. Liability for failure to comply with the requirement to return the deposit

If the bank fails to comply with the depositor’s, request to return the deposit or part thereof within the time limits provided for in Article 762 of this Code, the bank is obliged, regardless of the payment of interest on the deposit, to compensate for the losses caused in accordance with Article 327 of this Code.

Article 767. Depositing funds into the depositor’s account by third parties

Unless otherwise provided by the bank deposit agreement, the deposit includes funds received by the bank in the name of the depositor from third parties, indicating the necessary information about his deposit account. In this case, it is assumed that the depositor has agreed to receive funds from such persons by providing them with the necessary information about the deposit account.

Article 768. Contribution in favor of a third party

The deposit may be made to the bank in the name of a specified third party.

Indication of the name of the citizen or the name of the legal entity in whose favor the deposit is made is an essential condition of the relevant bank deposit agreement.

Unless otherwise provided by the agreement, the third party in whose name the deposit is made acquires the rights of the depositor from the moment the money is received into his account.

In cases where the third party in whose name the deposit was made refused it, the person who entered into a bank deposit agreement in the name of the third party has the right to claim the deposit back or transfer it to his own name.

Article 769. Savings book

Unless otherwise provided by agreement of the parties, the conclusion of a bank deposit agreement with a citizen and the deposit of funds into his deposit account is certified a savings book.

The savings book, must indicate and be certified by the bank the name and location of the bank or its relevant branch and the account number of the deposit. All amounts of funds credited to the account, all amounts of funds debited from the account and the balance of funds in the account at the time of presentation of the savings book to the bank.

Unless a different state of the deposit is proven, the deposit data indicated in the savings book is the basis for settlements on the deposit between the bank and the depositor.

The bank deposit agreement provides for the issuance of a personal savings book.

The issuance of a deposit, the payment of interest on it and the execution of the depositor’s orders to transfer funds from the deposit account to other persons are carried out by the bank upon presentation of a savings book.

If a personal savings book is lost or rendered unsuitable for presentation, the bank, upon application of the depositor, issues him a new savings book.

Article 770. Savings (deposit) certificate

A savings (deposit) certificate is a registered security certifying the amount of a deposit made to a bank and the right of the depositor (certificate holder) to receive, upon expiration of a specified period, the deposit amount and the interest stipulated in the certificate in the bank that issued the certificate or in any branch of this bank .

In case of early presentation of a savings (deposit) certificate for payment by the bank, the deposit amount and interest paid on demand deposits are paid, unless the terms of the certificate establish a different interest rate.

CHAPTER 44. BANK ACCOUNT

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Article 771. Bank account agreement

Under a bank account agreement, one party – a bank or other credit institution (hereinafter referred to as the bank) undertakes to accept and credit funds received to the account of the other party – the client (account owner), carry out the client’s orders for the transfer and withdrawal of appropriate amounts from the account and for other account transactions.

The rules of this chapter relating to banks also apply to other credit organizations when concluding and executing a bank account agreement in accordance with the issued permit (license).

Article 772. Use of client funds by the bank

The bank can use the client’s funds available in the bank account, guaranteeing their availability when claims are made on the account and the right of its owner to freely dispose of these funds within the limits of the amounts in the account.

Article 773. Disposal of funds by the client

The client independently manages his funds in his bank account.

The bank does not have the right to determine and control the direction of use of the client’s funds and establish other restrictions on his rights to dispose of funds at his own discretion, not provided for by law or the bank account agreement.

Client funds held in a bank account can be received in the form of cash in the manner prescribed by law.

Article 774. Form of bank account agreement

A bank account agreement must be concluded in writing.

Failure to comply with the written form of a bank account agreement entails the invalidity of this agreement. Such an agreement is considered void.

Article 775. Conclusion of a bank account agreement

A bank account agreement is concluded by the bank opening a bank account for the client or a person indicated by him on the terms agreed upon by the parties.

Legal entities and citizens independently choose banks for their settlement and cash services.

The bank is obliged to conclude a bank account agreement with a client who has made an offer to open an account on the conditions announced by the bank for opening accounts of this type, meeting the requirements provided for by law and the banking rules established in accordance with it.

The bank does not have the right to refuse to open an account, the performance of relevant operations on which is provided for law, the bank’s constituent documents and the license issued to it, except in cases where such a refusal is caused by the bank’s inability to accept banking services.

If the bank unreasonably refuses to enter into a bank account agreement, the client has the right to present him with the requirements provided for in parts six and seven of Article 377 of this Code.

Article 776. Certification of the right to dispose of funds in the account

The rights of persons, who carrying out orders on behalf of the client for the transfer and withdrawal of funds from the account are certified by the client by submitting to the bank the documents provided for by law, the banking rules established in accordance with it and the bank account agreement.

The client may give the bank an order to write off funds from the account at the request of third parties, including those related to the client’s fulfillment of its obligations to these parties. The Bank accepts these orders if they indicate in writing the necessary data that allows, when presenting a corresponding demand, to identify the person who has the right to present it and to establish the nature and grounds of such a demand.

A bank account agreement may provide for certification of rights to dispose of monetary amounts on the account, electronic means of payment and other documents using analogues of a handwritten signature, codes, passwords and other means confirming that, the order was given an authorized person.

Article 777. Account operations performed by the bank

Unless otherwise provided by the bank account agreement, the bank is obliged to accept and credit funds received into the account and carry out the client’s orders for the transfer and issuance of funds by performing operations provided for accounts of this type by law, the banking rules established in accordance with it and applied in banking practice and business customs.

Article 778. Terms of account transactions

The bank is obliged to credit funds received to the account, issue them or transfer them from the account by order of the client no later than the day following the day the bank receives the corresponding payment document, unless other deadlines are provided for law or the bank account agreement. Violation of the established deadlines for transactions on the account entails for the bank the consequences provided for in Article 327 of this Code.

Article 779. Crediting an account

In cases where, in accordance with the bank account agreement, the bank makes payments on claims to the client, despite the lack of funds in his account, the bank is considered to have provided the client with a loan in the corresponding amount from the date of payment (crediting the account).

The rights and obligations of the parties related to crediting the account are determined by the rules on loans and credit, unless otherwise provided by the bank account agreement.

Article 780. Payment of bank expenses for performing transactions on the account

The client pays for the bank’s services for performing transactions with funds in the account on the terms and conditions provided for in the bank account agreement. In cases where the price of the bank’s services for carrying out these operations is not defined in the bank account agreement, the fee for services is determined in accordance with Article 356 of this Code.

The fee for bank services provided for in part one of this article is charged by the bank at the end of each month from the client’s funds in his account, unless otherwise provided by the bank account agreement.

Article 781. Interest on the bank’s use of funds in the account

Unless otherwise provided by the bank account agreement, for the use of funds in the account, the bank pays interest to the client, the amount of which is credited to the account.

The interest specified in part one of this article is paid by the bank in the amount determined by the bank account agreement, and if there is no corresponding provision in the agreement – in the amount usually paid by the bank for demand deposits.

The amount of interest is credited to the account within the time periods provided for in the bank account agreement, and in cases where such terms are not provided for in the agreement, at the end of each quarter.

Article 782. Set-off of counterclaims of the bank and the client

The bank’s monetary claims to the client related to crediting the account and payment for the bank’s services, as well as the client’s claims to the bank for the payment of interest for the use of funds, are terminated by offset, unless otherwise provided by the bank account agreement.

The offset of the claims specified in part one of this article is carried out by the bank, which is obliged to inform the client about the offset in the manner and within the period established by the bank account agreement. If the relevant conditions are not agreed upon by the parties, in the manner and within the time frame usual for banking practice of providing clients information about the status of funds in the relevant account.

Article 783. Grounds for writing off funds from an account

The bank debits funds from the account based on the client’s order.

Without the client’s order, debiting funds on the account is permitted by a court decision, as well as in other cases established by this Code or other law or as provided for in the agreement between the bank and the client.

Article 784. Sequence of debiting funds from the account

If there are funds on the account, the amount of which is sufficient to satisfy all the requirements presented to the account, these funds are written off from the account in the order of receipt of client orders and other documents for write-off (calendar priority), unless otherwise provided by law.

If there are insufficient funds in the account to satisfy all demands placed on it, funds are written off in the following order:

first of all, write-offs are made proportionally according to payment (executive) documents providing for payments to the budget, to extra-budgetary funds and the issuance of funds for the payment of wages, according to executive documents providing for the transfer or issuance of funds from the account to satisfy claims for the collection of alimony, according to payment of remuneration under copyright agreements. Compensation for harm caused to life and health, ensuring an equal degree of fulfillment of the obligations of business entities regarding payments to the budget and requirements arising from labor and equivalent legal relations;

Secondly, write-offs are made according to executive documents providing for the satisfaction of other monetary claims;

in the third place, write-offs are made for other payment documents in calendar order.

Write-off of funds for urgent needs related directly to production activities, in the amount established by law, is carried out in the end of calendar order.

Article 785. Responsibility of the bank for untimely execution of transactions on the account and unjustified write-off of funds

In cases of untimely crediting of funds received to the client’s account or unjustified debiting of funds from the account by the bank, the bank is obliged, at the client’s request, to immediately credit the appropriate amount to the account, except in cases provided for by law.

The bank is also obliged to pay interest on the untimely credited or unreasonably written off amount and compensate for losses in accordance with Article 327 of this Code. The bank bears the same responsibility for untimely withdrawal of funds from the account and untimely execution of client orders to transfer funds from the account, except in cases provided for by law.

Article 786. Bank secrecy

Banks guarantee the secrecy of bank accounts and bank deposits, account transactions and client information.

Information constituting banking secrecy can only be provided to the clients themselves or their representatives. Such information may be provided to state bodies and their officials in cases and in the manner prescribed by law.

If the bank discloses information constituting a bank secret, the client whose rights have been violated has the right to demand compensation from the bank for the losses caused.

Article 787. Restrictions on the disposal of an account

Restriction of the client’s rights to dispose of funds in the account is not permitted, with the exception of seizing funds in the account or suspending operations on the account in cases provided for by law.

Article 788. Termination of a bank account agreement

The bank account agreement is terminated at the request of the client at any time.

At the request of the bank, the bank account agreement may be terminated by the court in the following cases:

when the amount of funds stored in the client’s account is below the minimum amount provided for by banking rules or agreement, unless such amount is restored within a month from the date the bank warned about this;

in the absence of transactions on this account during the year, unless otherwise provided by the agreement.

The balance of funds in the account is issued to the client or, at his instructions, is transferred to another account no later than seven days after receiving the corresponding written application from the client.

Termination of the bank account agreement is the basis for closing the client’s account.

Article 789. Bank accounts

The rules of this chapter apply to correspondent accounts, correspondent sub-accounts, and other bank accounts, unless otherwise provided by law.

CHAPTER 45.

CALCULATIONS

§ 1. General provisions on calculations

Article 790. Cash and non-cash payments

Settlements between citizens and settlements with the participation of citizens that are not related to their business activities can be made in cash without limiting the amount or by bank transfer.

Calculations between legal entities, and calculations with the participation of citizens, who related to the implementation of their business activities, are made by bank transfer. Settlements between the named persons can also be made in cash, unless otherwise provided by law.

Non-cash payments are made through banks and other credit organizations (hereinafter providing for payments to the budget and to extra-budgetary funds – banks) in which the accounts of the persons participating in the payments are opened, unless otherwise follows from the law and is not stipulated by the form of payment used.

Article 791. Forms of non-cash payments

When making non-cash payments, payments by payment orders, letters of credit, checks, collection payments, as well as payments in other forms provided for by law, banking rules issued in accordance with it and business customs applied in banking practice are allowed.

The parties to the agreement have the right to choose and provide for in the agreement any of the forms of payment specified in part one of this article.

§ 2. Payments by payment orders

Article 792. General provisions on settlements by payment orders

When making payments by payment order, the bank undertakes, on behalf of the client, at the expense of the funds in his account, to transfer a certain amount of money to the account of the person specified by the client in this or another bank within the period provided for by law, unless a shorter period is provided for in the bank account agreement or not determined by business customs used in banking practice.

The person indicated in the payment order as the recipient of funds does not acquire the right to demand that the bank make a payment, except in cases where such a right is provided for by law or by the client’s agreement with the bank.

Article 793. Conditions for the bank to accept a payment order

The content of the payment order and the settlement documents submitted along with it and their form must comply with the requirements established by banking rules.

The client’s order is accepted by the bank for execution only if there are funds in the client’s account, unless otherwise provided by the agreement between the client and the bank.

Article 794. Execution of instructions

The bank that has accepted the client’s payment order is obliged to transfer the corresponding amount of money to the recipient’s bank for crediting it to the account of the person specified in the order within the period established by part one of Article 792 of this Code.

The bank has the right to attract other banks to perform operations to transfer funds to the account specified in the client’s order.

The bank is obliged to immediately notify the client upon his request about the execution of the order, unless otherwise provided by the agreement.

Article 795. Liability for non-execution or improper execution of an order

In case of non-execution or improper execution of the client’s order, the bank is liable for this violation in accordance with Article 327 of this Code.

Banks participating in a settlement transaction under a payment order are jointly and severally liable to the person who gave this order.

§ 3. Payments under the letter of credit

Article 796. General provisions on settlements under a letter of credit

When making payments under a letter of credit, the bank that opened the letter of credit on behalf of the client (payer) and in accordance with his instructions (issuing bank) undertakes to make payment if the recipient of the funds or the person specified by him (hereinafter referred to as the recipient of funds) presents documents and fulfills other conditions, provided for by the letter of credit.

In the case of opening a covered (deposited) letter of credit, the issuing bank, upon its opening, is obliged to transfer the client’s own funds or the loan provided to him at the disposal of the executing bank for the entire duration of the issuing bank’s obligation.

In case of opening an uncovered letter of credit, the issuing bank grants the executing bank the right to write off the entire amount of the letter of credit from the account of the issuing bank maintained with the executing bank.

Article 797. Validity period and procedure for settlements under a letter of credit

The validity period and procedure for settlements under a letter of credit are established in the agreement between the payer and the recipient of funds.

The contract must also contain:

name of the issuing bank;

type of letter of credit and method of its execution;

method of notifying the recipient of funds about the opening of a letter of credit;

a complete list and precise description of the documents provided by the recipient to receive funds under the letter of credit;

deadlines for providing documents after shipment of goods (provision of services, performance of work), requirements for their execution.

Article 798. Revocable letter of credit

A revocable letter of credit is one that can be changed or canceled by the issuing bank without prior notice to the recipient of the funds. Revocation of a letter of credit does not create any obligations of the issuing bank to the recipient of funds.

The executing bank is obliged to carry out payment and other operations under a revocable letter of credit if, by the time they are completed, it has not received notification of a change in the conditions or cancellation of the letter of credit.

A letter of credit is revocable unless otherwise provided in its text.

Article 799. Irrevocable letter of credit

An irrevocable letter of credit is one that cannot be, canceled without the consent of the recipient of the funds.

At the request of the issuing bank, the executing bank participating in the letter of credit transaction may confirm an irrevocable letter of credit (confirmed letter of credit). Such confirmation means the acceptance by the nominated bank of an additional obligation to the issuing bank’s obligation to make payment in accordance with the terms of the letter of credit.

An irrevocable letter of credit confirmed by the nominated bank cannot be, amended or canceled without the consent of the nominated bank.

Article 800. Execution of a letter of credit

To execute a letter of credit, the recipient of funds submits to the executing bank documents confirming the fulfillment of all conditions of the letter of credit. If at least one of these conditions is violated, payment through the letter of credit is not made.

If the nominated bank has made a payment or carried out another transaction in accordance with the terms of the letter of credit, the issuing bank is obliged to reimburse it for the expenses incurred. These expenses, as well as all other expenses of the issuing bank associated with the execution of the letter of credit, are reimbursed by the client.

Article 801. Refusal to accept documents

If the executing bank refuses to accept documents that, by external appearance, do not comply with the terms of the letter of credit, it is obliged to immediately notify the recipient of the funds and the issuing bank about this, indicating the reasons for the refusal.

If the issuing bank, having received the documents accepted by the executing bank, considers that they do not comply with the terms of the letter of credit in appearance, it has the right to refuse to accept them and demand from the executing bank the amount paid to the recipient of funds in violation of the terms of the letter of credit, and for an uncovered letter of credit – to refuse from reimbursement of amounts paid.

Article 802. Responsibility of the bank for violation of the terms of the letter of credit

The issuing bank is responsible for violation of the terms of the letter of credit to the client, and the executing bank is responsible to the issuing bank, except for the cases provided for in this article.

If the executing bank unreasonably refuses to pay funds under a covered or confirmed letter of credit, liability to the recipient may be assigned to the executing bank.

In the event of an incorrect payment by the nominated bank of funds under a covered or confirmed letter of credit due to a violation of the terms of the letter of credit, liability to the client may be assigned to the nominated bank.

Article 803. Closing of a letter of credit

The letter of credit is closed at the executing bank:

upon expiration of the letter of credit;

at the request of the recipient of funds to refuse to use the letter of credit before its expiration, if the possibility of such refusal is provided for by the terms of the letter of credit;

at the payer’s request for full or partial revocation of the letter of credit, if such revocation is possible under the terms of the letter of credit.

The executing bank must notify the issuing bank of the closure of the letter of credit.

The unused amount of the deposited letter of credit is subject to return to the issuing bank simultaneously with the closure of the letter of credit. The issuing bank is required to credit the returned amounts to the payer’s account from which the funds were deposited.

§ 4. Payments for collection

Article 804. General provisions on collection payments

When making collection payments, the client sends his bank (issuing bank) an order to receive payment from the payer and (or) acceptance of payment at the client’s expense.

The issuing bank that has received a collection order has the right to attract another bank (executing bank) to carry out it.

The procedure for making collection payments is regulated by law and business customs applied in banking practice.

In case of non-execution or improper execution of the client’s order, the issuing bank is liable to him on the grounds and in the amount provided for in Chapter 24 of this Code.

If the non-execution or improper execution of the client’s order occurred in connection with a violation of the rules for performing settlement transactions by the executing bank, liability to the client may be assigned to this bank.

Article 805. Execution of collection order

If any document is missing or the external appearance of the documents does not correspond to the collection order, the executing bank is obliged to immediately notify the person from whom the collection order was received. If these deficiencies are not eliminated, the bank has the right to return the documents without execution.

Documents are presented to the payer in the form in which they were received, with the exception of marks and inscriptions of banks necessary for processing the collection transaction.

If documents are payable at sight, the executing bank must make presentation for payment immediately upon receipt of the collection order.

If the documents are subject to payment at a different time, the executing bank must, in order to obtain the payer’s acceptance, submit the documents for acceptance immediately upon receipt of the collection order, and the payment request must be made no later than the day the payment deadline specified in the document occurs.

Partial payments can be accepted in cases where this is established by banking rules, or with special permission in the collection order.

The received (collected) amounts must be immediately transferred the executing bank to the issuing bank, which is obliged to credit these amounts to the client’s account. The executing bank has the right to withhold from the collected amounts the remuneration and reimbursement of expenses due to it.

Article 806. Notice of refusal to pay

If payment and (or) acceptance have not been received, the executing bank is obliged to immediately notify the issuing bank of the reasons for non-payment or refusal to accept. The issuing bank is obliged immediately inform, the client about this, asking him for instructions on further actions.

If instructions on further actions are not received within the period established by banking rules, the executing bank has the right to return the documents to the bank from which the collection order was received.

§ 5. Payments by checks

Article 807. General provisions on payments by checks

A check is a security containing an unconditional order from the drawer to the bank to pay the amount specified in it to the check holder.

When making payments by check, only the bank where the drawer has funds that he has the right to dispose of by issuing checks can be indicated as the payer of the check.

Cancellation of a check before the expiration of the period for its presentation is not permitted.

The issuance of a check does not extinguish the monetary obligation for which it was issued.

The procedure and conditions for using checks in payment transactions are regulated by this Code and other legislation.

Article 808. Check details

The check must contain:

the name “check” included in the text of the document;

an instruction to the payer to pay a certain amount of money;

name of the payer and indication of the account from which the payment should be made;

indication of payment currency;

indication of the date and place of drawing up of the check;

signature of the drawer who issued the check.

The absence of any of the specified details in the document deprives it of the validity of a check.

A check that does not indicate the place of its drawing is considered to be signed at the place of origin of the drawer.

The form of the check and the procedure for filling it out are determined law.

Article 809. Payment of a check

The check is paid at the expense of the drawer.

The check is payable by the payer provided it is presented for payment within the period established by law.

The person who paid the check has the right to demand that the check be handed over to him with a receipt of payment.

Article 810. Transfer of rights by check

The transfer of rights under a check is carried out in compliance with the rules provided for in this article.

A personal check is not transferable.

In a transfer check, the payer’s endorsement has the force of a receipt for receipt of payment.

The endorsement made by the payer is invalid.

A person who owns a check of transfer received under an endorsement is considered its legal owner if he bases his right on a continuous (mutually conditioned) series of endorsements.

Article 811. Guarantee of payment (avail)

Payment of a check can be guaranteed in whole or in part by means of a guarantee (avail).

Avail can be given any person, with the exception of the payer.

The avail is placed on the front side of the check or on an additional sheet by writing “considered as avail” and indicating by whom and for whom it was given. If it is not indicated for whom it was given, then it is considered that it was given for the drawer.

The avail is signed by the availman, indicating his place of residence (location) and the date of the inscription.

The availman answers in the same way as the one for whom he gave the avail.

His obligation is valid even if the obligation, which he guaranteed, is found to be invalid for any reason other than failure to comply with the form.

The availman, who pays the check, acquires the rights arising from the check against the one for whom he gave the guarantee and against those who are obliged to the latter.

Article 812. Collection of a check

Presentation of a check to the bank serving the check holder for collection to receive payment is considered presentation for payment.

The check is paid in the manner established by Article 805 of this Code.

Funds from a collected check are credited to the check holder’s account after receiving payment from the payer, unless otherwise provided by the agreement between the check holder and the bank.

Article 813. Obligations of the payer

The payer of a check is obliged to verify by all means available to him the authenticity of the check, as well as that the bearer of the check is the person authorized by it.

When paying a collected check, the drawee is obliged to check the correctness of the endorsements, but not the signatures of the endorsers.

Losses incurred because of the payer paying for a forged, stolen or lost check are borne by the payer or the drawer, depending on whose fault they were caused.

Article 814. Certificate of refusal to pay a check

Refusal to pay a check must be certified in one of the following ways:   

making a protest by a notary in the manner prescribed by law;

a note from the payer on the check indicating the refusal to pay it, indicating the date the check was submitted for payment;

a note from the collecting bank indicating the date that the check was issued on time and not paid.

The protest or an equivalent act must be made before the expiration of the deadline for presenting the check for payment.

If the check was presented on the last day of the period, a protest or an equivalent act may be made on the next business day.

Article 815. Notice of non-payment of a check

The check holder is obliged to notify his endorser and drawer of non-payment within two working days following the day of the protest or an equivalent act.

Each endorser must, within two working days following the day he received the notice, inform his (previous) endorser of the notice he received. At the same time, a notice is sent to the person who gave the avail for this person. Those who fail to send notice within the specified period do not lose their rights under the check. He is obliged to compensate for losses caused as a result of failure to notify about non-payment of a check, up to the amount of the check.

Article 816. Consequences of non-payment of a check

In the event of a payer’s refusal to pay a check certified in accordance with Article 814 of this Code, the check holder has the right, at his choice, to file a claim against one, several or all persons obligated by the check (the drawer, analysts, endorsers), who are jointly and severally liable to him.

The check holder has the right to demand from the indicated person’s payment of the amount of the check, their costs for receiving payment, as well as interest in the amount and manner provided for in parts one and two of Article 327 of this Code. The same right belongs to the person obligated on the check after he has paid the check.

The claim of the check holder against the persons specified in part one of this article may be brought within six months from the date of expiration of the period for presenting the check for payment. Recourse claims on claims of obligated persons against each other are extinguished with the expiration of six months from the day when the corresponding obligated person satisfied the claim, or from the day the claim was brought against him.

CHAPTER 46. ASSIGNMENT

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Article 817. Agency contract

Under a contract of agency, one party (the attorney) undertakes to perform certain legal actions on behalf and at the expense of the other party (the principal). Under a transaction completed by an attorney, the rights and obligations arise directly from the principal.

The assignment may relate to the attorney performing one or more specific legal actions or conducting the affairs of the principal in accordance with his instructions.

Under an agency agreement with exclusive rights of an attorney, one party (the principal) instructs the other party (the attorney with exclusive rights) to perform on behalf and at the expense of the principal all legally significant actions for the latter in a certain area and/or on a certain territory.

The agency agreement is concluded in writing.

A contract of agency may be concluded with an indication of the period during which the attorney has the right to act on behalf of the principal, or without such an indication.

Article 818. Remuneration in a contract of agency

The principal is obliged to pay the attorney a fee if this is provided for law or the agency agreement.

If the agency agreement is related to the implementation of entrepreneurial activities by both parties or one of them, the principal is obliged to pay the attorney a remuneration, unless otherwise provided by the agreement.

If there is no provision in the reimbursable contract of assignment regarding the amount of remuneration and the procedure for its payment, it is determined in accordance with part four of Article 356 of this Code at the usually accepted prices for services of this kind and is paid after the execution of the assignment.

The remuneration is also subject to payment when the attorney has duly completed all the required actions, but the order was not fulfilled through no fault of his.

An attorney acting as a commercial representative has the right, in accordance with Article 290 of this Code, to retain the things in his possession that are subject to transfer to the principal in order to secure his claims under the agency agreement.

Article 819. Execution of an order in accordance with the instructions of the principal

The attorney is obliged to carry out the assignment given to him in accordance with the instructions of the principal. The principal’s instructions must be specific, permissible and possible.

The attorney has the right to deviate from the instructions of the principal if, under the circumstances of the case, this is necessary in the interests of the principal and the attorney could not first request the principal or did not receive a response to his request within a reasonable time. In this case, the attorney is obliged to notify the principal of the deviations made as soon as notification becomes possible.

An attorney acting as a commercial representative may be given by the principal the right to deviate in the interests of the principal from his instructions without prior request for this. In this case, the commercial representative is obliged to notify the principal of the deviations made within a reasonable time, unless otherwise provided by the agency agreement.

Article 820. Obligations of an attorney

The attorney is obliged:

execute the order given to him personally, except for the cases specified in Article 822 of this Code;

inform the principal, upon his request, all information about the progress of the execution of the order;

transfer to the principal without delay everything received from transactions completed in pursuance of the order;

upon execution of the order, immediately return to the principal the power of attorney, which has not expired, and submit a report with supporting documents attached, if required by the terms of the agreement or the nature of the order.

Article 821. Obligations of the principal

Unless otherwise provided by the agency agreement, the principal is obliged:

provide the attorney with the funds necessary to execute the order;

accept without delay what is performed by the attorney in accordance with the contract;

reimburse the attorney for expenses incurred that were necessary to execute the order;

upon execution of the order, pay the attorney a remuneration if it is provided for by law or contract.

Article 822. Delegation of execution of an order

The attorney has the right to transfer the execution of the assignment to another person (deputy), if this is provided for in the agreement of assignment, or if the attorney is forced to do so by circumstances in order to protect the interests of the principal.

An attorney who has entrusted the execution to another person is obliged to immediately notify the principal about this.

The principal has the right to appoint a deputy chosen as an attorney, except in cases where the deputy was named in the agency agreement.

If a deputy attorney is named in the contract, the attorney is not responsible for the conduct of the deputy’s affairs.

If the conduct of affairs by a deputy is provided for in the agency agreement, but the deputy is not named in it, the attorney is not responsible for the guilty actions of the deputy.

If the management of affairs by a deputy attorney is not provided for in the contract of assignment, the attorney is responsible for any actions of his deputy.

Article 823. Termination of a contract of agency

The agency agreement is terminated due to:

cancellation of the order by the principal;

the attorney’s refusal of the assignment;

death of the principal or attorney, recognition of any of them as incompetent, partially capable or missing.

The principal has the right to cancel the assignment, and the attorney to refuse it at any time. An agreement to waive this right is void.

If the attorney did not know and should not have known about the termination of the agency agreement, then his actions, legally performed at the direction of the principal, bind the principal (his successor) in relation to third parties and the attorney.

A party terminating a contract of agency with an attorney acting as an entrepreneur must notify the other party of the termination of the contract no later than thirty days in advance, unless a longer period is provided for in the contract. When reorganizing a legal entity that is a commercial representative, the principal has the right to cancel the order without such prior notice.

Article 824. Consequences of termination of a contract of agency

If the agency agreement is terminated before the mandate is fully executed by the attorney, the principal is obliged to compensate the attorney for the costs incurred in executing the assignment, and when the attorney is due remuneration, also pay him a remuneration in proportion to the work performed by him. This rule does not apply to the execution of an assignment by an attorney after he learned or should have learned about the termination of the assignment.

Article 825. Succession in a contract of agency

In the event of the death of the attorney, his heirs or other persons entrusted with ensuring the safety of the inherited property are obliged to immediately notify the principal of the termination of the agency agreement and take measures necessary to protect the principal’s property, in particular, to preserve the things, as well as the principal’s documents, and then transfer them to him. The same obligation lies with the person liquidating a legal entity that is a representative (attorney).

When reorganizing a legal entity acting as a representative (attorney), the principal must be immediately notified of this. In this case, the rights and obligations of such a legal entity are transferred to its legal successor if the principal does not notify of his refusal of the agency agreement within thirty days.

CHAPTER 47. ACTIONS IN THE INTERESTS OF OTHERS WITHOUT INSTRUCTIONS

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Article 826. Conditions for acting in someone else’s interest

Actions without an order, other indication or previously promised consent of the interested person in order to prevent harm to his person or property, fulfill his obligation or in his other non-illegal interests (actions in the interest of others) must be carried out based on the obvious benefit or benefit and the actual or probable intentions of the interested party persons and with the care and prudence necessary under the circumstances of the case.

The rules provided for in this chapter do not apply to actions in the interests of other persons committed by state bodies and self-government bodies of citizens for whom such actions are one of the goals of their activities.

Article 827. Obligations of a person acting in someone else’s interest without instructions

A person acting in the interests of another person without his instructions is obliged to notify the interested person about this as soon as possible. If the interested person approves these actions, then the rules on the agency agreement will subsequently apply to the relations of the parties. If these actions are disapproved, responsibility for them is assigned to the person who acted without instructions.

If it is impossible to notify the interested person, the person who has begun actions without instructions is obliged to complete them, taking all measures dependent on him to prevent negative property consequences for this person. In this case, a person acting without instructions is obliged to assume everything related to the conduct of the business, including responsibilities for concluded transactions.

If a person acting in the interests of another person without his instructions does not notify the interested party about this at the first opportunity, he does not have the right to demand compensation for expenses incurred.

A person acting in someone else’s interest without an order is obliged to continue the activities begun even in the event of the death of a citizen or termination of the activities of the legal entity in whose interests the relevant activities were carried out, until the heirs (legal successors) of the interested person are unable to replace him.

Article 828. Conducting transactions in the interest of others

Responsibilities under a transaction concluded in someone else’s interest pass to the person in whose interests it was concluded from the moment he approves this transaction, unless the other party objects to such a transfer or knew or should have known at the conclusion of the transaction that the transaction was concluded in someone else’s interest. When the obligations under such a transaction are transferred to the person in whose interests it was concluded, the rights under this transaction must also be transferred to the latter.

The person who entered into the transaction may delay the transfer of rights until he is reimbursed for expenses incurred in connection with activities in the interest of others.

Article 829. Responsibilities of a person in whose interest’s actions were carried out without instructions

A person in whose interests actions were carried out without instructions is obliged to compensate the person who acted in his interests for necessary expenses and other actual damages. This obligation also remains in cases where actions in the interests of others were reasonable, but the intended result was not achieved. However, in the event of preventing damage to the property of another person, the amount of compensation should not exceed the value of the property.

If the actions of a person were not directly aimed at ensuring the interests of another person, including in the case where the person who committed them mistakenly assumed that he was acting in his own interest, and his actions led to the unjust enrichment of another person, the rules provided for in Chapter 58 of this Code apply. . In the case where actions in the interests of others were within the scope of his business activities, he has the right to demand, along with compensation for actual damage, payment of proportionate remuneration.

Expenses and other losses of a person acting in someone else’s interest, incurred in connection with actions taken after receiving approval from the interested party, are reimbursed according to the rules on the contract of the corresponding type.

Article 830. Compensation for damage caused by actions in someone else’s interest

Relations regarding compensation for harm caused by actions in the interests of others to an interested person or third parties are regulated in accordance with the rules of Chapter 57 of this Code.

Article 831. Report of a person who acted in someone else’s interest

A person who acted in someone else’s interest is obliged to submit to the person in whose interests the activity was carried out a report indicating the income received and the expenses and losses incurred.

CHAPTER 48. COMMISSION

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Article 832. Commission agreement

Under a commission agreement, one party (the commission agent) undertakes, on behalf of the other party (the principal), for a fee, to carry out one or more transactions on its own behalf, but at the expense of the principal. The commission agreement must be concluded in writing.

Under a transaction made by a commission agent with a third party, the commission agent acquires rights and becomes obligated, even if the principal was named in the transaction or entered into direct relations with the third party for the execution of the transaction.

A commission agreement can be concluded for a certain period or without specifying the period of its validity, with or without indicating the territory of its execution, with or without the obligation of the principal not to provide third parties with the right to carry out transactions in his interests and at his expense, the execution of which is entrusted to the commission agent. obligations, with or without conditions, regarding the range of goods that are the subject of the commission.

Legislation may provide for specific features of certain types of commission agreements.

Article 833. Commission remuneration

The principal is obliged to pay a remuneration to the commission agent, and in cases where the commission agent has accepted guarantee for the execution of the transaction by a third party (del credere), also an additional remuneration in the amount established in the contract. If this amount is not provided for in the contract and cannot be determined based on its terms, the amount of remuneration is established in accordance with part four of Article 356 of this Code.

If the commission agreement was not fulfilled for reasons depending on the principal, the commission agent retains the right to a commission, as well as reimbursement of expenses incurred.

Article 834. Execution of commission orders

The commission agent must fulfill all obligations and exercise all rights arising from the transaction concluded by him with a third party.

The commission agent is obliged to execute the accepted order in accordance with the instructions of the principal, and in the absence of such instructions in the commission agreement – in accordance with business customs or other usually imposed requirements, on the most favorable terms for the principal. If the commission agent has completed a transaction on terms more favorable than those specified by the principal, then the additional benefit is shared equally by the parties, unless otherwise provided by the contract.

In cases where the commission agent undertakes to guarantee the principal for the execution of the transaction (del credere), he receives the right to additional remuneration in the amount stipulated in the commission agreement.

The commission agent is not liable to the principal for the failure of a third party to fulfill a transaction made with him at the expense of the principal, except in cases where the commission agent did not show the necessary caution in choosing this person or accepted a guarantee for the execution of the transaction (del credere).

If a third party fails to fulfill a transaction concluded with him by the commission agent, than the commission agent is obliged to immediately notify the principal about this, collect and provide the necessary evidence, and also, at the request of the principal, transfer to him the rights under such a transaction in compliance with the rules on the assignment of claims (Articles 313 – 317, 319, 320 of this Code).

The assignment of rights to the principal of a transaction on the basis of part five of this article is permitted regardless of the agreement of the commission agent with a third party prohibiting or limiting such assignment. This does not relieve the commission agent from liability to a third party in connection with the assignment of a right in violation of an agreement on its prohibition or limitation.

Article 835. Subcommission

For executing a commission agreement, a commission agent has the right to conclude a subcommission agreement with another person, remaining responsible for the actions of the subcommission agent to the principal, unless otherwise provided by the agreement.

Under a subcommission agreement, the commission agent acquires the rights and obligations of the principal in relation to the subcommission agent.

In cases where the law allows any transactions to be carried out only by specially authorized persons, a subcommission agreement can only be concluded with such a person.

Before the termination of the commission agreement, the principal has no right, without the consent of the commission agent, to enter into direct relations with the sub-commissioner, unless otherwise provided by the commission agreement.

Article 836. Price of property sold by commission agent

The price of property sold by a commission agent is determined by agreement with the principal, unless otherwise provided by law or the commission agreement.

Article 837. Deviation from the instructions of the principal

The commission agent has the right to deviate from the instructions of the principal in the cases provided for in Article 819 of this Code.

A commission agent who sold property at a price lower than agreed upon with the principal is obliged to compensate the latter for the difference, unless he proves that he did not have the opportunity to sell the property at the agreed price and the sale at a lower price prevented even greater losses. In the case where the commission agent was obliged to first request the principal, the commission agent must also prove that he was not able to obtain the prior consent of the principal to deviate from his instructions.

If the commission agent bought property at a price higher than that agreed upon with the principal, the principal who does not wish to accept such a purchase is obliged to notify the commission agent of this within a reasonable time upon receipt of notification from him about the conclusion of a transaction with a third party. Otherwise, the purchase is considered accepted by the principal.

If the commission agent has indicated that he accepts the difference in price at his own expense, the principal does not have the right to refuse the transaction concluded for him.

Article 838. Right to things that are the subject of a commission

Items received by the commission agent from the principal or acquired by the commission agent at the expense of the principal are the property of the principal.

The commission agent has the right, in accordance with Article 290 of this Code, to retain things in his possession that are subject to transfer to the principal or a person specified by the principal to secure his claims under the commission agreement.

If the principal is declared insolvent, the specified right of the commission agent is terminated, and his claims against the principal, within the limits of the value of the things that he withheld, are satisfied in accordance with Article 291 of this Code on an equal basis with the claims secured by the pledge.

Article 839. Satisfying the demands of the commission agent from the amounts due to the principal

The commission agent has the right, in accordance with Article 343 of this Code, to withhold the amounts due to him under the commission agreement from all amounts received by him at the expense of the principal. However, the creditors of the principal, who enjoy priority over the mortgagees in relation to the priority of satisfaction of their claims, are not deprived of the right to satisfy these claims from the amounts withheld by the commission agent.

Article 840. Responsibility of the commission agent for loss, shortage or damage to the principal’s property

The commission agent is responsible to the principal for any omission that results in loss, shortage or damage to the principal’s property in his possession.

If, when the commission agent accepts property sent by the principal or received the commission agent for the principal, than there is damage or shortage in this property that can be noticed during an external inspection, as well as in the event of someone causing damage to the principal’s property located with the commission agent, the commission agent is obliged to accept measures to protect the rights of the principal, collect the necessary evidence and immediately notify the principal about everything.

A commission agent who has not insured the principal’s property in his possession is liable for this only in cases where the principal has ordered him to insure the property at the principal’s expense or the insurance of this property by the commission agent is provided for by the commission agreement or business customs.

Article 841. Acceptance by the principal of what is executed under the commission agreement

The principal is obliged:

accept from the commission agent everything performed under the commission agreement;

inspect the property acquired for him by the commission agent and notify the latter without delay of any shortcomings discovered in this property;

release the commission agent from the obligations assumed by him to a third party for the execution of a commission order.

Article 842. Reimbursement of expenses for the execution of a commission order

The principal is obliged, in addition to paying the commission, and in appropriate cases, additional remuneration for the del credere, to reimburse the commission agent for the amounts spent by him on the execution of the commission order.

The commission agent does not have the right to reimbursement of expenses for storing the principal’s property in his possession, unless otherwise established by law or by the commission agreement.

Article 843. Cancellation of a commission order by the principal

The principal has the right to refuse to execute the commission agreement at any time by canceling the order given to the commission agent. In this case, the commission agent’s losses caused by the cancellation of the order are compensated on a general basis.

If a commission agreement is concluded without specifying its validity period, the principal must notify the commission agent of the termination of the agreement no later than thirty days in advance, unless a longer notice period is provided for in the agreement. In this case, the principal is obliged to pay the commission agent remuneration for transactions made by him before the termination of the contract, as well as reimburse the commission agent for the expenses incurred by him before the termination of the contract.

In case of cancellation of the order, the principal is obliged, within the period established by the commission agreement, and if such a period is not established, to immediately dispose of his property under the jurisdiction of the commission agent. If the principal fails to fulfill this obligation, the commission agent has the right to deposit the property at the expense of the principal or sell it at the most favorable price for the principal.

Article 844. Refusal of a commission agent to execute an order

The commission agent has no right, unless otherwise provided by the commission agreement, to refuse to execute it, except for the case when the agreement was concluded without specifying the period of its validity. In this case, the commission agent must notify the principal of the termination of the contract no later than thirty days in advance, unless a longer notice period is provided for in the contract.

The commission agent is obliged to take measures necessary to ensure the safety of the principal’s property.

The principal, notified of the commission agent’s refusal to execute the order, is obliged to dispose of the property in the commission agent’s possession within fifteen days from the date of receipt of the notification of the commission agent’s refusal to execute the order, unless a different period is established by the contract. If he fails to fulfill this obligation, the commission agent has the right to either hand over the property for storage or sell it at the most favorable price for the principal.

Unless otherwise provided by the commission agreement, a commission agent who refuses to execute an order retains the right to a commission for transactions made by him before the termination of the agreement, as well as to compensation for expenses incurred up to this point.

Article 845. Termination of a commission agreement

The commission agreement is terminated due to:

refusal of the principal to fulfill the contract;

refusal of the commission agent to fulfill the contract;

death of a commission agent, recognition of him as incompetent, partially capable, missing or insolvent.

Article 846. Refusal of the principal to execute a commission agreement concluded without specifying a period

The principal has the right at any time to refuse to execute a commission agreement concluded without specifying a period by notifying the commission agent of the refusal no later than thirty days in advance, unless a longer notice period is provided for by the agreement.

In this case, the principal is obliged to pay the commission agent remuneration for transactions made by him before the termination of the commission agreement, as well as reimburse the commission agent for the expenses incurred by him before the termination of the agreement.

In case of refusal to execute the commission agreement, the commitment must fulfill the obligations provided for in part three of Article 844 of this Code.

Article 847. Refusal of the commission agent to execute the commission agreement

The commission agent has the right at any time to refuse to execute a commission agreement concluded without specifying a period, notifying the principal of the refusal no later than thirty days in advance, unless a longer notice period is provided for by the agreement.

In this case, the commission agent is obliged to take measures to ensure the safety of the principal’s property in his possession. The principal is obliged to dispose of the property held by the commission agent until the termination of the commission agreement. If he fails to fulfill this obligation, the commission agent has the right to either hand over the property for storage at the expense of the principal, or sell it at the most favorable price for the principal.

A commission agent who refuses to fulfill a commission agreement has the right to receive a commission and reimbursement of expenses due to him at the time of termination of the agreement.

Article 848. Consequences of the death of a citizen or liquidation of a legal entity

In the event of the death of a citizen or the liquidation of a legal entity-commission agent, the commission agreement is terminated.

In the event of reorganization of a legal entity-commission agent, its rights and obligations as a commission agent are transferred to the legal successors, unless within thirty days from the date of receipt of the notice of the reorganization the principal does not notify of the termination of the contract.

In the event of the death of a citizen-commitment, recognition of him as incapacitated or partially capable, as well as in the event of liquidation of a legal entity-commitment, the commission agent is obliged to continue the execution of the instructions given to him until appropriate instructions are received from the heirs or legal successors (representatives) of the commitment.

CHAPTER 49. TRUST MANAGEMENT OF PROPERTY

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Article 849. Property trustily management agreement

Under a property trust management agreement, one party (the management founder) transfers property into trust management for a certain period of time to the other party (the trustee), and the other party undertakes to manage this property in the interests of the management founder or the person specified by him (the beneficiary).

The transfer of property into trust management does not entail the transfer of ownership of it to the trustee.

When carrying out trust management of property, the trustee has the right to perform any legal and actual actions in relation to this property in accordance with the trust management agreement in the interests of the beneficiary.

The law or agreement may provide for restrictions on certain actions related to trust management of property.

The trustee makes transactions with property transferred into trust management on his own behalf, indicating that he acts as such a manager. This condition is considered to be met if, when performing actions that do not require written documentation, the other party is informed about their performance by the trustee in this capacity, and in written documents a corresponding note is made after the name of the trustee.

In the absence of an indication of the trustee’s action in this capacity, the trustee is obligated to third parties personally and is liable to them only with the property belonging to him.

Article 850. Grounds for the emergence (establishment) of trust management of property

Trust management of property arises (established) based on:

property trust management agreement concluded between the founder and the trustee;

a will in which an executor of the will (trustee) is appointed;

court decisions;

decisions of the guardianship and trusteeship authority to establish guardianship over the property of the ward;

other legal facts in cases provided for by law.

Article 851. Object of trust management of property

Objects of trust management can be enterprises and other property complexes, individual objects related to real estate, securities, exclusive rights and other property.

Money cannot be an independent object of trust management, except in cases provided for by law.

Property under economic management or operational management cannot be transferred to trust management. Transfer to trust management of property that was under economic management or operational management is possible only after the liquidation of the legal entity in whose economic management or operational management the property was, or termination of the right to economic management or operational management of the property and its receipt by the owner as otherwise provided by law reasons.

Article 852. Subjects of trust management of property

The founder of trust property management is:

property owner;

a person who has the right of lifelong inheritable ownership of a land plot;

authorized state body – in relation to property owned by the state;

an enterprise to which the property belongs under the right of economic management – with the permission of the owner;

in cases provided for by law – a notary, a guardianship and trusteeship authority, a court or other authorized body.

The trustee may be:

citizen;

entity person.

Property is not subject to transfer into trust management by a government agency.

The appointment of a trustee can only be made with his consent.

The beneficiary can be any person, with the exception of the trustee.

Article 853. Essential terms of a property trust management agreement

The property trustily management agreement must provide for:

a list of property transferred to trust management under the agreement;

indication of the beneficiary;

deadlines for submitting reports to trustees;

the person receiving the property in the event of termination of trust management;

the amount and form of remuneration for the trustee, if the payment of remuneration is provided for in the agreement.

In the absence of the conditions provided for in part one of this article, the contract is considered not concluded.

A property trustily management agreement is concluded for a period not exceeding five years. In the absence of an application from one of the parties to terminate the contract at the end of its validity period, it is considered extended for the same period and on the same conditions as provided for in the contract.

Types of property transferred into trustily management, the law may establish other deadlines for the validity of the agreement.

Article 854. Form of property trustily management agreement

The property trustily management agreement is concluded in writing.

A real estate trust management agreement is concluded in the form and manner provided for an agreement on the alienation of real estate. The transfer of real estate into trust management is subject to state registration in the same manner as the transfer of ownership of this property.

Failure to comply with the form of the property trustily management agreement or the requirement to register the transfer of real estate into trust management entails its invalidity.

Article 855. Segregation of property under trustily management

Property transferred to trust management is separated from other property of the management founder, as well as from the property of the trustee. This property is reflected the trustee on a separate balance sheet and independent accounting is maintained for it. A separate bank account is opened for payments for activities related to trust management.

Foreclosure of the debts of the founder of the management of the property transferred by him to trust management is not allowed, except in cases where this person is declared bankrupt. If the founder of the management is declared bankrupt, the trust management of this property is terminated and it is included in the liquidation estate.

Article 856. Trust management of property encumbered with the rights of third parties

The trustee must be informed before concluding the agreement that the property transferred to him for management is encumbered with the rights of third parties. If this condition is violated, the trustee has the right to demand that the contract be declared invalid with compensation for actual damage and payment of proportionate remuneration.

If the property transferred into trust management was encumbered with the rights of third parties after the conclusion of the agreement, and the trustee was not notified of this within ten days, he has the right to demand termination of the trust management agreement for property with compensation for actual damage and payment of proportionate remuneration.

Article 857. Rights and obligations of the trustee

The trustee exercises, within the limits provided for by law and the property trustily management agreement, the powers of the owner in relation to the property transferred to trust management.

The rights acquired by the trustee because of actions to manage property are included in such property. The obligations arising because of such actions of the trustee are fulfilled at the expense of this property.

The trustee has the right to alienate and pledge real estate transferred for management only in cases where this is provided for in the property trust management agreement.

To protect the rights to property under trust management, the trustee has the right to demand the elimination of any violation of his rights (Articles 228, 229, 231, 232 of this Code).

The trustee provides the management founder and the beneficiary with a report on his activities within the period and in the manner established by the property to trust management agreement.

Article 858. Transfer of trust management of property

The trustee manages the property personally, except for the cases provided for in parts two and three of this article.

The trustee may instruct another person to perform on behalf of the trustee the actions necessary to manage the property if he is authorized to do so by the property trust agreement or has received the consent of the founder in writing, or is forced to do so due to circumstances to ensure the interests of the founder of the management or beneficiary and does not have the opportunity to receive instructions from the founder of the management within a reasonable time.

The trustee is responsible for the actions of his chosen attorney as if they were his own.

Article 859. Responsibility of the trustee

A trustee who has not shown due care for the interests of the beneficiary or the management founder during the trust management of property shall compensate the beneficiary for lost profits during the trust management of the property, and the management founder for losses caused by loss or damage to the property, as well as lost profits.

The trustee is liable for losses caused unless he proves that these losses occurred as a result of force majeure or the actions of the beneficiary or the founder of the management.

The obligations under a transaction made by a trustee in excess of the powers granted to him or in violation of the restrictions established for him are borne by the trustee personally. If third parties participating in the transaction did not know and should not have known about the excess of authority or about the established restrictions, the resulting obligations are subject to fulfillment in the manner established by part four of this article. The founder of the management may in this case demand from the trustee compensation for losses incurred by him.

Debts under obligations arising in connection with the trust management of property are repaid at the expense of this property. In the event of insufficiency of this property, recovery may be directed to the property of the trustee, and if his property is insufficient, to the property of the founder of the management that has not been transferred to trust management.

A property to trust management agreement may provide for the provision by the trustee of a collateral to ensure compensation for losses that may be caused to the management founder or beneficiary by improper execution of the trust management agreement.

Article 860. Remuneration to the trustee

The trustee has the right to remuneration provided for in the property trust management agreement, as well as to reimbursement of necessary expenses incurred by him during the trust management of property, at the expense of the property transferred for management, or income from the use of this property.

Article 861. Termination of a property trust management agreement

The property trust management of agreement is terminated:

an application by one of the parties to terminate the contract due to the expiration of the contract;

death of a citizen who is a beneficiary, liquidation of a legal entity-beneficiary, unless otherwise provided by the agreement;

death of a citizen who is a trustee, recognition of him as incompetent, partially capable or missing, as well as recognition of an individual entrepreneur as insolvent;

liquidation of a legal entity – trustee, declaring it insolvent;

(Paragraph five of part one of Article 861 as amended by the Law of the Republic of Uzbekistan dated February 21, 2024 No. ZRU-911 – National Legislation Database, 02.22.2024, No. 03/24/911/0142)refusal of the beneficiary to receive benefits under the agreement, unless otherwise provided by the agreement;

refusal of the trustee or founder of the management to carry out management due to the impossibility of the trustee to personally carry out trust management of the property;

refusal of the management founder to execute the contract for reasons other than those specified in paragraph six of this part, subject to payment to the trustee of the remuneration stipulated by the contract;

termination of the contract by a court decision in the event of improper performance by the trustee of his duties;

on other grounds provided by law or contract.

Upon termination of the trust management agreement, the property under trust management is transferred to the management founder, unless otherwise provided by the agreement.

When terminating a property trust management of agreement on the initiative of one of the parties, the other party must be notified at least three months in advance, unless a different period is established by the agreement.

CHAPTER 50. COMPREHENSIVE BUSINESS LICENSE (FRANCHISING)

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Article 862. Complex entrepreneurial license agreement

Under a complex business license agreement (franchising agreement), one party (complex licensor) undertakes to provide the other party (complex licensee) for a fee with a set of exclusive rights (license complex), including the right to use the licensor’s brand name and protected commercial information, as well as other exclusive objects rights (trademark, service mark and invention, etc.) provided for by the agreement in the business activity of the licensee.

A comprehensive business license agreement provides for the use of the license complex, business reputation and commercial experience of the licensor to a certain extent (in particular, establishing a minimum and (or) maximum volume of use), with or without indicating the territory of use in relation to a certain area of ​​activity (sale of goods, received from the licensor or produced by the licensee, providing services, performing work, carrying out trading activities, etc.).

Parties to a comprehensive entrepreneurial license agreement can only be commercial organizations and citizens registered as entrepreneurs.

A comprehensive business license agreement can be concluded either with or without specifying a term (unlimited agreement).

The rules of this Code on Intellectual Property are accordingly applied to the complex entrepreneurial license agreement, unless otherwise provided by this chapter or follows from the essence of the agreement.

Article 863. Form of a comprehensive entrepreneurial license agreement and requirements for its registration

A comprehensive entrepreneurial license agreement must be concluded in writing and is subject to registration by the body that registered the legal entity or individual entrepreneur acting as a licensor under the agreement. Failure to comply with this rule entails the invalidity of the contract.

Article 864. Complex entrepreneurial sublicense

A complex entrepreneurial license agreement may provide for the right of the licensee to permit the use of the licensed complex or part thereof provided to him by other persons on the terms agreed upon by him with the licensor or specified in the complex entrepreneurial license agreement. Likewise, the agreement may also contain the obligation of the licensee to issue, within a certain period of time, a certain number of sublicenses, indicating or without indicating the territory of their use.

Termination of the complex entrepreneurial license agreement terminates the complex entrepreneurial sublicense agreement.

Article 865. Form of remuneration under a comprehensive entrepreneurial license agreement

The licensee pays the licensor remuneration in the form of fixed one-time or periodic payments, deductions from revenue, a markup on the wholesale price of goods supplied to it by the licensor for resale, or in another form provided for by the comprehensive business license agreement.

Article 866. Obligations of the licensor

The licensor is obliged:

transfer to the licensee technical and commercial documentation and provide other information necessary for the licensee to exercise the rights granted to him under the comprehensive business license agreement, as well as instruct the licensee and his employees on issues related to the exercise of these rights;

issue the licensee the licenses provided for in the agreement, ensuring their execution in the prescribed manner;

provide the licensee with ongoing technical and consulting assistance, including assistance in training and advanced training of employees.

The comprehensive entrepreneurial license agreement may also provide for other responsibilities of the licensor.

Article 867. Obligations of the licensee

Taking into account the nature and characteristics of the activities carried out by the licensee under a comprehensive business license agreement, the licensee is obliged to:

use the licensor’s brand name in the manner specified in the agreement when carrying out the activities provided for in the contract;

ensure exact conformity of the quality of goods produced by him on the basis of the contract, services provided, work performed, with the quality of similar goods, services or work produced, provided or performed directly by the licensor;

comply with all instructions and instructions of the licensor aimed at achieving exact compliance with the nature, methods and conditions of use of the exclusive rights included in the license complex, with their use by the licensor, including instructions regarding the external and internal design of commercial premises used by the licensee in the implementation of those granted to him under the contract rights;

provide buyers (customers) with all additional services that they could count on when purchasing (ordering) a product (service, work) directly from the licensor;

refrain from disclosing the licensor’s production secrets and other confidential commercial information received from it;

issue a specified number of sublicenses, if such an obligation is expressly provided for in the contract;

inform buyers (customers) in the most obvious way to them that he is using a trade name, trademark, service mark or other means of individualization by virtue of a comprehensive business license.

Article 868. Restrictive conditions of a comprehensive entrepreneurial license agreement

A comprehensive entrepreneurial license agreement may provide for restrictive (exclusive) conditions, in particular:

the licensor’s obligation not to issue other similar complex business licenses for their use in the territory assigned to the licensee or to refrain from direct independent activities in this territory;

the licensee’s obligation not to compete with the licensor in the territory of use of the comprehensive business license;

refusal of the licensee to obtain other comprehensive business licenses from competitors (potential competitors) of the licensor;

the obligation of the licensee to agree with the licensor on the location of commercial premises used in the exercise of the exclusive rights granted under the agreement, as well as their external and internal design.

Restrictive covenants may be declared invalid at the request of the antimonopoly authority or another interested party if, taking into account the state of the relevant market and the economic situation of the parties, they contradict competition law.

The restrictive conditions of the comprehensive business license agreement are invalid, due to which:

the licensor has the right to determine the price of sale of goods by the licensee or the price of work (services) performed (rendered) by the licensee, or set an upper or lower limit on these prices;

the licensee has the right to sell goods, perform work or provide services exclusively to a certain category of buyers (customers) or exclusively to buyers (customers) located (place of residence) in the territory specified in the contract.

Article 869. Liability of the licensor for the requirements imposed on the licensee

The licensor bears subsidiary liability for requirements imposed on the licensee regarding non-conformity of the quality of goods (work, services) sold (performed, provided) by the licensee under a comprehensive business license agreement.

For the requirements imposed on the licensee as a manufacturer of the licensor’s products (goods), the licensor is jointly and severally liable with the licensee.

Article 870. Amendment of the complex entrepreneurial license agreement

The comprehensive entrepreneurial license agreement may be amended in accordance with the rules of Chapter 28 of this Code.

The contract is considered amended from the moment of registration of the corresponding changes in the manner established by Article 863 of this Code.

Article 871. Termination of a comprehensive entrepreneurial license agreement

A comprehensive business license agreement concluded with a specified period may be terminated in accordance with the rules of Chapter 28 of this Code.

Each party has the right at any time to cancel the perpetual agreement for a comprehensive business license by notifying the other party six months in advance, unless the agreement provides for a longer notice period.

The complex entrepreneurial license agreement is terminated in the event of termination of the right to a company name included in the license complex, without replacing it with a new company name.

Early termination of a complex entrepreneurial license agreement concluded with a specified period, as well as termination of an open-ended complex entrepreneurial license agreement are subject to registration in the manner established by Article 863 of this Code.

Article 872. Maintaining a comprehensive business license agreement in force when the parties change

The transfer to another person of any exclusive right included in the licensing complex is not a basis for changing or terminating the complex entrepreneurial license agreement. The new licensor enters into an agreement regarding the rights and obligations related to the transferred exclusive right.

In the event of the death of a citizen-licensor, his rights and obligations under the comprehensive entrepreneurial license agreement pass to the heir, if the latter is registered or registers as an entrepreneur within six months from the date of opening of the inheritance. Otherwise, the contract is terminated.

Management of the licensed complex in the period before the heir assumes the corresponding rights and obligations or before the heir is registered as a manager appointed by a notary in the prescribed manner carries out an entrepreneur.

Article 873. Maintaining a comprehensive business license agreement in force when changing the company name

If the licensor changes its business name, the comprehensive business license agreement remains valid and applies to the new business name of the licensor, unless the licensee requests termination of the agreement. If the contract remains in effect, the licensee has the right to demand a proportionate reduction in the remuneration due to the licensor.

Article 874. Consequences of termination of an exclusive right included in the licensing complex

If during the validity period of the complex entrepreneurial license agreement, than the validity period of the exclusive right included in the licensing complex has expired, or such right has terminated for another reason, then the agreement is preserved minus the provisions relating to the terminated right, and the licensee, unless otherwise provided by the agreement, has the right to demand proportionate reduction of the remuneration due to the licensor.

Chapter 51. Storage

§ 1. General provisions on storage

Article 875. Storage agreement

Under a storage agreement, one party (custodian) undertakes to store the thing transferred to it by the other party (bailer) and return this thing safely.

A storage agreement, in which the custodian is an organization that carries out storage as one of the purposes of its professional activities (professional custodian), may provide for the obligation of the custodian to accept the thing for storage from the bailer within the period stipulated by the agreement.

Article 876. Fulfillment of the obligation to accept a thing for storage

A custodian who carries out storage as a business or other professional activity may undertake, under a storage agreement, the obligation to accept for storage the things of the bailer and store those transferred by the bailer in accordance with the rules provided for in this article.

A custodian who has undertaken an obligation under a storage agreement to accept a thing for storage does not have the right to demand that this thing be transferred to him for storage. However, a bailer who fails to transfer a thing for storage within the period stipulated by the storage agreement is liable to the custodian for losses caused in connection with the failed storage, unless otherwise provided by law or the agreement.

Unless otherwise provided by the storage contract, the custodian is released from the obligation to accept the thing for storage in cases where the thing is not transferred for storage within the period stipulated by the contract, and when this period is not determined – after three months from the date of conclusion of the contract.

Article 877. Form of storage agreement

In cases where a storage agreement must be concluded in writing ( Article 108 of this Code), the written form of the agreement is considered to be complied with if the acceptance of the thing for storage is certified by the custodian by issuing to the depositor a safekeeping receipt, receipt, certificate, or other document signed by the custodian.

Compliance with the written form of the contract is not required if the item is transferred for storage under emergency circumstances (fire, natural disaster, sudden illness, threat of attack, etc.).

A storage agreement can be concluded issuing a number token (number) or other sign certifying the acceptance of things for storage by the custodian to the depositor, if this is permitted by law or is usual for this type of storage.

Failure to comply with the simple written form of the storage agreement does not deprive the parties of the right to refer to witness testimony in the event of a dispute about the identity of the thing accepted for storage and the thing returned by the custodian.

Article 878. Storage period

The custodian is obliged to store the thing for the period stipulated by the contract. If the storage period is not provided for by the contract and cannot be determined based on its terms, storage is carried out until the thing is demanded by the bailer.

If the storage period is determined by the moment the thing is claimed by the bailer, the custodian has the right, after the expiration of the usual period of storage of the thing under the given circumstances, to demand that the bailer accept the thing back, giving him a reasonable period for accepting the thing. Failure by the bailer to fulfill this obligation entails the consequences provided for in parts two and three of Article 888 of this Code.

Article 879. Storage of things with depersonalization

When storing with depersonalization, things accepted for storage may be mixed with things of the same kind and quality of other depositors. The bailer is returned an equal or stipulated quantity of things of the same kind and quality.

Storage with depersonalization is carried out only in cases where this is expressly provided for in the storage agreement.

Article 880. Obligations of the custodian to ensure the safety of things

The custodian is obliged to take all provisions provided for in the storage agreement, as well as other necessary measures to ensure the safety of the item transferred for storage.

The custodian is obliged to return to the bailer or another person indicated by him as the recipient the thing that was transferred to him for storage, unless the agreement provides for storage with depersonalization. The item must be returned in the condition in which it was accepted for storage, taking into account its natural deterioration or natural loss.

Simultaneously with the return of the thing, the custodian is obliged to transfer the fruits and income received during its storage, unless otherwise established by the storage agreement.

Article 881. Use of a thing transferred for storage

Without the consent of the bailer, the custodian does not have the right to use the thing transferred to him for storage, as well as provide the opportunity to use it to third parties, except for the case when the use of the stored thing is necessary to ensure its safety.

Article 882. Change of storage conditions

The custodian is obliged to immediately notify the bailer of the need to change the storage conditions of the item and wait for his response.

In the event that there is a danger of loss or damage to the thing, the Bailee is obliged to change the method, place and other conditions of storage provided for in the storage agreement, without waiting for the bailer’s response.

If during storage there is a real threat of damage to the thing, or the thing has already been damaged, or circumstances have arisen that do not allow its safety to be ensured, and the bailer cannot be expected to take timely measures, than the custodian has the right to independently sell the thing or part of it at the price prevailing at the place of storage. If the specified circumstances arose for reasons for which the custodian is not responsible, he has the right to reimbursement of his costs of sale at the expense of the purchase price.

Article 883. Storage of things with dangerous properties

If the bailer, when depositing highly flammable, explosive or inherently dangerous things, did not warn the custodian about their properties, they can be rendered harmless or destroyed by the custodian at any time without compensating the bailer for losses. The bailer is responsible for losses caused in connection with the storage of such things to the custodian and third parties.

When transferring things with dangerous properties for storage to a professional custodian, the rules provided for in part one of this article are applied in the case where such things were deposited under the wrong name and the custodian, when accepting them, could not verify their dangerous properties by external inspection.

In case of paid storage in the cases provided for in parts one and two of this article, the paid remuneration for storage of things is not returned, and if it has not been paid, the custodian may recover it in full.

If the things accepted for storage with the knowledge and consent of the custodian, specified in part one of this article, have become, despite compliance with the conditions of their storage, dangerous for others or for the property of the custodian or third parties and the circumstances do not allow the custodian to demand the bailer to immediately pick them up or the bailer does not comply with this requirement, these things may be rendered harmless or destroyed by the Bailee without compensating the bailer for losses. In this case, the bailer is not liable to the custodian and third parties for losses caused in connection with the storage of these things.

Article 884. Transfer of a thing for storage to a third party

Unless otherwise provided by law or the storage agreement, the custodian does not have the right to transfer the thing for storage to a third party without the consent of the bailer, unless this is necessary in the interests of the bailer, and the custodian is deprived of the opportunity to obtain his consent. The custodian is obliged to immediately notify, the bailer of the transfer of the thing to a third party.

The custodian is responsible for the actions of the third party to whom he transferred the item for storage.

Article 885. Remuneration for storage

The remuneration for storage must be paid to the custodian upon completion of storage, and if payment for storage is provided for periods, at the end of each period.

If storage is terminated before the expiration of the stipulated period due to circumstances for which the custodian is not responsible, he has the right to a proportionate part of the remuneration, and in cases provided for in parts one, two and three of Article 883 of this Code, to the entire amount of the remuneration.

If storage is terminated early due to circumstances for which the custodian is responsible, he does not have the right to demand remuneration for storage, and the amounts received for this remuneration must be returned to the depositor.

If, after the expiration of the period stipulated by the contract, the bailer does not take the thing in storage back, then he is obliged to pay the custodian a proportionate remuneration for further storage of the thing.

The rules of this article apply unless otherwise provided by the storage agreement.

Article 886. Reimbursement of storage expenses

Unless otherwise provided by the contract, the costs of storing the item are included for remuneration. It is assumed, that extraordinary expenses are not included for remuneration or in the expenses stipulated by the storage agreement.

In case of gratuitous storage, the bailer is obliged to reimburse the custodian for the necessary expenses actually incurred, unless otherwise provided by the storage agreement.

Article 887. Extraordinary storage costs

Expenses for storing things that exceed the usual expenses of this kind and which the parties could not foresee when concluding the storage agreement (extraordinary expenses) are reimbursed to the custodian if the bailer agreed to these expenses or approved them subsequently, as well as in other cases provided for by law or agreement.

If it is necessary to make extraordinary expenses, the custodian is obliged to request the bailer’s consent to these expenses. If the bailer does not communicate his disagreement within the period specified by the bailer, or within the time normally required for a response, he is deemed to have agreed to the extraordinary expenses.

In the case where the custodian incurred extraordinary expenses for storage without obtaining the bailer’s prior consent to these expenses, although this was possible under the circumstances of the case and the bailer subsequently did not approve them, the custodian may demand compensation for extraordinary expenses only to the extent of the damage. If these expenses had not been incurred, than custodian that could have been incurred.

Unless otherwise provided by the storage agreement, extraordinary expenses are reimbursed in addition to the storage fee.

Article 888. Receipt of the thing back by the bailer

The bailer is obliged to receive the thing transferred for storage upon expiration of the storage period stipulated by the contract.

If the bailer evades receiving the thing, the custodian has the right, unless otherwise provided by the storage agreement, to independently sell the thing, and in the case when its value exceeds the amount of fifty times the established basic settlement amount – in the manner prescribed by Articles 379, 380 and 381 of this Code.

The amount received from the sale of the thing is transferred to the bailer minus what is due to the custodian.

Article 889. Responsibility of the custodian for loss, shortage or damage to a thing

The custodian is responsible for the loss, shortage or damage of an item accepted for storage on the grounds provided for in Article 333 of this Code.

A professional custodian is responsible for loss, shortage or damage to a stored item, unless he proves that the loss, shortage or damage to the item occurred:

due to force majeure;

due to the hidden properties of the thing, which the custodian did not know and should not have known about when accepting it for storage;

as a result of intent or gross negligence of the bailer.

If the stored item is not taken back by the bailer after the expiration of the storage period stipulated by the contract, or the period during which the bailer, at the request of the custodian, was obliged to take the thing back, then the custodian will henceforth be liable for the loss, shortage or damage of this thing only if there is on his part intent or gross negligence.

Article 890. Amount of liability of the custodian

Losses caused to the bailer by the loss, shortage or damage of a thing are compensated by the custodian in accordance with Article 324 of this Code, unless otherwise provided by law or the storage agreement.

In case of gratuitous storage, losses caused to the bailer by loss, shortage or damage to the thing are compensated:

for loss and shortage of things – in the amount of the cost of the lost or missing things;

for damage to things – in the amount by which their value has decreased.

If, as a result of damage for which the custodian is responsible, the quality of the thing has changed so much that it cannot be used for its original purpose, the bailer has the right to refuse it and demand from the custodian compensation for the cost of this thing, as well as other losses, if this is provided for by law or contract storage

Article 891. Compensation for losses caused to the custodian

The bailer is obliged to compensate the custodian for losses caused by the properties of the thing deposited for storage if the custodian, when accepting the thing for storage, did not know and should not have known about these properties.

Article 892. Termination of the storage obligation at the request of the bailer

The custodian is obliged, at the request of the bailer, immediately to return the item accepted for storage, even if the agreement specifies a different return period. In this case, the bailer is obliged to compensate the custodian for losses caused by the early termination of the obligation, unless otherwise provided by the storage agreement.

Article 893. Application of general provisions on storage to its individual types

General provisions on storage apply to its individual types, unless otherwise established by the rules on individual types of storage provided for in Articles 894–913 of this Code and other acts of legislation.

§ 2. Certain types of storage

Article 894. Storage in a pawnshop

A pawnshop can accept movable items intended for personal consumption from citizens for storage.

An agreement to store an item in a pawnshop is formalized the pawnshop issuing a personal safety receipt to the depositor (client).

An item deposited in a pawnshop is subject to valuation by agreement of the parties in accordance with the prices for items of this kind and quality, usually established in trade at the time and place of their acceptance for storage.

The pawnshop is obliged to insure in favor of the depositor at its own expense the items accepted for storage in the full amount of their valuation, made in accordance with part three of this article.

Article 895. Items unclaimed from a pawnshop

If the bailer evades the return of items, the pawnshop is obliged to store them for three months. After this period, unclaimed items may be sold a pawnshop in the manner established by part seven of Article 289 of this Code.

Storage fees and other payments due to the pawnshop are paid from the proceeds from the sale of items. The remainder of the amount is returned by the pawnshop to the owner of the safe receipt upon presentation.

Article 896. Storing valuables in a bank

The bank can accept securities, precious metals and stones, other valuables, as well as documents for storage.

An agreement for storing valuables in a bank is formalized by the bank issuing to the depositor a personal safety document, the presentation of which is the basis for the bank to issue the stored valuables to the depositor.

In cases provided for by the agreement for the storage (deposit) of securities, the bank, in addition to ensuring their safety, also carries out legally significant actions in relation to these securities (representation, etc.).

An agreement for storing valuables using an individual bank safe (safe cell, separate storage room) can be concluded by the bank taking actions to accept valuables for storage and issuing to the depositor a key to the safe, a card identifying the depositor, another sign or document that certifies the bearer’s right to access to the safe and removal of valuables from it.

Unless otherwise provided by the agreement, the depositor has the right to remove valuables from the safe at any time, return them back, and work with stored documents. The bank has the right to record the receipt and return of valuables by the depositor.

When the depositor receives part of the valuables from the safe, the bank is responsible for the safety of the remaining part of the valuables.

The rules established by this article for storing valuables in a bank safe do not apply to cases when the bank provides it is safe to another person for use on the terms of a property rent.

Article 897. Storage in storage rooms of transport organizations

Luggage storage facilities operated by transport organizations are required to accept the belongings of passengers and other citizens for storage, regardless of whether they have travel documents. The storage agreement in the storage rooms of transport organizations is recognized as public.

To confirm the acceptance of an item for storage in a storage room (except for automatic ones), the depositor is given a receipt or a numbered token.

In case of loss of a receipt or token, the item deposited in the storage room is returned to the depositor upon presentation of evidence that the item belongs to him.

The amount of losses incurred by the bailer as a result of loss, shortage or damage to the thing deposited in the storage room is paid to the bailer within 24 hours from the moment the claim for compensation is presented, if an assessment was made when putting the thing into storage or if the parties came to an agreement regarding the amount subject to compensation.

An item may be placed in a storage room for a period within the limits established by special rules or by agreement of the parties. An item not claimed within the specified period must be stored in the storage room for another thirty days. After this period, the unclaimed item may be sold, and the proceeds from the sale distributed in accordance with Article 895 of this Code.

Article 898. Storage in wardrobes of organizations

Storage in the wardrobes of organizations is assumed free of charge, if remuneration for storage is not agreed upon or is not otherwise stipulated in an obvious way when the item is deposited.

In confirmation of acceptance of the item for storage in the wardrobe, the custodian issues the depositor with a numbered token or other sign confirming acceptance of the item for storage.

The item handed over to the cloakroom is given to the bearer of the token. In this case, the custodian is not obliged to check the authority of the bearer of the token to receive the thing. However, the custodian has the right to delay the return of the item to the bearer of the token if he has doubts about the ownership of the token to its bearer.

The custodian has the right to hand over an item from the wardrobe even when the depositor has lost the token, but the fact that he handed over the items to the wardrobe or that they belonged to him is not in doubt by the custodian or is proven by the depositor. The responsibility of organizations for the safety of items in wardrobes, as well as the storage periods for unclaimed items, are determined according to the rules established by parts four and five of Article 897 of this Code.

Article 899. Storage in a hotel

The hotel is liable as a custodian, without special agreement, for the loss, shortage or damage of things brought into the hotel by a person residing there, except for cases where the loss, shortage or damage occurred due to force majeure, the properties of the thing itself or through the fault of the resident himself, persons accompanying him or his visitors.

An item entrusted to the hotel employees or an item placed in a designated place (hotel room, etc.), is considered to be brought into a hotel.

The hotel is responsible for the loss of money, other currency values, securities and other precious things only if they were accepted for storage under a separate storage agreement.

A person residing in a hotel who discovers the loss, shortage or damage of his belongings is obliged immediately to report this to the hotel administration. Otherwise, the hotel is released from liability for failure to preserve items.

The hotel is not exempt from responsibility for the safety of the belongings of its guests, even if it made an announcement that, it does not accept this responsibility.

The storage periods and fate of unclaimed items in hotels are determined according to the rules established by part five of Article 897 of this Code.

The rules of this article also apply to the storage of things in motels, rest homes, sanatoriums, hostels, bathhouses, as well as in other organizations that have specially designated places for storing things of citizens visiting the organization.

Article 900. Storage of disputed items (sequestration)

Under a sequestration agreement, two or more persons between whom, a dispute has arisen about the right to a thing transfer the disputed thing to a third party, who undertakes, upon resolution of the dispute, to return the thing to the person to whom it will be awarded by a court decision or by agreement of all disputing persons (contractual sequestration ).

The disputed item may be transferred for storage through sequestration by a court decision (judicial sequestration).

The custodian for judicial sequestration can be either a person appointed by the court or a person determined by mutual agreement of the disputing parties. In both cases, the custodian’s consent is required, unless otherwise provided by law.

Both movable and immovable things can be transferred for storage by way of sequestration.

§ 3. Storage in a warehouse

Article 901. Warehouse

A goods warehouse is an organization that stores goods and provides storage-related services as a business activity.

Article 902. Public warehouse

A commodity warehouse is recognized as a public warehouse if, in accordance with the law, it is not classified as a warehouse that can accept goods for storage from a limited number of persons.

A warehousing agreement concluded by a public goods warehouse is recognized as a public contract.

Article 903. Warehousing agreement

Under a warehousing agreement, a commodity warehouse (custodian) undertakes, for a fee, to store goods transferred to it by the goods owner (bailer) and to return these goods safely.

A warehousing agreement is concluded in writing. The written form of a warehousing agreement is also, considered to be complied with if its conclusion and acceptance of goods into the warehouse are certified by a warehouse document.

Article 904. Storage of things with the right to dispose of them

If it follows from legislation or a warehousing agreement that a warehouse can dispose of goods deposited with it, and then the rules of Chapter 41 of this Code apply to the relations of the parties, however, the time and place of return of goods are determined by the rules of this chapter.

Article 905. Obligations of a warehouse

A commodity warehouse is obliged to comply with the storage conditions (regime) established in standards, technical specifications, technological instructions, storage instructions, storage rules, for certain types of goods, and other special regulatory documents mandatory for the warehouse.

The warehouse is obliged to inspect the goods at its own expense upon acceptance for storage, unless otherwise provided by the warehousing agreement.

The warehouse is obliged to provide the goods owner with the opportunity to inspect the goods or their samples, if storage is carried out with de-identification, take samples and take measures necessary to ensure the safety of the goods.

In the event that an urgent change in storage conditions is required to ensure the safety of goods, the warehouse has the right to take the required urgent measures independently. He is obliged to notify the goods owner of the measures taken.

If damage to the goods is detected during storage that goes beyond the limits agreed upon in the warehousing agreement or the usual norms of natural deterioration, the warehouse is obliged to immediately draw up a report about this and notify the depositor on the same day.

Article 906. Checking the quantity and condition of goods when returning them to the goods owner

The owner of the goods and the warehouse each have the right to demand, when returning the goods, that they be inspected and their quantity verified. The resulting costs are borne by the person who requested inspection of the goods or verification of their quantity.

If, when returning the goods by the warehouse to the goods owner, the goods were not jointly inspected or checked by them, a statement about the shortage or damage to the goods due to its improper storage must be made to the warehouse in writing upon receipt of the goods, and in relation to the shortage or damage that could not be detected during the usual method of acceptance goods – within a reasonable time necessary for their discovery.

In the absence of the statement specified in part two of this article, it is considered, unless otherwise proven, that the goods were returned the warehouse in accordance with the terms of the warehousing agreement.

Article 907. Refusal of a warehouse storage agreement by a warehouse

The warehouse has the right to refuse to fulfill the storage agreement in cases where the bailer concealed the dangerous nature of the goods, which threatens to cause significant damage.

Article 908. Warehouse documents

Commodity warehouses may issue the following warehouse documents to confirm the acceptance of goods for storage:

double warehouse receipt;

simple warehouse receipt;

warehouse receipt.

A double warehouse receipt, each of its parts and a simple warehouse receipt are securities.

Double and simple warehouse receipts can be the subject of collateral.

Article 909. Double warehouse certificate

A double warehouse receipt consists of a warehouse receipt and a pledge certificate (warrant), which can be separated from one another.

Each part of the double warehouse receipt must indicate:

name and location of the warehouse that accepted the goods for storage;

current warehouse receipt number according to the warehouse register;

the name of the organization or the name of the citizen from whom the goods were accepted for storage, as well as the location (residence) of the goods owner;

name and quantity of goods accepted for storage; number of units and (or) packages and (or) measure (weight, volume) of goods;

the period for which the goods are accepted for storage, if such a period is established, or an indication that the goods are accepted for storage until demand;

the amount of remuneration for storage or the tariffs on the basis of which it is calculated, and the procedure for paying for storage;

date of issue of the warehouse receipt.  

Both parts of the double warehouse receipt must have identical signatures of the authorized person and the seal of the warehouse (if there are seals).

A document that does not comply with the requirements of this article is not a double warehouse receipt.

Article 910. Rights of the holder of a warehouse and pledge certificate for goods

The holder of warehouse and pledge certificates has the right to dispose of the goods stored in the warehouse in full.

The holder of a warehouse certificate, separated from the pledge certificate, has the right to dispose of the goods, but cannot take it from the warehouse until the loan issued under the pledge certificate is repaid.

The holder of a pledge certificate has a pledge right to the goods, for loan issued under this certificate and interest on it. When pledging goods, a note about this is made on the warehouse receipt.

Article 911. Transfer of warehouse and pledge certificate

The warehouse certificate and the pledge certificate can be transferred together or separately by endorsements.

Article 912. Simple warehouse certificate

A simple warehouse receipt is issued to bearer.

A simple warehouse receipt must contain the information provided for in Article 909 of this Code, as well as an indication that it is issued to bearer.

Article 913. Issue of goods under a double warehouse certificate

The goods warehouse releases the goods to the holder of the warehouse and pledge certificates (double warehouse certificate) in exchange for both of these certificates together.

To the holder of a warehouse certificate, who does not have a certificate of pledge, but has paid the amount of the debt under it, the goods are issued by the warehouse only in exchange for a warehouse certificate and subject to the presentation along with it of a receipt for payment of the entire amount of the debt under the pledge certificate.

The holder of warehouse and pledge certificates has the right to demand the delivery of goods in parts. At the same time, in exchange for the initial certificates, he is issued new certificates for the goods remaining in the warehouse.

A warehouse that, contrary to the requirements of this article, has released goods to the holder of a warehouse certificate who does not have a certificate of pledge and has not paid the amount of debt under it, is liable to the holder of the certificate of pledge for payment of the entire amount secured under it.

CHAPTER 52. INSURANCE

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Article 914. Voluntary and compulsory insurance

Insurance is carried out based on property or personal insurance contracts concluded by a citizen or legal entity (policyholder) with an insurance organization (insurer).

A personal insurance contract is a public contract.

In cases where the law imposes on the persons specified in it the obligation to insure as insurers the life, health or property of other persons or their civil liability to other persons at their own expense or at the expense of interested parties (compulsory insurance), insurance is carried out by concluding contracts in accordance with the rules of this chapter.

With compulsory insurance, the policyholder is obliged to enter into an agreement with the insurer on the terms provided for by the legislation governing this type of insurance.

The law may provide for cases of compulsory insurance of life, health and property of citizens at the expense of the state budget (compulsory state insurance).

Article 915. Property insurance contract

Under a property insurance contract, one party (insurer) undertakes, for a fee stipulated by the contract (insurance premium), upon the occurrence of an event stipulated in the contract (insured event), to compensate the other party (the policyholder) or another person in whose favor the contract was concluded (the beneficiary) for damages caused as a result of this events, losses in the insured property or losses in connection with other property interests of the policyholder (pay insurance compensation) within the limits of the amount specified in the contract (sum insured).

The following can be insured under a property insurance contract:

risk of loss (destruction), shortage or damage to certain property;

risk of civil liability – the risk of liability for obligations arising from causing harm to the life, health or property of other persons, and in cases provided for by law, also liability under contracts;

Entrepreneurial risk is the risk of not receiving the expected income from business activities due to violation of their obligations by the entrepreneur’s counterparties or changes in the conditions of this activity due to circumstances beyond the control of the entrepreneur.

Article 916. Interests, insurance of which is not allowed

Insurance for unlawful interests is not permitted.

Insurance of losses from participation in games, lotteries and bets is not allowed.

Insurance of expenses that a person may be forced to make in order to free hostages is not permitted.

The terms of insurance contracts that contradict parts one, two and three of this article are void.

Article 917. Property insurance

Property can be insured under an insurance contract in favor of a person (the policyholder or beneficiary) who has an interest in preserving this property based on legislation or contract – in favor of its owner, a person who has another property right to the property, a tenant, a contractor, a custodian, a commission agent and so on.

A property insurance contract concluded when the policyholder and the beneficiary have no interest in preserving the insured property is invalid.

A property insurance contract in favor of the beneficiary may be concluded without indicating the name of the beneficiary. Upon conclusion of such a contract, the policyholder is issued an insurance policy to bearer. When exercising rights under such a contract, it is necessary to present this policy to the insurer.

Article 918. Insurance of liability for causing harm

Under an insurance contract for the risk of liability for obligations arising because of causing harm to the life, health or property of other persons, the risk of liability of the insured himself or another person to whom such liability may be assigned can be insured.

The person whose risk of liability for damage is insured must be named in the insurance contract. If this person is not named in the contract, the risk of liability of the policyholder himself is considered insured.

An insurance contract for the risk of liability for causing harm is considered in favor of persons who may be harmed (beneficiaries), even if the contract is concluded in favor of the insured or another person responsible for causing the harm, or the contract does not state in whose favor it is concluded.

In the event that liability for causing harm is insured due to the fact that its insurance is mandatory, as well as in other cases provided for by law or the insurance contract for such liability, than the person in whose favor the insurance contract is considered to have been concluded has the right to make a claim directly to the insurer, within the limits of the insured amount, for compensation for damage.

Article 919. Liability insurance under the contract

Insurance of the risk of liability for breach of contract is permitted in cases provided for by law.

Under an insurance contract for the risk of liability for breach of contract, only the risk of liability of the policyholder himself can be insured. An insurance contract that does not comply with this requirement is void.

The risk of liability for breach of contract is considered insured in favor of the party to whom, under the terms of this contract, the insured must bear corresponding liability – the beneficiary, even if the insurance contract was concluded in favor of another person or it does not say in whose favor it was concluded.

Article 920. Business risk insurance

Under a business risk insurance contract, only the business risk of the policyholder himself can be insured and only in his favor.

A business risk insurance contract for a person who is not the policyholder is void.

A business risk insurance contract in favor of a person who is not the policyholder is considered to be concluded in favor of the policyholder.

Article 921. Personal insurance contract

Under a personal insurance contract, one party (the insurer) undertakes, for a fee stipulated by the contract (insurance premium) paid by the other party (the policyholder), to pay a lump sum or to pay periodically the amount stipulated by the contract (insured amount) in the event of harm to the life or health of the policyholder himself or another named in the contract of a citizen (insured person), when he reaches a certain age or when another event (insured event) stipulated by the contract occurs in his life.

The right to receive the insurance amount belongs to the person in whose favor the personal insurance contract was concluded.

A personal insurance contract is considered concluded in favor of the insured person if another person is not named in the contract as a beneficiary. In the event of the death of a person insured under a contract in which no other beneficiary is named, the heirs of the insured person are recognized as beneficiaries.

A personal insurance contract in favor of a person who is not an insured person, including in favor of a policyholder who is not an insured person, can be concluded only with the written consent of the insured person. In the absence of such consent, the contract may be declared invalid at the claim of the insured person, and in the event of the death of this person, at the claim of his heirs.

Article 922. Compulsory insurance

The law may establish an obligation to insure:

life, health or property of other persons specified by law in case of harm to their life, health or property;

the risk of one’s civil liability, which may arise as a result of causing harm to the life, health or property of other persons or violation of contracts with other persons.

The obligation to act as an insurer is assigned by law to the persons specified therein.

The law may establish other types of compulsory insurance.

The obligation to insure one’s life or health cannot be imposed on a citizen by law.

In cases provided for by law or in the manner established by it, legal entities that have state-owned property under economic control or operational management may be required to insure this property.

In cases where the obligation to insure property does not arise from the law, but is based on an agreement with the owner of the property or on the constituent documents of the legal entity that is the owner of the property, such insurance is not mandatory in the sense of this article and does not entail the consequences provided for in Article 924 of this Code.

Article 923. Implementation of compulsory insurance

Compulsory insurance is carried out by concluding an insurance contract between the person charged with such insurance (the policyholder) and the insurer.

Compulsory insurance is carried out at the expense of the policyholder, with the exception of compulsory insurance of passengers, which in cases provided for by law can be carried out at their expense.

Objects subject to compulsory insurance, risks against which they must be insured, and the minimum amounts of insurance amounts are determined by law.

Article 924. Consequences of violating the rules on compulsory insurance

A person in whose favor compulsory insurance must be carried out by law has the right, if he knows that insurance has not been carried out, to demand in court that it be carried out by the person who is entrusted with the obligation of insurance as an insured.

If the person who is entrusted with the insurance obligation as an insured fails to carry it out or enters into an insurance contract on conditions that worsen the position of the beneficiary in comparison with the conditions determined by law, upon the occurrence of an insured event, he is liable to the beneficiary on the same conditions as he should the insurance claim would have been payable if there had been proper insurance.

Article 925. Insurer

As insurers, insurance contracts can be concluded by legal entities that are commercial organizations and have a license to carry out insurance of the corresponding type, unless otherwise provided by legislative acts.

The requirements that insurance organizations must meet, the procedure for their licensing and state supervision of their activities are determined by law.

Article 926. Fulfillment of obligations under an insurance contract by the insured and the beneficiary

The conclusion of an insurance contract in favor of the beneficiary, including when the beneficiary is the insured person, does not relieve the policyholder from fulfilling obligations under this contract, unless otherwise provided by the contract or the obligations incumbent on the policyholder are fulfilled by the person in whose favor the contract was concluded .

When a beneficiary submits a claim for payment of insurance compensation under a property insurance contract or the insured amount under a personal insurance contract, the insurer has the right to demand from him. When the beneficiary is the insured person, to fulfill obligations under the insurance contract, including the obligations falling on the insured, but not fulfilled by him. The risk of consequences of non-fulfillment or untimely fulfillment of duties that should have been performed earlier is borne the beneficiary.

Article 927. Form of insurance contract

The insurance contract must be concluded in writing.

Failure to comply with this requirement entails the invalidity of the insurance contract.

An insurance contract can be concluded by drawing up one document or by the insurer delivering to the policyholder, based on his written or oral application, an insurance policy (certificate, certificate, receipt) signed by the insurer, containing the terms of the insurance contract. In this case, the consent of the policyholder to conclude an agreement on the terms proposed by the insurer is confirmed by acceptance of the specified documents from the insurer and payment of the insurance premium or, if the insurance premium is paid in installments, by payment of the first installment.

When concluding an agreement, the insurer has the right to use standard forms of the insurance agreement (insurance policy) developed by it for certain types of insurance.

Article 928. Insurance under a general policy

Systematic insurance of different batches of homogeneous property (goods, cargo, etc.) on similar conditions for a certain period can, be carried out based on one insurance by agreement between the insured and the insurer, contract – a general policy.

The insured is obliged, in relation to each batch of property falling under the general policy, to report to the insurer the information stipulated by such policy within the period stipulated by it, and if it is not provided for, immediately upon receipt of the information. The insured is not relieved of this obligation, even if by the time such information is received the possibility of losses subject to compensation by the insurer has already passed.

At the request of the policyholder, the insurer is obliged to issue insurance policies for individual lots of property falling under the general policy.

In case of discrepancy between the contents of the insurance policy and the general policy, preference is given to the insurance policy.

Article 929. Essential terms of the insurance contract

When concluding a property insurance contract, an agreement must be reached between the policyholder and the insurer:

about certain property or other property interest, that is the object of insurance;

about the nature of the event against which insurance is provided (insured event);

about the amount of the insured amount;

on the procedure for determining the amount of insurance compensation if the contract provides for the possibility of its payment in an amount less than the insured amount;

on the amount of the insurance premium and the deadline(s) for its payment;

about the duration of the contract.

When concluding a personal insurance contract, an agreement must be reached between the policyholder and the insurer:

about the insured person;

about the nature of the event against the occurrence of which in the life of the insured person insurance is carried out (insured event);

about the amount of the insured amount;

on the amount of the insurance premium and the deadline(s) for its payment;

about the duration of the contract.

By agreement of the parties, other conditions may be included in the contract. If an insurance contract contains conditions that worsen the position of a citizen who is a policyholder, insured person or beneficiary, in comparison with the provisions established by law, the relevant provisions of the law are applied instead of these contract conditions.

Article 930. Determination of the terms of the insurance contract in the insurance rules

The conditions under which an insurance contract is concluded may be determined in the standard rules of insurance of the relevant type, adopted, approved or approved by the insurer or association of insurers (insurance rules).

Conditions contained in the insurance rules and not included in the text of the insurance contract (policy) are mandatory for the insured (beneficiary), if the contract (policy) directly indicates the application of such rules and the rules themselves are set out in one document with the contract (policy) or on its reverse side or attached to it. In the latter case, delivery of the insurance rules to the policyholder upon conclusion of the contract must be certified by an entry in the contract.

When concluding an insurance contract, the policyholder and the insurer may agree to change or exclude certain provisions of the insurance rules and to include in the contract provisions that are not in the rules.

The insured (beneficiary) has the right to refer, in defense of his interests, to the rules of insurance of the relevant type, which are referenced in the insurance contract (policy), even if these rules are not binding for him by virtue of this article.

Article 931. Information provided by the policyholder when concluding an insurance contract

When concluding an insurance contract, the policyholder is obliged to inform the insurer of the circumstances known to the policyholder that are significant for determining the likelihood of the occurrence of an insured event and the amount of possible losses from its occurrence (insurance risk).

The circumstances specifically stipulated by the insurer in the standard form of the insurance contract (policy), the insurance rules transmitted to the policyholder, or a written request are considered significant.

If an insurance contract is concluded in the absence of answers from the policyholder to any questions from the insurer, the insurer cannot subsequently demand termination of the contract or recognition of it as invalid because the policyholder did not communicate the relevant circumstances.

If, after concluding an contract of insurance, is established that the policyholder has provided the insurer with knowingly false information, about the circumstances specified in the first part of this article, so the insurer has the right to demand that the contract be declared invalid and the consequences provided for in the second part of Article 123 of this Code be applied.

The insurer cannot demand that the insurance contract be invalidated if the circumstances that the policyholder has kept silent about have already disappeared.

Article 932. The insurer’s right to assess the insurance risk

When concluding a property insurance contract, the insurer has the right to inspect the insured property, and, if necessary, organize an assessment in order to establish its actual value.

When concluding a personal insurance contract, the insurer has the right to conduct an examination of the insured person to assess the actual state of his health.

An assessment of the insurance risk by the insurer based on this article is not obligatory for the policyholder, who has the right to prove otherwise.

Article 933. Secrecy of insurance

The insurer has no right to disclose information received by him because of his professional activities about the policyholder, the insured person and the beneficiary, their state of health, as well as the property status of these persons. For violation of insurance secrets, the insurer, depending on the type of rights violated and the nature of the violation is liable in accordance with the rules of Articles 985, 1021 and 1022 of this Code.

Article 934. Sum insured

The amount within which the insurer undertakes to pay insurance compensation under a property insurance contract or which it undertakes to pay under a personal insurance contract (insured amount) is determined by an agreement between the policyholder and the insurer in accordance with the rules of this article.

When insuring property or business risk, unless otherwise provided by the insurance contract, the insured amount should not exceed their actual value (insurable value), which is considered:

for property – its actual value at its location on the day of concluding the insurance contract;

for business risk – losses from business activities that the policyholder could be expected to incur if the insured event occurred.

In personal insurance contracts and civil liability insurance contracts, the insured amount is determined by the parties at their discretion, except for cases provided for by law.

Article 935. Insurable value of property

The insurable value (insurance valuation) is the value of the property with which the insurable interest is associated, determined by agreement of the parties at the time of concluding the insurance contract, unless otherwise provided by law.

The insurable value of the property specified in the insurance contract cannot be subsequently disputed, except in the case where the insurer, who did not exercise its right to assess the insurance risk before concluding the contract, was deliberately misled regarding this value.

Article 936. Incomplete property insurance

If in a property or business risk insurance contract the insured amount is set below the insured value, the insurer, upon the occurrence of an insured event, is obliged to compensate the insured (beneficiary) for the losses incurred by the latter in proportion to the ratio of the insured amount to the insured value.

Article 937. Additional property insurance

If property or business risk, is insured only to the extent of the insured value, the policyholder (beneficiary) has the right to carry out additional insurance, including from another insurer, but so that the total insured amount for all insurance contracts does not exceed the insured value.

Failure to comply with the provisions of the first part of this article entails the consequences provided for in Article 938 of this Code.

Article 938. Consequences of insurance in excess of the insurance value

If the insured amount specified in the property or business risk insurance contract exceeds the insured value, the contract is void to the extent of the insured amount that exceeds the insured value.

The excess paid portion of the insurance premium is not refundable in this case.

If, in accordance with the insurance contract, the insurance premium is paid in installments and by the time the circumstances specified in part one of this article are established, it has not been paid in full, the remaining insurance premiums must be paid in an amount reduced in proportion to the reduction in the amount of the insured amount.

If the overstatement of the insured amount in the insurance contract was the result of fraud on the part of the policyholder, the insurer has the right to demand that the contract be declared invalid and compensation for losses caused to it in an amount exceeding the amount of the insurance premium received from the policyholder.

Article 939. Double insurance

The rules provided for in Article 938 of this Code, correspondingly are applied in the case where the insured amount exceeded the insured value because of insuring the same property or business risk with two or more insurers (double insurance).

In case of double insurance of property or business risk, each insurer is obliged to pay insurance compensation within the limits of the contract concluded, however the total amount of insurance compensation received from all insurers cannot exceed the actual damage.

In this case, the policyholder (beneficiary) has the right to receive insurance compensation from any insurer within the limits of the insured amount provided for in the contract concluded with him. If the insurance compensation received does not cover the actual damage, the policyholder (beneficiary) has the right to receive the missing amount from another insurer.

The insurer, wholly or partially exempted from paying insurance compensation due to the fact, that the damage caused was compensated other insurers, is obliged to return to the insured the corresponding part of the insurance payments minus the expenses incurred.

The rules of this article do not apply to double personal insurance, where each insurer fulfills its insurance obligations to the policyholder, the insured person and the beneficiary independently, regardless of the fulfillment of obligations by other insurers.

Article 940. Property insurance against various insurance risks

Property and business risk can be insured against various insurance risks either under one or under separate insurance contracts, including under contracts with different insurers.

In these cases, the total insured amount for all contracts is allowed to exceed the insured value and the rules of Article 939 of this Code are applied accordingly.

Article 941. Co-insurance

The insurance object can be insured under one contract jointly by several insurers (co-insurance). If such an agreement does not define the rights and obligations of each of the insurers, they are jointly and severally liable to the insured (beneficiary) for the payment of insurance compensation under a property insurance agreement or the insured amount under a personal insurance agreement.

For joint insurance of large and especially large risks, co-insurers can create simple partnerships (insurance pools) based on a joint activity agreement.

If there is an appropriate agreement between the co-insurers, one of them can represent all co-insurers in relations with the insured (beneficiary), remaining liable to the latter only in his share.

Article 942. Insurance premium and insurance contributions

The insurance premium is understood as the payment for insurance that the policyholder (beneficiary) is obliged to pay to the insurer in the manner and within the time limits established by the insurance contract.

When determining the amount of the insurance premium payable under the insurance contract, the insurer has the right to apply the insurance tariffs developed by it, which determine the premium charged per unit of the insured amount, taking into account the object of insurance and the nature of the insurance risk.

In cases provided for by law, the amount of the insurance premium is determined in accordance with the insurance tariffs established or regulated by state insurance supervisory authorities.

If the insurance contract provides for payment of the insurance premium in installments, the contract may determine the consequences of failure to pay regular insurance premiums on time.

If the insured event occurs before the payment of the next insurance premium, the payment of which is overdue, than the insurer has the right to limit the amount of insurance compensation payable under a property insurance contract or the insured amount under a personal insurance contract to an amount proportional to the part of the insurance premium paid to it, and set off the amount of the overdue insurance premium.

Article 943. Invalidity of an insurance contract

The insurance contract is void in cases where:

at the time of conclusion of the contract, the insurance object did not exist;

under the property insurance contract, property was insured that was obtained by criminal means, was the subject of a crime, or was subject to confiscation;

illegal interest is insured under the contract;

As an insured event, the insurance contract provides for an event that has no signs of probability or chance of its occurrence.

The insurance contract is also void in other cases provided for by this Code and other laws.

Article 944. Replacement of the insured person

In the event that, under an insurance contract for the risk of liability for causing harm, the liability of a person other than the insured is insured, the latter has the right, unless otherwise provided by the contract, to replace this person with another at any time before the occurrence of an insured event, notifying the insurer in writing.

The insured person named in the personal insurance contract may be replaced by the policyholder with another person only with the consent of the insured person and the insurer.

Article 945. Replacement of beneficiary

The policyholder has the right to replace the beneficiary named in the insurance contract with another person by notifying the insurer in writing. Replacing a beneficiary under a personal insurance contract, appointed with the consent of the insured person, is allowed only with the consent of this person.

The beneficiary cannot be replaced by another person, after he has fulfilled any of the obligations under the insurance contract or has submitted a claim to the insurer for payment of insurance compensation or the insured amount.

Article 946. Replacement of the policyholder

In the event of the death of the policyholder who has entered into a property insurance contract, the rights and obligations of the policyholder are transferred to the person who accepted this property by inheritance. In other cases of transfer of ownership, the rights and obligations of the policyholder are transferred to the new owner with the consent of the insurer, unless otherwise provided by the contract or legislation.

In the event of the death of the policyholder who has entered into a personal insurance contract in favor of the insured, the rights and obligations determined by this contract are transferred to the insured with his consent. If it is impossible for the insured to fulfill his obligations under the insurance contract, his rights and obligations may pass to persons who, in accordance with the law, carry out the duties of protecting his rights and legitimate interests.

If during the period of validity of the insurance contract the insured is declared incompetent or limited in legal capacity by the court, than the rights and obligations of such insured are received by his guardian or trustee. In this case, the insurance of the policyholder’s liability to third parties ends from the moment of termination or limitation of his legal capacity.

When the insured, who is a legal entity, is reorganized during the period of the insurance contract, his rights and obligations under this contract are transferred, with the consent of the insurer, to the corresponding legal successor in the manner prescribed by this Code.

Article 947. Commencement of an insurance contract

The insurance contract, unless otherwise provided in it, comes into force at the time of payment of the insurance premium or its first installment.

Insurance stipulated by the contract applies to insured events occurring after the entry into force of the insurance contract, unless the contract provides for a different start date for the insurance.

Article 948. Early termination of an insurance contract

The insurance contract is terminated before the expiration of the period for which it was concluded if, after its entry into force, the possibility of the occurrence of an insured event has ceased and the existence of the insured risk has ceased due to circumstances other than the insured event. Such circumstances include, in particular:

destruction of the insured property for reasons other than the occurrence of an insured event;

termination of business activity in accordance with the established procedure by a person who has insured the business risk or the risk of civil liability associated with this activity.

In case of early termination of the insurance contract under the circumstances specified in part one of this article, the insurer has the right to a portion of the insurance premium in proportion to the time during which the insurance was in effect.

The policyholder (beneficiary) has the right to refuse to fulfill the insurance contract at any time, if by the time of refusal the possibility of the occurrence of an insured event has not disappeared due to the circumstances specified in part one of this article.

In case of early refusal of the policyholder (beneficiary) from the insurance contract, the insurance premium paid to the insurer is not refundable, unless otherwise provided by the contract.

Article 949. Consequences of an increase in insurance risk during the validity period of the insurance contract

During the period of validity of the property insurance contract, the policyholder (beneficiary) is obliged to immediately notify the insurer of significant changes that become known to him in the circumstances communicated to the insurer at the conclusion of the contract, if these changes may significantly affect the increase in the insurance risk. Changes stipulated in the insurance contract (insurance policy) and in the insurance rules transferred to the policyholder are considered significant.

The insurer, notified of circumstances entailing an increase in insurance risk, has the right to demand changes in the terms of the insurance contract or payment of an additional insurance premium in proportion to the increase in risk.

If the policyholder (beneficiary) objects to changing the terms of the insurance contract or additional payment of the insurance premium, the insurer has the right to demand termination of the contract in accordance with the rules provided for in Chapter 28 of this Code.

If the insured or beneficiary fails to fulfill the obligation provided for in part one of this article, the insurer has the right to demand termination of the insurance contract and compensation for losses caused by termination of the contract.

The insurer has no right to demand termination of the insurance contract if the circumstances leading to an increase in the insurance risk have already ceased.

In case of personal insurance, the consequences of changes in the insurance risk during the validity period of the insurance contract, specified in parts two, three and four of this article, can occur only if they expressly are provided for in the contract.

Article 950. Transfer of rights to insured property to another person

When the rights to the insured property are transferred from the person, whose interests the insurance contract was concluded, to another person, the rights and obligations under this contract are transferred to the person, whom the rights to the property were transferred, with the exception of cases of forced seizure of property on the grounds specified in Articles 197 and 199 of this Code.

The person to whom the rights to the insured property have been transferred must notify the insurer in writing.

Article 951. Notification of the insurer about the occurrence of an insured event

The policyholder under a property insurance contract, after becoming aware of the occurrence of an insured event, is obliged to immediately notify the insurer or his representative of its occurrence. If the contract provides for a period and (or) method of notification, it must be done within the agreed period and in the manner specified in the contract. The same obligation lies with the beneficiary if he intends to exercise the right to insurance compensation under an agreement concluded in his favor.

If is not proven, that the insurer learned about the occurrence of an insured event in a timely manner or that the insurer’s lack of information about this could not affect its obligation to pay insurance compensation, than failure to fulfill the obligation provided for in the first part of this article gives the insurer the right to refuse to pay insurance compensation unless.

The rules provided for in this article correspondingly are applied to the personal insurance contract if the insured event is the death of the insured person or damage to his health. In this case, the period for notifying the insurer established by the contract cannot be less than twenty days.

Article 952. Reduction of losses from an insured event

When an insured event occurs under a property insurance contract, the policyholder is obliged to take reasonable and accessible measures to reduce possible losses. When taking such measures, the policyholder must follow the instructions of the insurer, if they are communicated to the policyholder.

Expenses, incurred in order to mitigate losses subject to compensation by the insurer, if such expenses were necessary or were incurred to carry out the instructions of the insurer, must be reimbursed the insurer, even if the corresponding measures were unsuccessful. Such expenses are reimbursed in proportion to the ratio of the insured amount to the insured value, regardless of the fact that, together with compensation for other losses, they may exceed the insured amount.

The insurer is exempt from compensation for losses arising due to the fact that the policyholder deliberately did not take measures to reduce possible losses.

Article 953. Consequences of an insured event due to the fault of the policyholder, beneficiary or insured person

The insurer, is exempt from paying insurance compensation or the insured amount if the insured event occurred due to the intent of the policyholder, beneficiary or insured person. Except, if the intentional actions were committed them in a state of necessary defense or emergency, as well as in the cases provided for in parts three and four of this article.

The law may provide for cases of exemption of the insurer from payment of insurance compensation under property insurance contracts or reduction of the amount of compensation upon the occurrence of an insured event due to gross negligence of the policyholder or beneficiary.

The insurer is not exempt from paying insurance compensation under a civil liability insurance contract for causing harm to the life or health of the insured person if the harm was caused through the fault of the person responsible for it.

The insurer is not exempt from paying the insurance amount, which under the personal insurance contract is payable in the event of the death of the insured person, if his death was due to suicide and by that time the insurance contract had been in force for at least two years.

Article 954. Grounds for exemption of the insurer from payment of insurance compensation and the insured amount

The insurer is exempt from paying insurance compensation and the insured amount, unless otherwise provided by law or the insurance contract and the insured event occurred because of:

exposure to a nuclear explosion, radiation or radioactive contamination;

military operations, maneuvers or other military events.

Unless otherwise provided by the property insurance contract, the insurer is exempt from paying insurance compensation for losses arising because of seizure, confiscation, requisition, arrest or destruction of insured property by order of government bodies.

Article 955. Refusal to pay insurance compensation or insurance amount

The insurer has the right to refuse to pay the policyholder (beneficiary) insurance compensation under a property insurance contract or the insured amount under a personal insurance contract in cases where:

the insurance contract was terminated before the occurrence of the insured event, including on the grounds specified in Articles 948 and 950 of this Code;

the insurance contract is void on the grounds provided for by this Code or other laws;

the insurer is exempt from paying insurance compensation or the insured amount on the grounds specified in Articles 951 – 954 of this Code;

The insurer has filed a claim to invalidate the insurance contract on the grounds provided for by this Code or other laws, or to terminate the insurance contract, because the insured (beneficiary) prevented the investigation of the circumstances of the insured event or the determination of the amount of losses caused.

The insurer’s decision to refuse to pay the insurance indemnity or the insured amount must be notified to the policyholder (beneficiary) no later than fifteen days after they apply for payment of the insurance indemnity or the insured amount, and must contain a reasoned justification for the reasons for the refusal.

The insurer’s refusal to pay the insurance indemnity or the insured amount may be challenged by filing a claim against it in court.

Article 956. Payment of the insurance amount under a personal insurance contract

The insurance amount under a personal insurance contract is paid to the person in whose favor the contract is concluded, regardless of the amounts due to the policyholder, the insured person or the beneficiary under social insurance, social security, under other insurance contracts or in compensation for harm.

The insurance amount under a personal insurance contract, paid to the heirs of the insured person based on part three of Article 921 of this Code, is not included in the inheritance of the insured person.

Article 957. Transfer of the insured’s rights to compensation for damage to the insurer (subrogation)

Unless otherwise provided by the property insurance contract, the insurer who paid the insurance indemnity is transferred, within the amount paid, the right of claim that the insured (beneficiary) has against the person responsible for the losses compensated as a result of the insurance. However, the provision of the contract that excludes the transfer to the insurer of the right of claim against the person who intentionally caused losses is void.

The right of claim transferred to the insurer is exercised him in compliance with the rules governing the relationship between the insured (beneficiary) and the person responsible for the losses.

The policyholder (beneficiary) is obliged to transfer to the insurer all documents, evidence, and provide him with all the information necessary for the insurer to exercise the right of claim transferred to him.

If the insured (beneficiary) has waived his right to claim against the person, responsible for losses, compensated by the insurer, or the exercise of this right has become impossible due to the fault of the insured (beneficiary), than the insurer is exempt from paying the insurance compensation in full or in the relevant part and has the right to demand the return of the excess paid amount of compensation.

Article 958. Transfer of rights to insured property to the insurer

When insuring property, the policyholder (beneficiary), after the occurrence of an insured event, can, with the consent of the insurer, transfer to him his rights to the insured property and receive insurance compensation in the full amount of the insured amount.

Article 959. Reinsurance

The risk of payment of insurance compensation or the insured amount assumed by the insurer under an insurance contract may be insured by it in full or in part with another insurer (insurers) under a reinsurance agreement concluded with the latter.

The rules of this chapter apply to the reinsurance agreement, subject to application in relation to business risk insurance, unless otherwise provided by the reinsurance agreement. The insurer under the insurance contract (main contract), who has entered into a reinsurance contract, is considered to be the policyholder in this latter contract.

In case of reinsurance, the insurer under this contract remains responsible to the policyholder under the main insurance contract for the payment of insurance compensation or the insured amount.

However, in the event of liquidation of an insurance organization that is an insurer under the main insurance contract, before the occurrence of an insured event, its rights and obligations under this contract in the reinsured part are transferred to the insurer under the reinsurance contract.

Consecutive conclusion of two or more reinsurance contracts is allowed. Each of such contracts is considered the main insurance contract in relation to the subsequent reinsurance contract.

Article 960. Mutual insurance

Citizens and legal entities may insure their property and other property interests specified in part two of Article 915 of this Code on a mutual basis by pooling the funds necessary for this in mutual insurance companies.

Mutual insurance societies insure the property and other property interests of their members and are non-profit organizations.

Mutual insurance companies insure the property and property interests of their members directly based on membership, unless the constituent documents of the company provide for the conclusion of insurance contracts in these cases.

The rules of this chapter apply to insurance relations between a mutual insurance company and its members, unless otherwise provided by law, the constituent documents of the relevant company or the insurance rules established by it.

Compulsory insurance through mutual insurance is permitted only in cases provided for by law.

A mutual insurance company may, as an insurer, insure the interests of persons, who are not members of the company, if such insurance activities are provided for by its constituent documents, the company itself is formed in the form of a commercial organization, has a license to carry out insurance of the appropriate type and meets other requirements established law.

Insurance of the interests of persons who are not members of a mutual insurance company is carried out by the company under insurance contracts in accordance with the rules of this chapter.

The specifics of the legal status of mutual insurance companies and the conditions of their activities are determined law.

Article 961. Compulsory state insurance

In order to ensure the social interests of citizens and the interests of the state, the law may establish compulsory state insurance of life, health and property.

Compulsory state insurance is carried out at the expense of funds allocated for these purposes from the state budget.

Compulsory state insurance is carried out directly based on insurance legislation by the state insurance or other state organizations (insurers) specified therein.

The rules of this chapter apply to compulsory state insurance, unless otherwise provided by insurance legislation and does not follow from the essence of the relevant insurance relations.

CHAPTER 53. SIMPLE PARTNERSHIP

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Article 962. Simple partnership agreement

Under a simple partnership agreement (joint activity agreement), two or more persons, called partners (participants), undertake to pool their contributions and act together without forming a legal entity to make a profit or achieve another goal that does not contradict the law.

The parties to a simple partnership agreement concluded for the implementation of entrepreneurial activities can only be individual entrepreneurs and (or) commercial organizations.

A simple partnership agreement must be concluded in writing.

Article 963. Contributions of partners

The contribution of a comrade is recognized as everything that he contributes to the common cause, in particular money, other property, professional and other knowledge, skills and abilities, as well as business reputation.

The partners’ contributions are assumed to be equal in value, unless otherwise follows from the simple partnership agreement or actual circumstances. The monetary value of a partner’s contribution is made by agreement between the partners.

Article 964. Common property of partners

The property contributed by the partners, which they possessed by right of ownership, as well as the products produced as a result of joint activities and the fruits and income received from such activities are recognized as their common shared property, unless otherwise established by law or a simple partnership agreement or does not follow from the essence of the obligation.

Property in the common shared ownership of the partners, as well as their common claims and common exclusive rights, form the common property of the partners. Common property is used for the benefit of all partners.

Maintaining accounting records of the partners’ common property may be entrusted by them to one of the legal entities participating in the simple partnership agreement.

The use of the common property of the partners is carried out by their common consent, and if agreement is not reached, in the manner established by the court.

The obligations of the partners for the maintenance of common property and the procedure for reimbursement of expenses associated with the performance of these obligations are provided for in the simple partnership agreement.

Article 965. Conducting common affairs of comrades

Conducting the common affairs of the participants in a simple partnership agreement is carried out in the manner prescribed by the agreement.

When conducting common affairs, each partner has the right to act on behalf of all partners, unless the simple partnership agreement establishes that the business is carried out by individual participants or jointly by all participants in the agreement.

When conducting business together, each transaction requires the consent of all partners.

In relations with third parties, the authority of a partner to make transactions on behalf of all partners is certified by a power of attorney issued to him by the other partners, or is evident from a simple partnership agreement.

In relations with third parties, partners cannot refer to restrictions on the rights to conduct the common affairs of the partner who entered into the transaction, unless they prove that at the time of concluding the transaction the third party knew or should have known about the existence of such restrictions.

A partner who has made transactions on behalf of all his partners in respect of which his right to conduct business was limited, or who has entered into transactions in the interests of all partners on his own behalf, has the right to compensation for expenses incurred by him from his own funds, if there were sufficient grounds to believe that these the transactions were necessary in the interests of all comrades. If such transactions cause losses to other partners, they have the right to demand compensation.

Decisions concerning common affairs are made partners by general agreement, unless otherwise provided by the simple partnership agreement.

Participants in the agreement authorized to conduct common affairs have the right to separate remuneration if this is provided for in the simple partnership agreement.

Article 966. A friend’s right to information

Each comrade, regardless of whether he is authorized to conduct the common affairs of his comrades, has the right to familiarize himself with all documentation on the conduct of affairs. Waiver of this right or its limitation, including by agreement of partners, is void.

Article 967. General expenses, losses and liability of partners

The procedure for covering expenses and losses associated with the joint activities of the partners is determined by their agreement. In the absence of such an agreement, each partner bears expenses and losses in proportion to the value of his contribution to the common cause.

An agreement that completely exempts any of the partners from participating in covering common expenses or losses is void.

If agreement of a simple partnership is not related to, the implementation of entrepreneurial activities its participants, then for general contractual obligations each partner is liable with all his property in proportion to the value of his contribution to the common cause.

For general obligations that do not arise from a simple partnership agreement, the partners are jointly and severally liable.

If agreement a simple partnership is related to the implementation of entrepreneurial activities its participants, than the partners are jointly and severally liable for all general obligations, regardless of the basis for their occurrence.

Article 968. Distribution of profits

The profit received by the partners because of their joint activities is distributed, in proportion to the value of the partners’ contributions to the common cause, unless otherwise provided by the simple partnership agreement or other agreement of the partners. An agreement to exclude any of the partners from participating in the profits is void.

Article 969. Allocation of a partner’s share at the request of his creditor

The creditor of a participant in a simple partnership agreement has the right to make a claim for the allocation of his share in the common property in accordance with Article 227 of this Code.

Article 970. Grounds for termination of a simple partnership agreement

The simple partnership agreement is terminated due to:

declaring one of the partners incapacitated, partially incapacitated or missing, unless the agreement of a simple partnership or a subsequent agreement provides for the preservation of the agreement in relations between the remaining partners;

declaring one of the partners’ insolvent (bankrupt), with the exception specified in paragraph two of this article;

death of a partner or liquidation or reorganization of a legal entity participating in a simple partnership agreement, unless the agreement or subsequent agreement provides for the preservation of the agreement in relations between the remaining partners or the replacement of a deceased partner (liquidated or reorganized legal entity) by his heirs (legal successors);

refusal of any of the partners from further participation in an open-ended simple partnership agreement, with the exception specified in paragraph two of this article;

termination of a simple partnership agreement concluded with a specified period at the request of one of the partners in relations between him and the other partners, with the exception specified in paragraph two of this article;

expiration of the simple partnership agreement;

allocation of a partner’s share at the request of his creditor, with the exception specified in paragraph two of this article;

other grounds provided for by this Code or the agreement.

Article 971. Consequences of termination of a simple partnership agreement

Upon termination of a simple partnership agreement, things transferred into the common possession and (or) use of the partners are returned to the partners who provided them without remuneration, unless otherwise provided by agreement of the parties.

From the moment of termination of a simple partnership agreement, its participants bear joint liability for unfulfilled general obligations in relation to third parties.

The division of property that was in the common shared ownership of the partners, and the common rights of claim that arose among them, is carried out in the manner established by Article 223 of this Code.

A partner who has contributed an individually defined thing to the common shared ownership has the right, upon termination of a simple partnership agreement, to demand the return of this thing to him, if the interests of the other partners and creditors are respected.

Article 972. Refusal of an open-ended simple partnership agreement

An application for a person’s refusal to renounce an open-ended simple partnership agreement must be made him no later than three months before the intended withdrawal from the agreement, unless a different period is established by the agreement.

An agreement to limit the right to withdraw from an open-ended simple partnership agreement is void.

Article 973. Termination of a simple partnership agreement at the request of a party

Along with the grounds specified in part two of Article 382 of this Code, a party to a simple partnership agreement concluded with an indication of the term or with an indication of the purpose as a severable condition, has the right to demand termination of the agreement in relations between itself. The other partners for a good reason with compensation to the other partners of real damage caused by termination of the contract.

Article 974. Liability of a partner who refused to participate in the contract or demanded its termination

In the event, that a simple partnership agreement was not terminated as a result of a statement by one of the participants to refuse further participation in it or termination of the agreement at the request of one of the partners. The person, whose participation in the agreement was terminated is liable to third parties for general obligations, arising during the period of its participation in the agreement, as if it had remained a party to the simple partnership agreement.

Article 975. Unofficial partnership

A simple partnership agreement may provide, that its existence be not disclosed to third parties (tacit partnership). The rules of this chapter apply to such an agreement, unless otherwise provided by this article or follows from the essence of the private partnership.

In relations with third parties, each of the participants in a private partnership is liable with all his property for transactions that he concluded on his own behalf in the common interests of his partners.

In relations between partners, obligations arising in the course of their joint activities are considered general.

CHAPTER 54. PUBLIC COMPETITION

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Article 976. Organization of a public competition

A person who publicly announced the payment of a monetary reward or the issuance of another reward (payment of an award) for the best performance of work or achievement of other results (public competition) must pay the stipulated reward to the one who, in accordance with the terms of the competition, is recognized as its winner.

A public competition can be open, when the competition organizer’s offer to take part in the competition is addressed to everyone through an announcement in the press and other media, or closed, when the offer to take part in the competition is sent to a certain circle of people chosen the competition organizer.

An open competition may be conditioned by the preliminary qualification of its participants, when the organizer of the competition carries out a preliminary selection of persons who wish to take part in the competition.

The announcement of a public competition must contain conditions stipulating the essence of the task, the criteria and procedure for assessing the results of work or other achievements, the place, deadline and procedure for their presentation, the size and form of the award, as well as the procedure and timing for announcing the results.

For a public competition containing an obligation to conclude an agreement with the winner of the competition, the rules of this chapter apply to the extent that Articles 379–381 of this Code do not provide otherwise.

Article 977. Change of conditions and cancellation of a public competition

The person, who announced a public competition has the right to change its conditions or cancel the competition only during the first half of the deadline established for the submission of works.

Notification of changes in conditions or cancellation of the competition must be made in the same way as the competition was announced.

In the event of a change in the terms of the competition or its cancellation, the person who announced the competition must reimburse the costs incurred by any person who performed the work specified in the announcement before he became or should have become aware of the change in the terms of the competition or its cancellation.

If, when changing the conditions of the competition or when canceling it, the requirements specified in parts one or two of this article were violated, the person who announced the competition must pay a reward to those who completed work that satisfies the conditions specified in the announcement.

The person, who announced the competition is released from the obligation to reimburse expenses if he proves that the specified work was not performed in connection with the competition, in particular, before the announcement of the competition, or knowingly did not comply with the conditions of the competition.

Article 978. Decision on payment of reward

The decision to pay the award to the winner of the competition must be made and communicated, to the participants of the public competition in the manner and within the time limits, established in the announcement of the competition.

If the results specified in the advertisement are achieved in work performed jointly by two or more persons, the reward is distributed among them in accordance with their agreement. If such an agreement is not reached, the order of distribution of the award is determined by the court.

Article 979. Use of works of science, literature and art that win a public competition

If the subject of a public competition is a work of science, literature or art, than the person who announced the competition acquires the preemptive right to conclude. An agreement with the author of the work that has been awarded a specified award on the use of the work with the payment to him of an appropriate remuneration for this, unless otherwise provided by the terms of the competition.

Article 980. Return of submitted works to participants in a public competition

The person who announced a public competition is obliged to return works not awarded to the participants of the competition, unless otherwise provided the announcement of the competition and does not follow from the nature of the work performed.

CHAPTER 55. PUBLIC PROMISE OF REWARD

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Article 981. Obligation to pay rewards

A person who publicly announced the payment of a monetary reward or the issuance of another reward (the payment of a reward) to someone who performs the action specified in the announcement within the period specified in it is obliged to pay the promised reward to anyone who performed the corresponding action.

The obligation to pay a reward arises provided that, the promise of a reward makes it possible to establish who promised the reward. The person who responded to the promise has the right to demand written confirmation of the promise and bears the risk of the consequences of failure to make this demand if it turns out that in fact, the announcement of the reward was not made the person named in it.

If the public promise of a reward does not indicate its size, it is determined by agreement with the person who promised the reward, and in case of a dispute, by the court.

The obligation to pay the reward arises regardless of whether the relevant action is taken in connection with the announcement made or independently of it.

In cases, where the action specified in the advertisement was performed several persons, the right to receive the reward is acquired by the one who performed the corresponding action first.

If, the action, specified in the advertisement, is committed two or more persons and it is impossible to determine, than which of them performed the corresponding action first. So, if the action was performed by two or more persons at the same time, the reward is divided equally between them or as otherwise provided by agreement between them size.

Unless otherwise provided in the announcement of the reward or does not follow from the nature of the action specified therein, the compliance of the performed action with the requirements contained in the announcement is determined by the person who publicly promised the reward, and in case of a dispute, by the court.

Article 982. Cancellation of a public promise of reward

A person, who has publicly announced the payment of a reward, has the right to refuse this promise in the same form, except in cases where the announcement itself provides for or implies the inadmissibility of refusal or a certain period is given for performing the action for which the reward is promised, or by the time of the announcement. If there is a refusal, one or more responding persons, have already completed, than the action specified in the advertisement.

Cancellation of a public promise of a reward does not relieve the person who announced the reward from reimbursing the person who responded for the expenses incurred by him in connection with the execution of the action specified in the announcement. The amount of compensation in all cases cannot exceed the reward specified in the advertisement.

CHAPTER 56. CONDUCTING GAMES AND BETTING

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Article 983. Requirements related to the organization of games and bets and participation in them

The claims, of citizens and legal entities related to the organization of games or bets based on risk (gambling and betting) or participation in them are not subject to judicial protection, with the exception of the claims of persons, who took part in games or bets under the influence of deception, violence, threats or malicious agreement of their representative with the organizer of games or bets and demands arising from the relations specified in Article 984 of this Code.

Article 984. Features of holding lotteries by the state

Relations between the lottery organizer – the state, persons who have received permission (license) from the authorized state body, and lottery participants are based on an agreement. Such an agreement is formalized by the issuance of a lottery ticket and is recognized as concluded from the moment the participant pays the cost of the lottery ticket.

A proposal to conclude an agreement provided for in part one of this article must include conditions on the period for holding lotteries and the procedure for determining the winnings and its amount.

If the organizer of lotteries refuses to hold them within the established period, lottery participants have the right to demand from their organizer compensation for real damage incurred due to the cancellation of lotteries or the postponement of their date.

Persons, who in accordance with the conditions of the lottery, are recognized as winners must be paid by the lottery organizer the winnings in the amount, form (cash or in kind) and terms stipulated by the conditions of the lotteries. If the period was not specified in these conditions – no later than ten days from the moment the lottery results are announced.

If the lottery organizer fails to fulfill the obligation specified in part four of this article, the participant who won the lottery has the right to demand payment of the winnings from the lottery organizer, as well as compensation for losses caused by the violation of the contract by the organizer.

CHAPTER 57. LIABILITIES DUE TO DAMAGE

§ 1. General Provisions

Article 985. General grounds for liability for causing harm

Harm caused by unlawful actions (inaction) to the person or property of a citizen, as well as harm caused to a legal entity, is subject to compensation by the person who caused the harm, in full, including lost profits.

The law may impose the obligation to compensate for harm on a person who is not the cause of harm.

Legislation or a contract may establish an obligation to pay victims compensation in addition to damages.

The person who caused the harm is released from compensation for the harm if he proves that the harm was not caused through his fault. The law may provide for compensation for harm even in the absence of the causer’s fault.

Damage caused by lawful actions is subject to compensation in cases provided for by law.

Compensation for harm may be refused if the harm was caused at the request or with the consent of the victim, and the actions of the perpetrator do not violate the moral principles of society.

Article 986. Prevention of harm

The danger of causing harm in the future may be the basis for a claim to prohibit the activity that creates such a danger.

If the harm caused is a consequence of the operation of an enterprise, structure or other production activity that continues to cause harm or threatens new harm, the court has the right to oblige the defendant, in addition to compensation for harm, to suspend or terminate the relevant activity.

The court may reject a claim to suspend or terminate the relevant activity only if its suspension or termination is contrary to the public interest. Refusal to suspend or terminate such activity does not deprive victims of the right to compensation for harm caused by this activity.

Article 987. Causing harm in a state of necessary defense

Damage caused in a state of necessary defense is not subject to compensation, unless its limits were exceeded.

If, while defending against an unlawful attack, the defender causes harm to a third party, he must be compensated by the attacker.

Damage caused to a person in connection with the suppression of his criminal actions or his detention and delivery to the relevant authorities is not subject to compensation.

Article 988. Causing harm in a state of extreme necessity

Damage caused in a state of extreme necessity, that is, to eliminate a danger threatening the causer of harm or the person who caused the harm, except in cases provided for by law, must compensate other persons, if this danger under the given circumstances could not be eliminated other means.

Taking into account the circumstances in which such damage was caused, the court may impose the obligation to compensate it on the third party in whose interests the person who caused the damage acted, or exempt both this third party and the person who caused the damage from compensation for damage in whole or in part.

Article 989. Liability of a legal entity or citizen for harm caused by its employee

A legal entity or citizen compensates for damage caused by its employee in the performance of his labor (official, official) duties.

In relation to the provisions of this chapter, employees are citizens performing work based on an employment contract, as well as based on a civil law contract, if they acted or had to act on the instructions and under the control of the relevant legal entity or citizen for the safe conduct of work.

Business partnerships and societies, production cooperatives compensate for damage caused by their participants (members) when the latter carried out entrepreneurial, production or other activities of the partnership and society or cooperative.

Article 990. Liability for damage caused by state bodies, self-government bodies of citizens, as well as their officials

Harm caused to a citizen or legal entity because of illegal decisions of state bodies or self-government bodies of citizens is subject to compensation based on a court decision, regardless of the guilt of their officials.

Damage caused to a citizen or legal entity because of illegal actions (inaction) of officials of state bodies and self-government bodies of citizens is subject to compensation based on a court decision.

Damage is compensated in the manner prescribed by Article 15 of this Code.

Article 991. Liability for damage caused by illegal actions of bodies carrying out pre-investigation checks, bodies of inquiry, preliminary investigation, prosecutor’s office and court

Harm, caused to a citizen as a result of an illegal conviction, illegal prosecution, illegal use of detention or an undertaking of proper behavior as a preventive measure, illegal imposition of an administrative penalty in the form of arrest, as well as any use of torture and other cruel, inhuman or degrading the dignity of types of treatment and punishment, than is compensated by the state in full, regardless of the guilt of officials of bodies carrying out pre-investigation checks, bodies of inquiry, preliminary investigation, prosecutor’s office and court, in the manner prescribed law. By a court decision, compensation for damage may be imposed on officials through whose fault the damage was caused.

Damage caused to a citizen or legal entity, because of other illegal activities of bodies carrying out pre-investigation checks, bodies of inquiry, preliminary investigation, prosecutor’s office and court, is compensated on a general basis, unless otherwise provided by law.

Article 992. Compensation for damage by a person who has insured his liability

A legal entity or citizen who has insured its liability through voluntary or compulsory insurance in favor of the victim, if the insured amount is insufficient fully to compensate for the damage caused, shall compensate the difference between the insured amount and the actual amount of damage.

Article 993. Liability for damage caused by minors under fourteen years of age

For harm caused to a minor under fourteen years of age (minor), his parents (adoptive parents) or trustee are responsible, unless they prove that the harm did not arise through their fault.

If a minor in need of guardianship was in an appropriate educational, medical institution, social welfare institution or other similar institution, which by force of law is his trustee, then this institution is obliged to compensate for the damage caused to the minor, unless it proves that the harm did not arise due to the fault of the institution.

If, a minor caused harm while he was under the supervision of an educational institution, educational, medical or other institution obliged to supervise him, as well as a person, who exercised supervision on the basis of an agreement, these institutions and persons are liable for the damage unless, that they prove that that the harm did not arise through their fault in exercising supervision.

The obligation of parents (adoptive parents), trustee, educational institutions, and educational, medical and other institutions to compensate for harm caused to minors does not end when the minor reaches the age of majority or receives property sufficient to compensate for the harm.

If parents (adoptive parents), trustee, as well as other citizens specified in part three of this article, have died or they do not have sufficient funds to compensate for the harm, and the harm-doer himself, who has become fully capable, has such funds. The court, taking into account his property status parties, as well as other circumstances, has the right to decide to compensate for damage in whole or in part at the expense of the property of the harm-cautery himself.

Article 994. Liability for damage caused by minors aged fourteen to eighteen years

Minors aged fourteen to eighteen years are independently responsible for the harm caused on a general basis.

In the event that a minor aged fourteen to eighteen years does not have property or other sources of income sufficient to compensate for damage, the damage must be compensated in full or in the missing part by his parents (adoptive parents) or trustee, and unless they prove that, the damage occurred not their fault.

If a minor aged fourteen to eighteen years, in need of care, was in an appropriate educational, medical institution, social protection institution or other similar institution, which by force of law is his trustee, these institutions are obliged to compensate for the damage in full or in the missing part unless they prove that the harm was not their fault.

The obligation of the parents (adoptive parents), the trustee and the relevant institution to compensate for harm ceases when the person who caused the harm reaches the age of majority, or when, before reaching the age of majority, he acquired property or other sources of income sufficient to compensate for the harm, or when he acquired legal capacity before reaching the age of majority.

Article 995. Responsibility of parents deprived of parental rights for harm caused by minors

A court may hold a parent deprived of parental rights liable for harm caused by his minor children within three years after the parent is deprived of parental rights, if the child’s behavior, which led to the harm, was the result of improper performance of his duties in raising the child.

Article 996. Liability for damage caused by a citizen declared incompetent

Damage caused by a citizen declared legally incompetent is compensated by his trustee or organization obligated to supervise him, unless they prove that the harm arose through no fault of theirs.

The obligation of a trustee or organization to compensate for damage caused by a citizen declared incompetent does not end even if his legal capacity is restored.

If the trustee has died or does not have sufficient funds to compensate for the harm, and the causer of the harm himself has such funds, than the court, taking into account the property status of the victim and the causer of the harm, as well as other circumstances, has the right to decide on compensation for harm in whole or in part at the expense of the property of the causer of the harm himself.

Article 997. Liability for damage caused by a citizen recognized as having limited legal capacity

Harm caused by a citizen recognized as having limited legal capacity as a result, of alcohol or drug, so the causer of the harm on a general basis compensates abuse.

Article 998. Liability for harm caused by a citizen who is unable to understand the meaning of his actions

A capable citizen, as well as a minor between the ages of fourteen and eighteen, who caused harm in a state where he could not understand the meaning of his actions or control them, is not responsible for the harm he caused.

If harm is caused to the life or health of the victim, the court may, taking into account the property status of the victim and the causer, as well as other circumstances, impose the obligation to compensate the harm in whole or in part on the causer of the harm.

The causer of harm is not exempt from liability if he himself brought himself into such a state by consuming alcoholic beverages, drugs, or in any other way.

If, the harm was caused by a person who could not understand the meaning of his actions or control them due to a mental disorder (mental illness or dementia), than the obligation to compensate for the harm may be imposed by the court on his able-bodied spouse, parents, and adult children living together with this person who knew about such a state of the harm-doer, but did not raise the question of declaring him incompetent and establishing guardianship over him.

Article 999. Liability for harm caused by activities that create an increased danger to others

Legal entities and citizens whose activities are associated with an increased danger to others (transport organizations, industrial enterprises, construction sites, vehicle owners, etc.) are obliged to compensate for damage caused by a source of increased danger, unless they prove that the damage arose due to force majeure or intent victim.

The obligation, to compensate for damage is assigned to a legal entity or citizen who owns a source of increased danger on the right of ownership, the right of economic management or the right of operational management or on any other legal basis (a property lease agreement, a power of attorney for the right to drive a vehicle, by virtue of an order of the relevant body on transferring to him a source of increased danger, etc.).

Owners of sources of increased danger bear joint liability for damage caused as a result, of the interaction of these sources (collisions of vehicles, etc.) to third parties on the grounds provided for in parts one and two of this article.

Damage caused as a result, of the interaction of sources of increased danger to their owners is compensated on a general basis. In this case, that party compensates damage caused through the fault of one party in full, and damage caused through the fault of both or several parties is compensated in proportion to the degree of guilt of each of them. If it is impossible to establish the degree of guilt of each party, responsibility is distributed equally between them. If the parties are not at fault for causing harm, none of them has the right to demand compensation for harm. In this case, each party bears the risk of losses incurred by it.

The owner of a source of increased danger is not liable for damage caused by this source if he proves that the source was removed from the owner’s possession as a result, of unlawful actions (inactions) of other persons. Responsibility for damage caused by a source of increased danger in such cases lies with the persons who unlawfully took possession of the source. If the owner is guilty of illegally removing this source from his possession, liability can be assigned to both the owner and the persons who took possession of the source of increased danger.

Article 1000. Liability for jointly caused damage

Persons who jointly caused harm are jointly liable to the victim.

At the request of the victim and in his interests, the court has the right to impose shared liability on the persons who jointly caused the harm.

Article 1001. Right of recourse to the person who caused harm

A person who has compensated for damage caused by another person (an employee in the performance of his work duties, a person driving a vehicle, etc.) has the right to claim back (recourse) against this person in the amount, of the compensation paid, unless a different amount is established law.

The causer of harm, who has jointly compensated for the harm caused, has the right to demand from each of the causers a share of the compensation paid to the victim in an amount corresponding to the degree of guilt of each causer. If it is impossible to determine the degree of guilt, the shares are considered equal.

The state, which has compensated for the damage caused by officials of the bodies carrying out pre-investigation checks, bodies of inquiry, preliminary investigation, the prosecutor’s office and the court, has the right of recourse to these persons in cases where the guilt of such persons is established by a court verdict that has entered into legal force.

The state that has compensated for the damage caused as a result of the anti-terrorist operation has the right to claim back (recourse) against the person whose guilty actions caused the anti-terrorist operation, in the amount of the compensation paid.

Persons who have compensated for damage on the grounds specified in Articles 993 – 996 , 998 of this Code do not have the right of recourse (recourse) to the person who caused the harm.

Article 1002. Liability for damage caused by domestic animals

For damage caused by a domestic animal, responsibility on a general basis lies with the owner or the person in whose possession and use the animal was.

Article 1003. Methods of compensation for damage

Satisfying the claim for compensation for damage, the court, in accordance with the circumstances of the case, obliges the person responsible for the damage caused to compensate for the damage in kind (provide an item of the same kind and quality, correct the damaged item, etc.) or compensate for the losses caused.

Article 1004. Taking into account the guilt of the victim and the property status of the person who caused the harm

Damage caused by the intent of the victim is not subject to compensation.

If the gross negligence of the victim himself contributed to the occurrence or increase of harm, then depending on the degree of guilt of the victim and the harm-cater, the amount of compensation should be reduced.

In case of gross negligence of the victim and the absence of guilt of the harm-doer in cases where his liability occurs regardless of guilt, the amount of compensation should be reduced or compensation for harm may be refused, unless otherwise provided by law. If harm is caused to the life or health of a citizen, refusal of compensation is not allowed.

The guilt of the victim is not taken into account when compensating for additional expenses, when compensating for damage in connection with the death of the breadwinner, as well as when compensating for funeral expenses.

The court may reduce the amount of compensation for harm caused by a citizen, taking into account his property status, with the exception of cases where the harm was caused by actions (inactions) committed intentionally.

§ 2. Compensation for harm caused to the life and health of a citizen

Article 1005. Compensation for harm caused to the life or health of a citizen during the performance of contractual or other obligations

Harm caused to the life or health of a citizen during the performance of contractual obligations, as well as during the performance of military service, service in internal affairs bodies and other relevant duties, is compensated according to the rules of this chapter, unless law or contract provides for a higher amount, of liability.

Article 1006. Scope and nature of compensation for damage caused by damage to health

If a citizen is injured or otherwise damaged to health, the victim’s lost earnings (income) that he had or definitely could have had, as well as additional expenses incurred due to damage to health, including treatment, additional food, purchase of medicines, prosthetics, extraneous care, sanatorium-resort treatment, purchase of special vehicles, preparation for another profession, if it is established that the victim needs these types of help and care and does not have the right to receive them free of charge.

When determining lost earnings (income), the disability pension assigned to the victim in connection with injury or other damage to health, as well as other types of pensions, benefits and other similar payments, both before and after the injury to health, are not taken into account and are not entail a reduction in the amount of compensation for harm (they are not counted towards compensation for harm). Earnings (income) received by the victim after damage to health are also not included in compensation for harm.

Legislation or an agreement may increase the scope and amount of compensation due to the victim in accordance with this article.

Article 1007. Determination of earnings (income) lost as a result, of damage to health

The amount of lost earnings (income) subject to compensation is determined as a percentage of the average monthly earnings (income) before the injury or other damage to health or until the onset of loss of ability to work, corresponding to the degree of loss of professional ability by the victim, and in the absence of it, general ability to work.

The lost earnings (income) of the victim includes all types of remuneration for his work under employment and civil law contracts, both at the place of his main job and part-time work, subject to personal income tax. One-time payments are not taken into account (cash compensation for unused vacation, severance pay upon termination of an employment contract). During the period of temporary disability and maternity leave, the benefits paid are taken into account. Income from business activities, as well as royalties, are included in lost earnings (income), while income from business activities is included on the basis of data from the tax inspectorate.

All types of earnings (income) are taken into account in amounts accrued before taxes are withheld.

Average monthly earnings (income) are calculated by dividing the total amount of earnings (income) for the twelve months of work preceding the injury by twelve. If the victim had been working for less than twelve months at the time of the injury, average earnings (income) are calculated by dividing the total amount of earnings (income) for the number of months actually worked prior to the injury by the number of these months.

Months not fully worked by the victim are, at his request, replaced by previous fully worked months or excluded from the calculation if it is impossible to replace them.

In the case, where the victim was not working at the time of the injury, at his request, his earnings (income) before the termination of the employment contract or the usual amount of remuneration for an employee of his qualifications in the given area are taken into account, but not less than five times the basic calculated amount established law.

If in the earnings (income) of the victim before the injury or other damage to his health there were sustainable changes that improved his financial situation (the salary for the position was increased, he was transferred to a higher paid job, he started working after graduating from an educational institution with full-time study) and in other cases, when the sustainability of a change or the possibility of a change in the victim’s wages is proven, when determining his average monthly earnings, only the earnings (income) that he received or should have received after the corresponding change are taken into account.

Article 1008. Compensation for damage to the health of a person under the age of majority

In the event of injury or other damage to the health of a minor who has not reached fourteen years of age and has no earnings (income), the person responsible for the damage caused is obliged to compensate the expenses caused by the damage to health.

When the victim reaches fourteen years of age, as well as in the event of harm being caused to a minor from fourteen to eighteen years of age who does not have earnings (income), the person responsible for the harm caused is obliged to compensate the victim, in addition to expenses caused by damage to health, also harm associated with the loss of or a decrease in his ability to work, based on five times the basic calculated value established law.

If at the time of damage to his health the minor had earnings (income), then the damage is compensated based on the amount of this earnings (income), but not less than five times the basic calculated amount established by law.

After starting work, a minor whose health was previously harmed has the right to demand an increase in compensation for harm, based on the earnings (income) he receives or the amount of remuneration established for the position he holds or the earnings (income) of an employee of the same qualification at his place of work. .

Article 1009. Compensation for damage to persons, who suffered damage as a result, of the death of the breadwinner

In the event of the death of the breadwinner, the following have the right to compensation for damage:

disabled persons who were dependent on the deceased or who had the right to receive maintenance from him on the day of his death;

a child of the deceased born after his death;

one of the parents, spouse or other family member, regardless of ability to work, who does not work and is busy caring for the deceased’s dependent children, grandchildren, brothers and sisters who have not reached fourteen years of age or, although they have reached the specified age, but according to the conclusion of medical institutions those in need of outside care for health reasons;

persons who were dependent on the deceased and became disabled within five years after his death.

One of the parents, spouse or other family member who is unemployed and engaged in caring for the children, grandchildren, brothers and sisters of the deceased mentioned in the first part of this article and who became disabled during the period of care retains the right to compensation for damage after the end of care for these persons.

Damage is compensated:

minors – up to the age of eighteen;

students over eighteen years of age – until completion of full-time studies, but not more than twenty-three years of age;

women over fifty-five years of age and men over sixty years of age – for life;

for persons with disabilities – for the period of disability;

one of the parents, spouse or other family member involved in caring for the deceased’s dependent children, grandchildren, brothers and sisters – until they reach the age of fourteen.

Article 1010. Amount of compensation for damage incurred in the event of the death of the breadwinner

Persons entitled to compensation for damage in connection with the death of a breadwinner are compensated for damage in the amount of that share of the earnings (income) of the deceased, determined according to the rules of Article 1007 of this Code, which they received or had the right to receive for their maintenance during his life. When determining compensation for damage to these persons, the income of the deceased, along with earnings (income), includes the pension, lifelong maintenance and other similar payments received by him during his lifetime.

When determining the amount of compensation for harm, pensions assigned to persons in connection with the death of the breadwinner, as well as other types of pensions assigned both before and after the death of the breadwinner, as well as earnings (income), scholarships are not counted towards compensation.

The amount of compensation established for each person entitled to compensation for damage in connection with the death of the breadwinner is not subject to further recalculation, except in the following cases:

the birth of a child after the death of the breadwinner;

appointment or termination of payment of compensation to persons caring for children, grandchildren, brothers and sisters of the deceased breadwinner.

Legislation or an agreement may provide for an increase in the amount, of compensation.

Article 1011. Compensation for damage by the heirs of the person who caused the damage

The obligation to compensate for damage caused by a citizen after his death passes to the heirs who accepted the inheritance. The latter are liable to the victim within the limits of the actual value of the inherited property transferred to them. The state or self-government body of citizens to which the escheated property was received is liable on the same grounds.

Article 1012. Change in the amount, of compensation for damage

A victim, who has partially lost his ability to work has the right at any time to demand from the person charged with compensation for harm, a corresponding increase in the amount, of compensation if his ability to work has decreased due to the damage caused to his health compared to what remained with him at the time compensation for harm was awarded to him.

The person charged with the obligation to compensate for harm caused to the health of the victim has the right to demand a corresponding reduction in the amount, of compensation if the victim’s ability to work has increased compared to what he had at the time compensation was awarded.

The victim has the right to demand an increase in the amount of compensation for harm if the property situation of the citizen who is entrusted with the obligation to compensate for harm has improved, and the amount of compensation has been reduced in accordance with part five of Article 1004 of this Code.

The court may, at the request of the citizen, who caused the harm, reduce the amount, of compensation for harm if his property situation due to disability or reaching retirement age has worsened compared to what it was at the time compensation was awarded, except in cases where the harm was caused intentionally.

Article 1013. Increase in compensation for damage due to an increase in the cost of living and an increase in the size of the basic calculation amount established by law

When the size of the basic settlement amount is increased in accordance with the procedure established by law, the amount of compensation for lost earnings (income), other payments awarded in connection with damage to the health and death of the victim, increases in proportion to the increase in the size of the base settlement amount established by law.

Article 1014. Payments for compensation of harm

Compensation for damage associated with decreased working capacity or death of the victim is made in monthly payments.

If there are good reasons, the court, taking into account the capabilities of the causer of the harm may, at the request of a citizen entitled to compensation, award him the due payments in a lump sum, but not more than for three years.

Collection of additional expenses can be made for the future within the terms determined based on the conclusion of a medical examination, as well as if it is necessary to pre-pay the cost of relevant services and property (purchase of a voucher, payment for travel, payment for special vehicles, etc.).

In cases where the victim, in accordance with the law, has the right to demand termination or early fulfillment of an obligation, such a requirement is satisfied capitalizing the corresponding time-based payments.

Article 1015. Compensation for damage in case of termination of a legal entity

In the event of reorganization of a legal entity recognized in accordance with the established procedure as responsible for harm caused to life and health, the obligation to pay the appropriate payments lies with its legal successor. Claims for damages are also being made against him.

If the reorganized legal entity, a producer of commercial agricultural products, who is responsible for harm caused to the life and health of an employee in connection with the performance of his labor duties, has no or insufficient funds, the awarded amounts are paid by the state in the manner prescribed by law. These amounts are paid by the state and in other cases provided for by law.

In the event of liquidation of a legal entity recognized in accordance with the established procedure as responsible for harm caused to life and health, the corresponding payments must be capitalized for payment to the victim according to the rules established law.

In cases where capitalization of payments cannot be made due to the absence or insufficiency of property of the liquidated legal entity, the awarded amounts are paid to the victim by the state in the manner prescribed law.

Article 1016. Reimbursement of funeral expenses

Persons responsible for damage caused by the death of the victim are obliged to compensate the necessary funeral expenses to the person who incurred these expenses.

Funeral benefits received by citizens who incurred these expenses are not counted toward compensation for damage.

§ 3. Compensation for damage caused due to defects in goods, works, and services

Article 1017. Grounds for compensation for damage caused as a result, of defects in goods, work, and services

Damage caused to the life, health or property of a citizen or the property of a legal entity due to design, prescription or other defects of a product (work, service), as well as due to unreliable or insufficient information about the product (work, service) is subject to compensation the seller or manufacturer (performer) regardless on their guilt and on whether the victim was in a contractual relationship with them or not.

The rules provided for in this article apply only in cases of purchasing goods (performing work, providing services) for consumer purposes, and not for use in business activities.

Article 1018. Persons responsible for damage caused as a result, of defects in goods, work, services

Damage caused as a result, of defects in the goods is subject to compensation at the choice of the victim by the seller or manufacturer of the goods.

Damage caused as a result, of a lack of work (service) is subject to compensation by the person who performed the work or provided services (performer).

Damage caused as a result, of failure to provide complete or reliable information about a product (work, service) is subject to compensation in accordance with the rules of this article.

Article 1019. Terms of compensation for damage caused as a result of defects in goods, work, services

Damage caused as a result of defects in a product (work, service) is subject to compensation if it was caused during the established shelf life of the product (work, service), and if the shelf life is not established – within ten years from the date of manufacture of the product (acceptance of the work, service).

Outside the time limits specified in part one of this article, damage is subject to compensation if:

in violation of legal requirements, the expiration date has not been established;

the person to whom the goods were sold, for which the work was performed or to whom the service was provided, was not warned about the necessary actions after the expiration date and about the possible consequences of failure to perform these actions.

Article 1020. Grounds for exemption from liability for damage caused as a result, of defects in goods, work, or services

The seller or manufacturer of goods, performer of work (services) is exempt from liability in cases where he proves that the damage arose as a result of force majeure or violation by the consumer of the established rules for storing or using the goods (results of work, services).

§ 4. Compensation for moral damage

Article 1021. General provisions

Moral damage is compensated the causer, if the causer is at fault, except for the cases provided for in part two of this article.

Moral damage is compensated regardless of the guilt of the perpetrator in the following cases:

harm was caused to the life and health of a citizen by a source of increased danger;

harm was caused to a citizen as a result of his illegal conviction, illegal prosecution, illegal use of detention as a preventive measure or a sign of proper behavior, illegal application of an administrative penalty and illegal detention, as well as any use of torture and other cruel, inhuman or degrading the dignity of types of treatment and punishment;

harm was caused by the dissemination of information discrediting honor, dignity and business reputation;

in other cases provided by law.

Article 1022. Method and amount of compensation for moral damage

Moral damage is compensated in monetary form.

The amount of compensation for moral damage is determined by the court depending on the nature of the physical and moral suffering caused to the victim, as well as the degree of guilt of the perpetrator in cases where guilt is the basis for compensation. When determining the amount of compensation for harm, the requirements of reasonableness and fairness must be taken into account.

The nature of physical and moral suffering is assessed by the court, taking into account the actual circumstances in which moral harm was caused and the individual characteristics of the victim.

Moral damage is compensated regardless of the property damage subject to compensation.

CHAPTER 58. LIABILITIES DUE TO UNJUST ENRICHMENT

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Article 1023. Obligation to return unjust enrichment

A person who, without the grounds established by law or a transaction, acquired or saved property (acquirer) at the expense of another person (victim), is obliged to return to the latter the unjustly acquired or saved property (unjust enrichment), except for the cases provided for in Article 1030 of this Code.

The obligation established by the first part of this article also arises if the basis on which the property was acquired or saved, disappears subsequently.

The rules of this chapter apply regardless of whether the unjust enrichment was the result of the behavior of the acquirer of the property, the victim himself, third parties, or occurred against their will.

Article 1024. Correlation of claims for the return of unjust enrichment with other claims for the protection of civil rights

Unless otherwise established by law and does not follow from the essence of the relevant relations, the rules of this chapter are also subject to application to the requirements:

on the return of what was executed under an invalid transaction;

on the reclaiming of property by the owner from someone else’s illegal possession;

one party in an obligation to the other to return in connection with these obligations;

on compensation for damage, including damage caused by the dishonest behavior of the enriched person.

Article 1025. Return of unjust enrichment in kind

Property constituting unjust enrichment of the acquirer must be returned to the victim in kind.

The acquirer is liable to the victim for any, including accidental shortage or deterioration of unjustifiably acquired or saved property that occurred after he learned or should have learned about the unjustified enrichment. Until this moment, he is responsible only for intent and gross negligence.

Article 1026. Compensation for the cost of unjust enrichment

If it is impossible to return in kind unjustly acquired or saved property, the acquirer must compensate the victim for the actual value of this property at the time of its acquisition, as well as compensate for losses caused by a subsequent change in the value of the property, if the acquirer did not reimburse its value immediately after learning of the unjustified enrichment .

A person who has unjustifiably temporarily used someone else’s property without the intention of acquiring it or using someone else’s services must compensate the victim for what he saved as a result of such use, at the price that existed at the time when the use ended and in the place where it took place.

Article 1027. Consequences of unjustified transfer of rights to another person

A person who has transferred by assignment of a claim or otherwise a right belonging to him to another person on the basis of a non-existent or invalid obligation has the right to demand restoration of the previous position, including the return to him of documents certifying the transferred right.

Article 1028. Compensation to the victim for lost income

A person, who has unjustifiably received or saved property, is obliged to return or compensate to the victim all the income that, he has derived or should have derived from this property from the time he learned or should have known about the unjustified enrichment.

Interest is subject to accrual on the amount of unjust monetary enrichment for the use of someone else’s funds from the time when the acquirer learned or should have learned about the unjust monetary of receiving or saving money.

Article 1029. Reimbursement of expenses for property subject to return

When returning unjustifiably acquired or saved property or reimbursement of its value, the acquirer has the right to demand from the victim compensation for the necessary expenses incurred for the maintenance and preservation of the property from the time from which he is obliged to return the income, with an offset to the benefits received by him. The right to reimbursement of costs is lost in cases where the acquirer intentionally withheld property that was subject to return.

Article 1030. Unjust enrichment that is not subject to return

The following cannot be returned as unjust enrichment:

property transferred in fulfillment of an obligation before the deadline for fulfillment, unless otherwise provided by the obligation;

property transferred in fulfillment of an obligation after the expiration of the limitation period;

wages and payments equivalent to it, pensions, benefits, scholarships, compensation for harm caused to life or health, alimony and other sums of money provided to a citizen as a means of subsistence, in the absence of dishonesty on his part and an accounting error;

sums of money and other property provided in fulfillment of a non-existent obligation, if the acquirer proves that the person demanding the return of the property knew about the absence of an obligation or provided the property for charitable purposes.

SECTION IV. INTELLECTUAL PROPERTY

CHAPTER 59. GENERAL PROVISIONS

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Article 1031. Intellectual property objects

Objects of intellectual property include:

1) results of intellectual activity:

works of science, literature and art;

performances, phonograms, broadcasts of broadcasting or cable broadcasting organizations;

programs for electronic computers (hereinafter referred to as computers) and databases;

inventions, utility models, industrial designs;

breeding achievements;

undisclosed information, including trade secrets (know-how);

2) means of individualization of participants in civil transactions, goods, works and services:

brand names;

trademarks (service marks);

geographical indications;

names of places of origin of goods;

3) other results of intellectual activity and means of individualization of participants in civil circulation, goods, works and services in cases provided for by this Code or other laws.

Article 1032. Legal protection of intellectual property objects

Legal protection of intellectual property objects arises due to the fact of their creation or as a result, of the provision of legal protection by an authorized state body in cases and in the manner provided for by this Code or other laws.

The conditions for providing legal protection to undisclosed information are determined by law.

Article 1033. Personal non-property and property rights to intellectual property objects

The authors of the results of intellectual activity own personal non-property and property rights in relation to these results.

Personal non-property rights belong to the author regardless of his property rights and are retained him in the event of the transfer of his property rights to the results of intellectual activity to another person.

Holders of the right to means of individualization of participants in civil transactions, goods, works or services (hereinafter referred to as means of individualization) own property rights in relation to these means.

The right of authorship (the right to be recognized as the author of a result of intellectual activity) is a personal non-property right and can only belong to the person whose creative work created the result of intellectual activity.

The right of authorship is inalienable and non-transferable.

If the result was created the joint creative work of two or more people, they are recognized as co-authors. In relation to certain objects of intellectual property, the law may limit the circle of persons who are recognized as co-authors of the work as a whole.

Article 1034. Exclusive rights to intellectual property objects

The owner of property rights to the result of intellectual activity or a means of individualization has the exclusive right to lawfully use this object of intellectual property at his own discretion in any form and in any way.

The use by other persons of intellectual property objects in respect of which their copyright holder has an exclusive right is permitted only with the permission of the copyright holder.

The holder of the exclusive right to an object of intellectual property has the right to transfer this right to another person in whole or in part, to allow another person to use the object of intellectual property and has the right to dispose of it in a different way, if this does not contradict the rules of this Code and other laws.

Restrictions on exclusive rights, including by providing the opportunity to use an object of intellectual property to other persons, the recognition of these rights as invalid and their termination (cancellation) are permitted in the cases, limits and procedure established by this Code and other laws.

Restrictions on exclusive rights are applied provided that, such a restriction does not cause unjustified damage to the normal use of the intellectual property object and does not unreasonably infringe on the legitimate interests of copyright holders.

Article 1035. Transfer of exclusive rights to another person

Property rights belonging to the owner of exclusive rights to an object of intellectual property, unless otherwise provided by this Code or other law. May be transferred by the copyright holder in completely or in part to another person under an agreement, and transferred by inheritance and succession during the reorganization of the legal entity – the copyright holder.

The transfer of property rights under an agreement or their transfer in the order of universal legal succession does not entail the transfer or limitation of the right of authorship and other inalienable and non-transferable exclusive rights. The terms of the agreement on the transfer or limitation of such rights is void.

The exclusive rights that are transferred under the contract must be defined in it. Rights that are not specified in the contract as alienable are assumed not to be transferred, unless otherwise proven.

To an agreement providing for the granting of an exclusive right during the period of its validity to another person for a limited time, the rules on a license agreement apply.

Article 1036. License agreement

Under a license agreement, the party that has the exclusive right to the result of intellectual activity or to a means of individualization (the licensor) grants the other party (the licensee) permission to use the corresponding object of intellectual property.

The license agreement must define the rights granted, the limits and terms of use.

The license agreement is supposed to be paid.

The license agreement may provide for the provision to the licensee of:

the right to use an object of intellectual property with the licensor retaining the right to use it and the right to issue a license to other persons (simple non-exclusive license);

the right to use an object of intellectual property with the licensor retaining the right to use it, but without the right to issue a license to other persons (exclusive license);

other types of licenses permitted by law.

Unless otherwise provided in the license agreement, the license is assumed to be simple (non-exclusive).

An agreement on granting by a licensee the right to use an intellectual property object to another person is recognized as a sublicensing agreement. The licensee has the right to enter into a sublicense agreement only in cases provided for in the license agreement.

The licensee is responsible to the licensor for the actions of the sublicensee, unless otherwise provided in the license agreement.

Article 1037. Agreement on the creation and use of results of intellectual activity

The author may undertake, under an agreement on the creation and use of results of intellectual activity, the obligation to create in the future a work, invention or other result of intellectual activity and provide the customer, who is not his employer, with exclusive rights to use this result.

The agreement provided for in the first part of this article must determine the nature of the result of intellectual activity to be created, as well as the purposes or methods of its use.

An agreement obliging the author to grant any person exclusive rights to use any results of intellectual activity that this author will create in the future is void.

The terms of the agreement on the creation and use of the results of intellectual activity, limiting the author in creating in the future the results of intellectual activity of a certain kind or in a certain area, are void.

Article 1038. Exclusive right and right of ownership

The exclusive right to the result of intellectual activity or a means of individualization exists regardless of the ownership of the material object in which such result or means of individualization is expressed.

Article 1039. Validity period of the exclusive right to intellectual property objects

The exclusive right to intellectual property is valid for the period provided for by this Code or other laws.

Personal non-property rights in relation to intellectual property are valid indefinitely.

In cases provided for by law, the exclusive right to intellectual property may be terminated due to non-use for a certain time.

Article 1040. Methods of protecting exclusive rights to intellectual property objects

Protection of exclusive rights to intellectual property is carried out by the methods provided for in Article 11 of this Code. Protection of exclusive rights can also be carried out:

seizure of material objects with the help of which exclusive rights are violated, and material objects created as a result of such violation;

mandatory publication of the violation, including information about who owns the violated right;

in other ways provided by law.

In case of violation of the agreement on the creation and use of the results of intellectual activity and means of individualization, the general rules on liability for violation of obligations apply.

CHAPTER 60. COPYRIGHT

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Article 1041. Object of copyright

Copyright extends to works of science, literature and art that are the result of creative activity, regardless of the purpose and merit of the work, as well as the method of its expression.

Copyright extends to both published and unpublished works that are in any objective form:

written (manuscript, typescript, musical notation, etc.);

oral (public utterance, public performance, etc.);

sound or video recording (mechanical, magnetic, digital, optical, etc.);

images (drawing, sketch, painting, plan, drawing, film, television, video or photograph, etc.);

volumetric-spatial (sculpture, model, layout, structure, etc.);

other forms.

Copyright extends to the form of expression and not to the ideas, principles, methods, processes, systems, methods or concepts as such.

Article 1042. Types of copyright objects

Objects of copyright include:

literary works (literary and artistic, scientific, educational, journalistic, etc.);

dramatic and screenplay works;

musical works with and without text;

musical and dramatic works;

choreographic works and pantomimes;

audiovisual works;

works of painting, sculpture, graphics, design and other works of fine art;

works of decorative, applied and scenographic art;

works of architecture, urban planning and landscape art;

photographic works and works obtained by methods similar to photography;

geographical, geological and other maps, plans, sketches and works related to geography, topography and other sciences;

programs for electronic computers (computers) of all types, including application programs and operating systems;

other works that meet the requirements established by Article 1041 of this Code.

Article 1043. Parts of a work, derivative and composite works that are objects of copyright

Objects of copyright are those that meet the requirements established by Article 1041 of this Code:

parts of the work (including its title) that can be used independently;

derivative works (translations, adaptations, annotations, abstracts, summaries, reviews, dramatizations, arrangements, adaptations and other processing of works of science, literature and art);

collections (encyclopedias, anthologies, databases) and other composite works that, by the selection or arrangement of materials, represent the result of creative work.

Derivative and composite works are protected copyright regardless of whether the works on which they are based or which they incorporate are copyrighted.

Article 1044. Materials that are not objects of copyright

The following are not subject to copyright:

official documents (laws, decisions, etc.), as well as their official translations;

official symbols and signs (flags, coats of arms, orders, banknotes, etc.);

works of folk art;

messages about the news of the day or messages about current events that have the nature of ordinary press information;

results obtained with the help of technical means intended for production of a certain kind, without human creative activity directly aimed at creating an individual work.

Article 1045. Rights to draft official documents, symbols and signs

The right of authorship to a draft of an official document, symbol or sign belongs to the person who created the project (developer).

Developers of draft official documents, symbols and signs have the right to publish such projects, unless this is prohibited by the body on, whose behalf the project was developed. When publishing a project, developers have the right to indicate their name.

The draft may be used the competent authority to prepare an official document, without the consent of the developer if the draft is published by him or sent to the relevant authority.

When preparing official documents, symbols and signs based on the project, additions and changes may be made to it at the discretion of the body preparing the official document, symbol or sign.

Once the project has been approved the competent authority, it can be used without indicating the name of the developer.

Article 1046. Author of the work. The emergence of copyright. Presumption of authorship

The author of a work is recognized as the citizen whose creative work created it.

Copyright in a work of science, literature and art arises due to the fact of its creation. For the emergence and exercise of copyright, registration of a work or compliance with any other formalities is not required.

The person indicated as the author on the original or copy of the work is considered its author, unless proven otherwise.

When publishing a work anonymously or under a pseudonym (except for the case where the author’s pseudonym leaves no doubt about his identity), the publisher who carried out the publication, whose name or title is indicated on the work, in the absence of evidence otherwise, is considered a representative of the author and has the right to protect the rights of the author and ensure their implementation. This provision remains in effect until the author of such work reveals his identity and declares his authorship.

Article 1047. Co-authorship

The copyright in a work created by the joint creative work of two or more citizens belongs to the co-authors jointly, regardless of whether such a work forms one inseparable whole or consists of parts, each of which also has independent meaning.

A part of a work is recognized as having independent meaning if it can be used independently of other parts of this work.

Each of the co-authors has the right to use the part of the work created by him, which has independent significance, at his own discretion, unless otherwise provided by an agreement between them.

Relations between co-authors are determined, as a rule, on the basis, of agreement. In the absence of such an agreement, copyright in the work is exercised all authors jointly, and the remuneration is distributed equally among them.

If the work of co-authors forms one inseparable whole, then none of the co-authors has the right to prohibit the use of the work without sufficient grounds.

Article 1048. Copyright in a derivative work

The author of a derivative work owns the copyright for his processing of a work of science, literature and art.

The author of a derivative work enjoys copyright in the work he created, provided that, he respects the rights of the author of the work that has undergone processing.

The copyright of the author of a derivative work does not prevent other persons from carrying out their own adaptations of the work that became the basis for the adaptation.

Article 1049. Rights of persons organizing the creation of works

Persons organizing the creation of works (producers of audiovisual works, publishers of encyclopedias, producers, etc.) are not recognized as the authors of the corresponding works. However, in cases provided for by this Code or other laws, such persons acquire exclusive rights to use these works.

The producer of an audiovisual work has the right, when using this work, to indicate his name or designation or to require such an indication.

The publisher of encyclopedias, encyclopedic dictionaries, periodical and continuing collections of scientific works, newspapers, magazines and other periodicals has exclusive rights to use such publications. The publisher has the right, in any use of such publications, to indicate his name or title or to require such an indication. The authors of works included in such publications retain exclusive rights to use their works regardless of the publication as a whole, unless otherwise provided by the copyright agreement.

Article 1050. Signs of copyright protection

The owner of the exclusive copyright may, to notify of his rights, use a copyright sign, which is placed on each copy of the work and consists of three elements:

Latin letter “C” in a circle;

name (title) of the owner of exclusive copyright;

year of first publication of the work.

Unless proven otherwise, the copyright holder is considered to be the person indicated in the copyright symbol.

Article 1051. Personal non-property rights of the author

The author of the work owns the following personal non-property rights:

the right to be recognized as the author of a work (right of authorship);

the right to use or allow the use of a work under the author’s true name, a pseudonym, or without designating a name, that is, anonymously (the right to the author’s name);

the right to publish or authorize the publication of a work in any form (the right of publication), including the right of withdrawal;

the right to protect the work, including its title, from any distortion or any other attack that could damage the honor and dignity of the author (the right to protect the author’s reputation).

The author has the right to refuse a previously made decision to publish the work (the right to withdraw), subject to compensation to persons who received the right to use the work for losses caused by such a decision, including lost profits. If the work has already been published, the author is obliged to publicly notify about its revocation. At the same time, he has the right to withdraw from circulation previously produced copies of the work at his own expense. These provisions do not apply to proprietary works, unless otherwise provided in the agreement with the author.

When publishing, publicly performing or otherwise using a work, making any changes to the work itself, to its title and to the designation of the author’s name is permitted only with the consent of the author.

It is prohibited to provide his work with illustrations, preface, afterword, comments or any explanations during publication without the consent of the author.

Personal non-property rights belong to the author regardless of his property rights and are retained by him in the event of transfer of exclusive rights to use the work.

An agreement between the author and anyone and the author’s statement of refusal to exercise personal non-property rights are void.

Article 1056. Property rights of the author

The author owns the exclusive rights to use the work in any form and in any way.

Entities persons and physical persons, except in cases, provided for by this Code and other laws, may use the work only under an agreement with the copyright holder or other authorized person, including under an agreement with organizations that, manage property rights on a collective basis, or, in their absence, – under an agreement with the organization, performing the functions and responsibilities of these organizations.

The author’s exclusive rights to use a work mean the right to carry out or authorize the following actions:

reproduce the work (right of reproduction);

distribute the original or copies of the work by selling or otherwise transferring ownership (right of distribution);

make the work available to the public (the right to make it available to the public);

rent out the original or copies of the work (the right to rent);

import copies of a work for distribution purposes, including copies made with the permission of the holder of exclusive copyright (import right);

communicate the work to the public by transmission by wire (cable) or other similar means (right of communication by cable);

remake, arrange or otherwise rework the work (right of reworking);

publicly display the work (right of public display);

perform the work publicly (right of public performance);

communicate the work to the public by transmission via wireless means (right of broadcast);

translate a work (right to translate);

re-communicate a work to the public if such communication is carried out by an organization other than the organization that originally made the communication (the right to re-communicate to the public).

The author has the right to receive remuneration for each type of use of his work (the right to remuneration).

If copies of a published work lawfully are introduced, into civil circulation through their sale or other transfer of ownership, then their further distribution is permitted without the consent of the author and without payment of remuneration to him, except in cases provided for by law.

A work is considered used regardless of whether it is used for generating income or its use is not aimed at this.

The practical application of the provisions that make up the content of the work (inventions, other technical, economic, organizational and similar decisions) is not considered the use of the work in the sense of copyright.

Article 1058. Restrictions on copyright

Restriction of the exclusive rights of the author and other persons to use the work is permitted only in cases provided for in Articles 1059-1062 of this Code or other laws. These restrictions apply provided that this does not cause undue harm to the normal use of the work and does not unreasonably infringe on the legitimate interests of the author.

Article 1059. Reproduction of works for personal purposes without the consent of the author and without payment of remuneration

It is permitted to reproduce a published work for personal purposes without the consent of the author or other copyright holder and without payment of remuneration, except in cases provided for by law.

The rules of part one of this article do not apply to the:

reproduction of works of architecture in the form of buildings and structures;

reproduction of databases or significant parts thereof;

reproduction of computer programs, except as provided by law;

reprographic reproduction of books (in general) and musical texts.

Article 1060. Free public performance of works

Public performance of published musical works during official, religious and funeral ceremonies is permitted without the consent of the author or other copyright holder and without payment of remuneration to the extent justified by the nature of such ceremonies.

Article 1061. Use of works for the purposes of pre-investigation checks, inquiries, preliminary investigations, administrative and judicial proceedings

It is permitted, without the consent of the author or other copyright holder and without payment of remuneration, to use works for the purposes of pre-investigation checks, inquiries, and preliminary investigations, administrative and judicial proceedings to the extent justified by the purpose of use.

Article 1062. Copyright in proprietary work

The author’s personal non-property rights to a work created in the performance of official duties or an official assignment (official work) are retained by the author of the work.

The exclusive rights to use the work for hire belong to the employer, unless otherwise provided in the agreement between him and the author.

The amount of remuneration for each type of use of a work of service and the procedure for its payment are established by an agreement between the author and the employer. After ten years from the date of publication of the work, and with the consent of the employer – even earlier, the author acquires the full right to use the work and receive remuneration, regardless of the contract concluded with the employer.

The author’s right to use the work for hire in a manner not determined by the purpose of the assignment is not limited.

The employer has the right to indicate its name or require such an indication whenever using a work for hire.

The provisions of this article do not apply to the creation, in the performance of official duties or official assignments of the employer, of encyclopedias, encyclopedic dictionaries, periodical and ongoing collections of scientific works, newspapers, magazines and other periodicals provided for in part three of Article 1049 of this Code.

Article 1063. Scope of copyright

In accordance with this Code, copyright extends:

for works of authors or other original owners of copyright who are citizens of the Republic of Uzbekistan or who have a permanent place of residence in the territory of the Republic of Uzbekistan;

for works first published in the Republic of Uzbekistan, regardless of the citizenship and permanent residence of their authors;

for works protected in the Republic of Uzbekistan in accordance with international treaties of the Republic of Uzbekistan.

A work is also considered first published in the Republic of Uzbekistan if, within thirty days after the date of first publication outside the Republic of Uzbekistan, it was published on the territory of the Republic of Uzbekistan.

When granting protection to a work on the territory of the Republic of Uzbekistan in accordance with international treaties of the Republic of Uzbekistan, the author of the work is determined by the law of the state in whose territory the legal fact took place that served as the basis for the ownership of copyright.

Article 1065. Duration of copyright

Copyright is valid throughout the life of the author and seventy years after his death, except in cases provided for by this article and other laws.

Copyright in a work created in collaboration lasts for the entire life of the co-authors and seventy years after the death of the last surviving author.

Copyright in a work lawfully published under a pseudonym or anonymously lasts for fifty years after its publication. If during the specified period the pseudonym or anonymous person reveals his identity or his identity no longer leaves doubt, then the terms specified in part one of this article apply.

Copyright for a work first published after the death of the author is valid for seventy years after its publication.

The right of authorship, the right to the copyright name and the right to protect the author’s reputation are protected indefinitely.

When granting protection to a work in accordance with international treaties of the Republic of Uzbekistan, the validity period of copyright on the territory of the Republic of Uzbekistan is determined in accordance with this article. However, this period cannot exceed the term of copyright established in the country of origin of the work.

The calculation of the periods provided for in this article begins on the first of January following the year in which the legal fact took place, which is the basis for the start of the period.

Article 1066. Transfer of a work into the public domain

The expiration of copyright in works means they enter the public domain.

Public domain works freely may be used by anyone without payment of remuneration. In this case, the personal non-property rights of the author must be respected.

Article 1067. Copyright agreement

Property rights provided for in part three of Article 1056 of this Code may be transferred by the copyright holder to another person only by concluding an author’s agreement, except for cases established by this Code and other laws.

The transfer of the author’s property rights can be carried out based on an author’s agreement on the transfer of exclusive rights or based on an author’s agreement on the transfer of non-exclusive rights.

An author’s agreement on the transfer of exclusive rights allows the use of a work in a certain way and within the limits established by the agreement only to the person to whom these rights are transferred.

An author’s agreement on the transfer of non-exclusive rights allows the user to use the work on an equal basis with the holder of exclusive rights who transferred such rights, and (or) other persons who received permission to use this work in the same way.

Rights transferred under an author’s agreement are considered non-exclusive, unless otherwise expressly provided in the agreement.

Copyright in a work is not associated with the right of ownership of the material object in which the work is expressed.

The transfer of ownership of a material object or the right of possession of a material object does not in itself; entail the transfer of any copyright in the work expressed in this object.

Article 1068. Terms of the copyright agreement

The copyright agreement must provide for:

methods of using the work (specific rights transferred under this agreement);

the amount of remuneration and (or) the procedure for determining the amount of remuneration for each method of using the work, the procedure and timing of its payment.

The author’s agreement may provide for other conditions that the parties deem necessary.

If there is no provision in the copyright agreement regarding the period for which the right to use the work is transferred, the agreement may be terminated by the author after five years from the date of its conclusion, if the user is notified in writing about this six months before the termination of the agreement.

If there is no provision in the copyright agreement about the territory within which the right to use the work is valid, the validity of the right transferred under the agreement is limited to the territory of the Republic of Uzbekistan.

Rights to use the work that expressly are not provided for transfer by the copyright agreement are considered not transferred.

The subject of a copyright agreement cannot be rights to use the work that are unknown at the time the agreement is concluded.

The remuneration is determined in the copyright agreement in the form of a percentage of income for the corresponding method of using the work or, if this is impossible to achieve due to the nature of the work or the peculiarities of its use, in the form of an amount fixed in the agreement or otherwise. The minimum amounts of this remuneration are established the Cabinet of Ministers of the Republic of Uzbekistan.

If the author’s contract for the publication or other use of a work determines remuneration in the form of a fixed amount, then the contract must establish a maximum circulation of the work.

Rights transferred under a copyright agreement may be transferred in whole or in part to other persons only in cases where this is expressly provided for by such agreement.

A provision of an author’s contract that restricts the author from creating future works on a given topic or in a given field is void.

The terms of the copyright agreement that contradict the requirements of this Code or other laws are invalid.

Article 1069. Form of copyright agreement

The copyright agreement must be concluded in writing, except as otherwise provided by law.

Article 1070. Liability under an author’s contract

The party that fails to fulfill or improperly fulfills its obligations under the copyright agreement is obliged to compensate for losses caused to the other party, including lost profits.

Article 1073. Legal regulation of copyright relations

Copyright relations are regulated by this Code and other legislation.

CHAPTER 61. RELATED RIGHTS

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Article 1074. Objects of related rights

Objects of related rights include performances, phonograms, and broadcasts of broadcasting or cable broadcasting organizations.

Article 1075. Subjects of related rights

Subjects of related rights are performers, producers of phonograms, broadcasting or cable broadcasting organizations.

For the emergence and exercise of related rights, registration of the object of related rights or compliance with any other formalities is not required.

Legal entities and individuals, including those carrying out broadcasting and cable communications (including retransmission), except for the cases provided for by this Code and other laws, may use a work, performance, phonogram or transmission of an on-air or cable broadcasting organization only under an agreement with the copyright holder or other authorized person. Retransmission must be carried out in compliance with the rights of authors, performers, producers of phonograms and other rights holders for broadcasting, cable communication, and making available to the public.

Article 1076. Signs of protection of related rights

Holders of exclusive rights to a phonogram and (or) a performance recorded on such a phonogram may, to notify about their rights, use the sign of protection of related rights, which is placed on each copy of the phonogram and (or) on each case containing it and consists of three elements:

Latin letter “P” in a circle;

name (name) of the owner of exclusive related rights;

the year of the first publication of the phonogram.

Unless otherwise proven, the manufacturer of a phonogram is a legal or physical person whose name is indicated on this phonogram and (or) on the case containing it in the usual way.

Article 1077. Rights of the performer

The performer owns the following rights:

right to a name;

the right to protection of the performance from any distortion or any other attack that could damage the honor and dignity of the performer;

exclusive rights to use the performance in any form, including the right to receive remuneration for each type of use of its performance.

The performer’s exclusive rights to use the performance mean the right to perform or permit the following actions:

reproduce a recording of a performance (reproduction right);

distribute the original or copies of a recording of a performance by sale or other transfer of ownership (right of distribution);

make the recording of the performance available to the public (the right to make it available to the public);

rent out the original or copies of a recording of a performance, even after their distribution with the consent of the performer and regardless of the ownership of the original and copies (the right to rent);

record previously unrecorded performances (recording right);

broadcast or report by cable a performance if the performance used for such broadcast has not previously been broadcast or is not carried out using a recording (the right to broadcast or report by cable of an unrecorded performance);

broadcast or communicate by cable a recording of a performance, if this recording was originally made not for commercial purposes (the right to broadcast or communicate by cable a recording of a performance).

If copies of a recording of a performance lawfully are introduced into civil circulation through their sale or other transfer of ownership, then their further distribution is permitted without the consent of the performer and without payment of remuneration to him.

The provisions of Article 1062 of this Code apply to performances carried out in the performance of official duties or official assignments of the employer.

Performers must exercise their rights while respecting the rights of the authors of the works they perform.

A recording of a performance is considered used regardless of whether it is used for generating income or whether its use is not intended for this purpose.

Article 1078. Rights of the phonogram producer

The producer of a phonogram has exclusive rights to use this phonogram in accordance with this Code and other laws.

The exclusive rights of the phonogram manufacturer to use the phonogram mean the right to carry out or permit the following actions:

reproduce a phonogram (right to reproduce);

distribute the original or copies of the phonogram by selling or otherwise transferring ownership (right of distribution);

make the phonogram available to the public (the right to make it available to the public);

rent out the original or copies of the phonogram even after their distribution by the manufacturer of the phonogram or with his consent, and regardless of the ownership of the original and copies (the right to rent);

import the original or copies of the phonogram for the purpose of distribution, including copies made with the permission of the holder of the exclusive rights to the phonogram (import right);

broadcast or communicate via cable a phonogram (the right to broadcast or communicate via cable);

remake or otherwise process the phonogram (the right to processing).

The producer of a phonogram has the right to receive remuneration for each type of use of his phonogram.

If copies of a published phonogram lawfully are introduced into civil circulation through their sale or other transfer of ownership, then their further distribution is permitted without the consent of the phonogram producer and without payment of remuneration to him.

The exclusive rights of the phonogram manufacturer, provided for in part two of this article, may be transferred under an agreement to other persons. The provisions of Articles 1067, 1068 and 1069 of this Code apply to such an agreement accordingly.

Producers of phonograms must exercise their rights while respecting the rights of the authors and performers of the works and performances used.

A phonogram is considered used regardless of whether it is used for the purpose of generating income or whether its use is not intended for this purpose.

Article 1079. Rights of organizing broadcasting or cable broadcasting

An on-air or cable broadcasting organization has exclusive rights to use its transmission in accordance with this Code and other laws.

The exclusive rights of an on-air or cable broadcasting organization to use its transmission mean the right to carry out or permit the following actions:

reproduce a recording of a broadcast (reproduction right);

distribute the original or copies of the recording of the transmission by sale or other transfer of ownership (right of distribution);

make the recording of the broadcast available to the public (the right to make it available to the public);

record the broadcast (recording right);

communicate the program to the public in places with a paid entrance (the right to communicate to the public in places with a paid entrance);

retransmit a transmission (the right to retransmit);

communicate a program to the public via cable or broadcast a program (the right to communicate via cable or broadcast).

An on-air or cable broadcasting organization has the right to receive remuneration for each type of use of its broadcast.

The exclusive rights of organizing on-air or cable broadcasting, provided for in part two of this article, may be transferred under an agreement to other persons. The provisions of Articles 1067, 1068 and 1069 of this Code apply to such an agreement accordingly.

Broadcasting or cable broadcasting organizations must exercise their rights in compliance with the rights of authors and performers of the works and performances used, and, in appropriate cases, the rights of producers of phonograms and broadcasting or cable broadcasting organizations.

A broadcast from an on-air or cable broadcasting organization is considered used regardless of whether it is used for generating income or whether its use is not intended for this purpose.

CHAPTER 62. RIGHT TO INDUSTRIAL PROPERTY (RIGHT TO INVENTION, UTILITY MODEL, INDUSTRIAL DESIGN)

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Article 1082. Legal protection of an invention, utility model, industrial design

The right to an invention, utility model and industrial design is protected subject to the issuance of a patent.

The requirements for an invention, utility model, industrial design, under which the right to obtain a patent arises, and the procedure for its issuance by the authorized state body are established by law.

Article 1083. The right to use an invention, utility model, industrial design

The patent holder has the exclusive right to use a patent-protected invention, utility model, or industrial design at his own discretion, including the right to produce a product using protected solutions, to use patent-protected technological processes in his own production, to sell or offer for sale products containing protected solutions, to import relevant products.

Other persons other than the patent holder do not have the right to use an invention, utility model, industrial design without his permission, except in cases where such use in accordance with this Code or other law does not constitute a violation of the rights of the patent holder.

A violation of the exclusive right of the patent holder is recognized as the unauthorized manufacture, use, import, and offer for sale, sale, other introduction into civil circulation or storage for this purpose of a product made using a patented invention, utility model or industrial design. The use of a method protected by a patent for invention, or introduction into civil circulation or storage for this purpose of a product manufactured directly by a method protected by a patent for an invention.

The product is considered to be manufactured a patented process until proven otherwise.

Article 1084. Disposal of the right to a patent

The right to obtain a patent, the rights arising from the registration of an application, the right to own a patent, and the rights arising from a patent may be transferred in whole or in part to another person.

Article 1085. Right of authorship

The author of an invention, utility model, or industrial design has the right of authorship and the right to assign a special name to the invention, utility model, or industrial design.

The right of authorship and other personal rights to an invention, utility model, industrial design arise from the moment the rights based on the patent arise.

The law may assign special rights, benefits and benefits of a social nature to the author of an invention, utility model, or industrial design.

The person indicated in the application as the author is considered the author until proven otherwise. Only facts and circumstances that existed before the emergence of the law can be used as evidence.

Article 1086. Co-authors of an invention, utility model, industrial design

The relationship between the co-authors of an invention, utility model, or industrial design is determined by an agreement between them.

Non-creative assistance in the creation of an invention, utility model, industrial design (technical, organizational or mathematical assistance, assistance in registration of rights, etc.) does not entail co-authorship.

Article 1087. Service inventions, utility models, industrial designs

The right to obtain a patent for an invention, utility model, or industrial design created by an employee in the performance of his official duties or a specific assignment of the employer (official invention) belongs to the employer, if this is provided for, in the agreement between them.

The amount, conditions and procedure for paying remuneration to the author for a service invention, utility model, and industrial design are determined an agreement between him and the employer. If no agreement is reached, the decision is made by the court. If it is impossible to balance the contribution of the author and the employer to the creation of a work invention, utility model or industrial design, the author is recognized as entitled to half the benefits that the employer received or should have received.

Article 1088. Form of agreement on transfer of rights to a patent

An agreement on the transfer of the right to a patent (assignment of a patent) must be concluded in writing and is subject to registration with the authorized state body. Failure to comply with the written form or registration requirement shall render the contract invalid.

Article 1089. Form of permission (license) to use an invention, utility model, industrial design

The license agreement and sublicense agreement are concluded in writing and are subject to registration with the authorized state body. Failure to comply with the written form or registration requirement shall render the contract invalid.

Article 1090. Liability for patent infringement

At the request of the patent holder, the infringement of the patent must be stopped, and the infringer must compensate the patent holder for the losses incurred by him. Instead of compensation for damages, the patent holder has the right to demand from the infringer payment of compensation in the amount and manner established by law.

CHAPTER 63. RIGHTS TO NEW VARIETIES OF PLANTS AND NEW BREEDS OF ANIMALS

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Article 1091. Protection of rights to new varieties of plants and new breeds of animals

Rights to new varieties of plants and new breeds of animals (breeding achievements) are protected subject to the issuance of a patent.

The requirements, under which the right to obtain a patent, arises and the procedure for issuing a patent for selection achievements are established by law.

The rules of Articles 1084 – 1090 of this Code are respectively applied to relations related to rights to selection achievements and the protection of these rights, unless otherwise provided by the rules of this chapter and the law.

Article 1092. Rights of the author of a selection achievement to remuneration

The author of a selection achievement, who is not the patent holder, has the right to receive remuneration from the patent holder for the use of the selection achievement during the validity period of the patent.

The amount and terms of payment of remuneration to the author of a selection achievement are determined by an agreement concluded between him and the patent holder.

Article 1093. Rights of the patent holder

The owner of a patent for a selection achievement has the exclusive right to use this achievement within the limits established by law.

Article 1094. Obligations of the patent owner

The holder of a patent for a selection achievement is obliged to maintain the corresponding plant variety or the corresponding animal breed during the validity period of the patent in such a way that the characteristics specified in the description of the variety or breed drawn up during their registration are preserved.

Chapter 64. Protecting undisclosed information from illegal use

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Article 1095. Right to protection of undisclosed information

A person who lawfully possesses technical, organizational or commercial information, including production secrets (know-how), unknown to third parties (undisclosed information), has the right to have this information protected from illegal use if the conditions established by Article 98 of this Code are met.

The right to protect undisclosed information from illegal use arises regardless of the completion of any formalities in relation to this information (its registration, receipt of certificates, etc.).

Rules on the protection of undisclosed information do not apply to information that, in accordance with the law, cannot constitute an official or commercial secret (information about legal entities, rights to property and transactions with it, subject to state registration, information subject to submission as state statistical reporting etc.).

The right to protection of undisclosed information is valid as long as the conditions provided for in Article 98 of this Code are maintained.

Article 1096. Liability for illegal use of undisclosed information

A person who has received or disseminated undisclosed information or uses it without legal grounds is obliged to compensate the person who lawfully possesses this information for losses caused by its illegal use.

If a person, illegally using undisclosed information received it from a person, who did not have the right to distribute it, about which the acquirer of the information did not know and should not have known (a bona fide acquirer), than the lawful owner of the undisclosed information has the right to demand from him compensation for losses caused the use of undisclosed information. Information after a bona fide purchaser has learned that its use is illegal.

A person who lawfully possesses undisclosed information has the right to demand that the person who is illegally using it immediately stop using it. However, the court, taking into account the funds spent by the bona fide purchaser of undisclosed information on its use, may allow its further use under the terms of a paid exclusive license.

A person who independently and lawfully received information constituting the content of undisclosed information has the right to use this information regardless of the rights of the owner of the corresponding undisclosed information and is not responsible to him for such use.

Article 1097. Transfer of the right to protect undisclosed information from illegal use

A person who has undisclosed information may transfer all or part of the information constituting the content of this information to another person under a license agreement.

The licensee is obliged to act appropriately, to protect the confidentiality of information received under the contract and has the same rights to protect it from illegal use by third parties as the licensor. Unless otherwise provided in the agreement, the obligation to maintain the confidentiality of information lies with the licensee even after termination of the license agreement, if the relevant information continues to remain undisclosed information.

CHAPTER 65. MEANS OF INDIVIDUALIZATION OF PARTICIPANTS IN CIVIL TRANSACTIONS, GOODS, WORKS AND SERVICES

§ 1. Company name

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Article 1098. Right to a company name

A legal entity has the exclusive right to use the company name on goods, their packaging, advertising, signs, prospectuses, invoices, printed publications, official forms and other documentation related to its activities, as well as when demonstrating goods at exhibitions and fairs held in territory of the Republic of Uzbekistan.

The corporate name of a legal entity is indicated in its constituent documents. The right to a company name arises from the moment of state registration of a legal entity.

A business name of a legal entity that is so similar to one already registered that it could lead to identification of the respective legal entities cannot be registered.

Article 1099. Use of the corporate name of a legal entity in a trademark

The corporate name of a legal entity can be used in a trademark owned by it.

Article 1100. Validity of the right to a company name

On the territory of the Republic of Uzbekistan there is an exclusive right to a name registered in the Republic of Uzbekistan as a designation of a legal entity.

An exclusive right to a name registered or generally recognized in a foreign state on the territory of the Republic of Uzbekistan is valid in cases provided for by law.

The right to a company name terminates with the liquidation of a legal entity or with a change in its company name.

Article 1101. Alienation of the right to a company name

Alienation and transfer of the right to a corporate name of a legal entity are permitted only in cases of reorganization of the legal entity and alienation of the enterprise as a whole.

The owner of the right to a business name may allow another person to use his name (issue a license). However, the license agreement must stipulate measures to prevent misleading the consumer.

§ 2. Trademark (service mark)

Article 1102. Legal protection of a trademark

Legal protection of a trademark (service mark) is provided based on its registration.

The right to a trademark is certified a certificate of registration of a trademark (service mark).

Article 1103. Right to use and inviolability of a trademark

The owner of the right to a trademark has the exclusive right to use and dispose of the mark belonging to him. The owner of the right to a trademark also has the exclusive right to make changes and additions to the trademark.

The use of a trademark is considered any introduction into circulation in the manner prescribed law.

When publishing, publicly performing or otherwise using a trademark, making any changes to both the trademark itself and its designation is permitted only with the consent of the owner of the right to the trademark.

The right to the integrity of a trademark belongs to the owner of the right to the trademark.

Article 1104. Consequences of non-use of a trademark

If a trademark is not used on the territory of the Republic of Uzbekistan without a good reason continuously for the last three years, its registration may be canceled based on a court decision at the request of any interested party.

The issuance of a license to use a trademark is considered its use.

Article 1105. Transfer of the right to a trademark

The right to a trademark in relation to all classes of goods, works and services specified in the certificate or part thereof may be transferred the right holder to another person under an agreement.

Transfer of the right to a trademark is not permitted if it may cause misrepresentation regarding the product or its manufacturer.

The transfer of the right to a trademark, including its transfer under an agreement or by succession, must be registered with the authorized state body.

Article 1106. Form of an agreement on the transfer of rights to a trademark

An agreement on the transfer of rights to a trademark or on the granting of a license must be concluded, in writing form and registered with the authorized state body.

Failure to comply with the written form and registration requirements entails the invalidity of the contract.

Article 1107. Liability for violation of the right to a trademark

A person who unlawfully uses a trademark is obliged to stop the violation and compensate the owner of the trademark for the losses incurred by him.

A person who unlawfully uses a trademark is obliged to destroy the manufactured images of the trademark, remove from the product or its packaging the illegally used trademark or a designation that is confusingly similar to it.

Instead of compensation for damages, the trademark owner has the right to demand from the person illegally using the trademark payment of compensation in the amount and manner established by law.

If it is impossible to fulfill the requirements established by part two of this article, the corresponding goods are subject to destruction.

Article 1107¹. Exhaustion of the exclusive right to a trademark

The use of this trademark by other persons in relation to goods that lawfully were introduced into civil circulation directly by the owner of the trademark or with his consent is not a violation of the exclusive right to a trademark.

§ 3. NAME OF PLACE OF ORIGIN OF THE GOODS

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Article 1108. Legal protection of the appellation of origin of goods

Legal protection of the appellation of origin of a product is provided on the basis of, its registration.

The appellation of origin (indication of origin) of a product is recognized as the name of a country, locality, locality or other geographical object, used to designate a product whose special properties are solely or mainly determined by the natural conditions or other factors characteristic of this geographical object, or a combination of natural conditions and these factors.

The appellation of origin of a product may be the historical name of a geographical feature.

A designation that, although it represents or contains the name of a geographical object, has come into general use in the Republic of Uzbekistan as a designation of a product of a certain type, not related to the place of its manufacture. This, however, does not deprive a person whose rights are violated by the unfair use of such a name from the opportunity to protect them in other ways provided by law.

Registration of the appellation of origin of goods is carried out the authorized state body.

Based on registration, a certificate of the right to use the appellation of origin of the goods is issued.

The procedure and conditions for registration, issuance of certificates, invalidation and termination of registration and certificates are determined law.

Article 1109. The right to use the appellation of origin of goods

A person who has the right to use the appellation of origin of a product has the right to place this name on the product, packaging, advertising, prospectuses, and invoices and use it in other ways in connection with the introduction of this product into civil circulation.

The appellation of origin of a product may be registered several persons, both jointly and independently of each other, to designate a product that meets the requirements specified in parts one, two and three of Article 1108 of this Code. The right to use the appellation of origin of goods belongs to each of such persons.

Alienation and other transactions on the assignment of the right to use the appellation of origin of a product and the provision of use of it on the basis of a license are not permitted.

Article 1110. Scope of legal protection of the appellation of origin of goods

The Republic of Uzbekistan provides legal protection for appellations of origin of goods located on the territory of the Republic of Uzbekistan.

Legal protection of an appellation of origin of goods located in another state is provided in the Republic of Uzbekistan if this name is registered in the country of origin of the goods, as well as with the authorized state body in accordance with this Code.

Article 1111. Liability for unlawful use of the appellation of origin of goods

A person, who has the right to use the appellation of origin of a product, as well as organizations for the protection of consumer rights, may demand that someone who illegally uses this name stop using it, remove from the product. its packaging, forms and other documentation the illegally used name or designation similar with it to the point of confusion, destruction of manufactured images of the name or designation similar to it to the point of confusion, and if this is impossible – confiscation and destruction of the goods and (or) packaging.

A person who has the right to use the appellation of origin of a product has the right to demand compensation for losses incurred from the violator of this right.

SECTION V. LAW OF INHERITANCE

CHAPTER 66. GENERAL PROVISIONS ON INHERITANCE

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Article 1112. Grounds for inheritance

Inheritance is carried out according to a will and law.

Inheritance by law takes place when there is no will or does not determine the fate of the entire inheritance, as well as in other cases established by this Code.

Article 1113. Composition of the inheritance

The inheritance includes all rights and obligations belonging to the testator at the time of opening of the inheritance, the existence of which does not cease with his death.

The following rights and obligations that are inextricably linked with the personality of the testator are not included in the inheritance:

rights of membership, participation in commercial and other organizations that are legal entities, unless otherwise provided by law or agreement;

the right to compensation for harm caused to life or health;

rights and obligations arising from alimony obligations;

rights to pensions, benefits and other payments based on labor and social security legislation;

personal non-property rights not related to property rights.

Personal non-property rights and other intangible benefits that belonged to the testator may be exercised and protected the heirs.

Article 1114. Inheritance of property that is common joint property

The death of a participant in common joint property is the basis for determining his share in the right to common property and dividing the common property or separating from it the share of the deceased participant in the manner established by Article 226 of this Code. In this case, the inheritance is opened in relation to the common property attributable to the share of the deceased participant, and if it is impossible to divide the property in kind – in relation to the value of such a share.

A participant in common joint property has the right to bequeath his share in the right to common property, which will be determined after his death in accordance with part one of this article.

Article 1115. Inheritance of the right to a land plot

Inheritance of the right to a land plot is regulated by the rules of this Code, unless otherwise provided by law.

Article 1116. Opening of inheritance

An inheritance opens as a result, of the death of a citizen or the court declaring him dead.

The time of opening of the inheritance is recognized as the day (if necessary, the moment) of the death of the testator, and when declaring him dead, the day of entry into force of the court decision declaring the citizen dead, unless a different day is specified in the court decision.

If within one calendar day (twenty-four hours) persons who had the right to inherit one after the other died, they are recognized as deceased at the same time, the inheritance opens after each of them and the heirs of each of them are called to inherit.

Article 1117. Place of opening of inheritance

The place of opening of the inheritance is the last permanent place of residence of the testator. If the last place of residence of the testator is unknown, the place of opening of the inheritance is the location of the real estate belonging to the testator or its main part, and in the absence of real estate – the location of the main part of the movable property.

Article 1118. Heirs

Heirs by will and law can be citizens who are alive at the time of opening of the inheritance, as well as children conceived during the life of the testator and born alive after the opening of the inheritance.

Heirs under a will can also be legal entities that were created at the time of opening of the inheritance, the state and self-government bodies of citizens.

Article 1119. Removal of unworthy heirs from inheritance

Persons who intentionally took the life of the testator or any of the possible heirs or made an attempt on their life do not have the right to inherit either by will or by law. The exception is for persons in respect of whom the testator made a will after an attempt on his life had been committed.

Persons who deliberately prevented the testator from carrying out his last will and thereby contributed to the calling of themselves or persons close to them to inherit or to increase the share of the inheritance due to them have no right to inherit either by will or by law.

Parents do not have the right to inherit by law after children in respect of whom they were deprived of parental rights and were not restored to these rights by the time the inheritance was opened. Parents (adoptive parents) and adult children (adopted children), who evaded fulfilling the duties assigned to them by force the law of obligations to support the testator.

The circumstances, serving the basis for the exclusion of unworthy heirs from inheritance are established the court, at the request of the person for whom such exclusion gives rise to property consequences associated with inheritance.

The rules of this article also apply to a legacy.

The rules of this article apply to any heirs, including those entitled to an obligatory share.

CHAPTER 67. INHERITANCE BY WILL

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Article 1120. General provisions

A will recognizes the will of a citizen to dispose of his property or the right to it in the event of death.

The will must be made in person. Making a will through a representative is not allowed.

A citizen can bequeath all or part of his property to one or more persons, both included and not included in the circle of heirs by law, as well as legal entities, the state or self-government bodies of citizens.

The testator has the right, without explanation, to disinherit one, several or all heirs by law. The deprivation of an heir by law of inheritance does not apply to his descendants who inherit by right of representation, unless otherwise follows from the will.

The testator has the right to make a will containing a disposition of any property.

The testator has the right to make a will containing an order regarding property that does not belong to him at the time of making the will. If at the time of opening of the inheritance such property belongs to him, the corresponding order is valid.

The testator is free to cancel and change the will at any time after its execution and is not obliged to indicate the reasons for the cancellation or change.

The testator does not have the right to impose on the persons appointed by him as heirs in the will the obligation, in turn, to dispose of the property bequeathed to him in a certain way in the event of their death.

Article 1121. Will with condition

The testator has the right to condition the receipt of the inheritance on a certain legal condition regarding the nature of the heir’s behavior.

Illegal conditions included in the order appointing an heir or depriving the right of inheritance are invalid.

A condition included in the will, which is impossible for the heir to fulfill due to his state of health or due to other objective reasons, may be declared invalid at the suit of the heir.

Article 1122. Sub appointment of heirs

The testator may, in the event that the heir indicated in the will dies before the opening of the inheritance, does not accept it or refuses it, or is removed from inheritance as an unworthy heir in accordance with Article 1119 of this Code. In the event that the heir under the will fails to fulfill the legal conditions of the testator, appoint another heir (sub-appointment of heir).

A designated heir may be any person who, in accordance with this Code, can be an heir.

Refusal of a will by an heir not in favor of a designated heir is not permitted.

Article 1123. Inheritance of part of the property remaining untested

The part of the property that remains intestate is distributed among the heirs law, called to inherit in accordance with Articles 1134 – 1143 of this Code.

These heirs also include those legal heirs to whom another part of the property was left will.

Article 1124. General rules on the form of a will

The will must be made in writing, indicating the place and time of its preparation.

The following wills are recognized as wills made in writing:

notarized wills;

wills equivalent to notarized wills.

A will in writing must be handwritten and signed by the testator.

If the testator, due to physical disabilities, illness or illiteracy, cannot sign the will with his own hand, it may be signed in the presence of a notary or another person certifying the will in accordance with the law, by another person indicating the reasons why the testator could not sign handwritten will.

The following cannot sign a will instead of the testator:

a notary or other person certifying the will;

the person in whose favor a will is drawn up or a testamentary refusal is made, the spouse of such a person, his children, parents, grandchildren and great-grandchildren, as well as the heirs of the testator at law;

citizens who do not have full legal capacity;

illiterate and other persons unable to read a will;

persons previously convicted of perjury.

Article 1125. Notarized will

A notarized will must be written by the testator or recorded from his words by a notary. When recording a will from the words can be used of the testator by a notary, generally accepted technical means (typewriter, personal computer, etc.).

A will written down by a notary from the words of the testator fully must be read by the testator in the presence of the notary before signing the will.

If the testator, due to physical disabilities, illness or illiteracy, is unable to personally read the will, its text is read out to him by a notary, about which a corresponding entry is made in the will indicating the reasons why the testator was unable to personally read the will.

At the request of the testator, the will is certified by a notary without familiarization with its contents (secret will).

A secret will, under penalty of invalidity, must be personally written and signed by the testator. The will, in the presence of two witnesses and a notary, must be sealed in an envelope on which the witnesses put their signatures, indicating the last name, first name, patronymic and permanent place of residence. The envelope signed by the witnesses is sealed in the presence of the witnesses and the notary into another envelope, on which the notary writes a certification inscription.

Article 1126. Wills equivalent to notarized wills

The following are equivalent to notarized wills:

wills of citizens, undergoing treatment in hospitals, hospitals, other inpatient medical institutions or living in boarding homes for the elderly and people with disabilities, certified by the chief doctors, their deputies for medical affairs or the doctors on duty of these hospitals, hospitals and other medical institutions, and also heads of hospitals, directors or chief doctors of boarding homes for the elderly and people with disabilities;

wills of citizens traveling on ships flying the flag of the Republic of Uzbekistan, certified by the captains of these ships;

wills of citizens on exploration or other similar expeditions, certified by the heads of these expeditions;

wills of military personnel, and in the locations of military units where there are no notaries, also wills of civilians working in these units, members of their families and family members of military personnel, certified by the commanders of military units;

wills of persons in prison or custody, certified by the heads of the relevant institutions;

wills of persons living in settlements where there is no notary, certified by officials who have the right to perform notarial acts in accordance with the law.

The rules of Article 1125 of this Code apply to wills provided for in part one of this article, with the exception of the requirement for notarization of the will.

Article 1127. Cancellation and modification of a will

The testator has the right at any time to cancel the will he has made as a whole or to change it by canceling, amending or supplementing individual testamentary dispositions contained therein, making a new will.

A will may be revoked by destroying all its copies by the testator or a notary or other officials by written order of the testator.

A will draw up earlier is canceled by a subsequent will in full or in part in which it contradicts it.

A previously made will, canceled in whole or in part by a subsequent will, is not restored if the latter is in turn canceled or changed by the testator.

Article 1128. Secrecy of a will

A notary, another official certifying a will, as well as a citizen signing a will instead of the testator, do not have the right to disclose information regarding the contents of the will, its preparation, cancellation or modification before the opening of the inheritance.

Article 1129. Interpretation of a will

When interpreting a will by a notary, executor or court, the literal meaning of the words and expressions contained therein is taken into account. If the literal meaning of any provision of the will is unclear, it is established by comparing this provision with other provisions and the meaning of the will as a whole.

Article 1130. Invalidity of a will

A will made in improper form is invalid. The invalidity of a will is also based on the rules of this Code on the invalidity of transactions.

A will may be declared invalid due to a violation of the procedure for drawing up, signing and certifying a will established by this Code, upon the claim of a person for whom the invalidation of a will has property consequences.

The invalidity of individual instructions contained in the will does not affect the validity of the rest of the will.

If a will is declared invalid, the heir who was deprived of inheritance under this will receives the right to inherit on a general basis.

Article 1131. Execution of a will

The testator may entrust the execution of the will to a person specified in the will who is not an heir (the executor of the will). The consent of this person to be the executor of the will must be expressed by him either in his own handwritten inscription on the will itself, or in a statement attached to the will.

By agreement among themselves, the heirs have the right to entrust the execution of the will to one of the heirs or to another person. If such an agreement is not reached, the executor of the will may be appointed by the court at the request of one or more heirs.

The executor of a will has the right at any time to refuse to fulfill the duties assigned to him by the testator, having notified the heirs under the will in advance. The release of the executor of a will from his duties is also possible by a court decision according to the application of the heirs.

The executor of the will must:

protect and manage the inheritance;

take all possible measures to notify all heirs and legatees of the opening of the inheritance and of testamentary refusals in their favor;

receive amounts due to the testator;

give the heirs the property due to them in accordance with the will of the testator and the law;

ensure the execution by the heirs of the testamentary refusals assigned to them;

execute testamentary assignments or demand from the heirs under a will the execution of testamentary assignments.

The executor of a will has the right to enter on his own behalf into legal and other matters related to the management of the inheritance and the execution of the will, and may also be involved in such matters.

The executor of the will shall perform his functions within the period reasonably necessary to clear the estate of debts, collect amounts due to the testator and take possession of the estate by all heirs. In any case, the specified period cannot be more than one year from the date of opening of the inheritance.

The executor of a will has the right to compensation from the inheritance for the necessary expenses for managing the inheritance and executing the will. The will may provide for the payment of remuneration to the executor of the will from the inheritance.

Upon execution of the will, the executor of the will is obliged to provide the heirs with a report upon their request.

Article 1132. Testamentary refusal

The testator has the right to assign to the heir under the will the fulfillment at the expense of the inheritance of any obligation (testamentary disclaimer) in favor of one or more persons (legatees), who acquire the right to demand execution of the testamentary disclaimer.

Legatees can be persons both included and not included in the number of heirs by law.

The subject of a testamentary refusal may be the transfer to the legatee of property or other property right of a thing included in the inheritance, the acquisition and transfer to him of property that is not part of the inheritance, the performance of certain work for him, the provision of a certain service to him, etc.

The heir, upon whom the testator is entrusted with the execution of a testamentary refusal, must fulfill it only within the limits of the actual value of the inheritance passed to him, minus the portion of the testator’s debts falling on him.

If the heir to whom the testamentary refusal is entrusted has the right to an obligatory share in the inheritance, his obligation to fulfill the refusal is limited to the value of the inheritance transferred to him, which exceeds the size of his obligatory share.

In cases where a testamentary refusal is assigned to all or several heirs, the refusal burdens each of them in proportion to his share in the inheritance, unless otherwise provided by the will.

The testator has the right to impose on the heir to whom a residential house, apartment or other residential premises passes the obligation to provide another person with lifelong use of this premises or a certain part of it. Upon subsequent transfer of ownership of the residential premises, the right of lifelong use remains in force.

The right to lifelong use of residential premises is inalienable, non-transferable and does not pass to the heirs of the legatee.

The right to lifelong use of residential premises granted to the legatee is not the basis for residence of members of his family, unless otherwise specified in the will.

In the event of the death of the heir to whom the testamentary refusal was entrusted or if he does not accept the inheritance, the execution of the testamentary refusal passes to other heirs who received his share, or to the state or self-government body of citizens if the property has become escheated.

A testamentary refusal is not executed in the event of the death of the legatee before the opening of the inheritance or after the opening of the inheritance, but before the moment when the heir under the will managed to accept it.

The legatee is not responsible for the debts of the testator.

Article 1133. Imposition of obligations

The testator may impose on the heir under the will the obligation to perform any action or refrain from it, without giving anyone the right to demand the fulfillment of this obligation as a creditor. To achieve a generally beneficial purpose, the same obligation may be assigned to the executor of the will, with the testator allocating part of the property for the execution of the assignment.

The rules contained in Article 1132 of this Code are accordingly applied to the assignment, the subject of which is actions of a property nature.

The obligation to fulfill the assignment ceases if, in accordance with this Code, the share of the inheritance that was due or belonged to the heir who had the obligation to fulfill the assignment passes to other heirs.

CHAPTER 68. INHERITANCE BY LAW

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Article 1134. General provisions

Heirs by law are called upon to inherit in the order of priority provided for in Articles 1135 – 1141 of this Code.

When inheriting by law, the adopted person and his offspring, on the one hand, and the adoptive parent and his relatives, on the other, are equated to blood relatives.

Adopted persons and their offspring do not inherit by law after the death of the adoptee’s parents or his other blood relatives in the ascending line.

The parents of the adopted person and his other blood relatives in the ascending line do not inherit by law after the death of the adopted person and his offspring.

Each subsequent line of heirs by law receives the right to inherit in the event of the absence of heirs of the previous line, their removal from the inheritance, their non-acceptance of the inheritance or their refusal of it.

Article 1135. First priority of legal heirs

First, the right to inherit according to the law is received in equal shares by the children of the testator (including adopted children), the spouse and parents (adoptive parents) of the testator. The first priority heirs also include the children of the testator born after his death.

Article 1136. Second order of heirs by law

Secondly, the right to inherit according to the law is received in equal shares by the testator’s full and half brothers and sisters, as well as his grandparents on both the father’s and mother’s sides.

Article 1137. Third order of heirs by law

Thirdly, the right to inheritance according to the law is received in equal shares by the testator’s uncles and aunts.

Article 1138. Fourth order of heirs by law

Fourthly, the right to inherit according to the law is received by other relatives of the testator up to the sixth degree of kinship, inclusive, and relatives of a closer degree of kinship have a preferential right to inherit over relatives of a more distant degree of kinship.

Heirs of the fourth order called to inherit in equal shares.

Article 1139. Fifth order of heirs by law

Fifthly, the right to inherit by law is received by the disabled dependents of the testator, if they do not inherit on the basis, of Article 1141 of this Code.

Article 1140. Inheritance by right of representation

Inheritance by right of representation involves the transfer of the share of the heir by law to his descendants in the event of his death before the opening of the inheritance, and the share is divided equally between the descendants who are in the same degree of relationship with the represented heir by law.

When inheriting in a direct descending line, the right of representation operates without limiting the degrees of relationship, and when inheriting along a lateral line, the right of representation is received, respectively, by the nephews (nieces) of the testator, representing his siblings, or the cousins ​​of the testator, representing his uncle or aunt.

Article 1140¹. Transfer of the right to accept inheritance (hereditary transmission)

If an heir called to inherit by will or by law died after the opening of the inheritance, without having time to accept it, the right to accept the inheritance due to him passes to his heirs by law, and if all the inherited property was bequeathed – to his heirs by will (hereditary transmission). The right to accept an inheritance by way of hereditary transmission is not included in the inheritance opened after the death of such an heir.

The right to accept an inheritance that belonged to a deceased heir may be exercised by his heirs on a general basis.

The right of the heir to accept part of the inheritance as a mandatory share, provided for in Article 1142 of this Code, does not pass to his heirs.

Article 1141. Disabled dependents of the testator

Legal heirs include disabled persons who were dependent on the testator for at least one year before the death of the testator and lived together with him. If there are other heirs by law, they inherit together with the heirs of the line called for inheritance.

Disabled persons, who are among the heirs by law specified in Articles 1136 – 1138 of this Code, but who are not included in the circle of heirs of the line called for inheritance, inherit together with the heirs of this line, if at least a year before the death of the testator they were in his dependents, regardless of whether they lived together with the testator.

Persons called to inherit on the basis, of this article, if there are other heirs by law, jointly inherit no more than one-fourth of the inheritance.

Article 1142. Right to an obligatory share in the inheritance

Minor or disabled children of the testator, including adopted children, as well as his disabled spouse and parents, including adoptive parents, inherit, regardless of the contents of the will, at least half of the share that would be due to each of them upon inheritance by law (mandatory share).

The obligatory share includes everything that the heir entitled to such a share receives from the inheritance for any reason, including the value of property consisting of ordinary household furnishings and household items, and the value of the testamentary disclaimer established in favor of such heir.

Any restrictions and encumbrances established in the will for an heir entitled to an obligatory share in the inheritance are valid only in relation to that part of the inheritance passing to him that exceeds the obligatory share.

Article 1143. Rights of a spouse during inheritance

The right of inheritance belonging to a spouse by virtue of a will or law does not affect his other property rights related to his state of marriage with the testator, including the right of ownership of part of the property acquired jointly during marriage.

Article 1144. Protection of inheritance and management of it during inheritance by law

If part of the property is inherited by will, the executor of the will, appointed by the testator, protects and manages the entire inheritance, including that part of the inheritance that is transferred by inheritance by law.

The executor of the will, appointed in accordance with Article 1131 of this Code by the heirs under the will or by the court, carries out the functions of protecting the entire inheritance as a whole and managing it, unless the heirs by law require the appointment of an inheritance manager to perform these functions in relation to the part of the inheritance transferred in the order inheritance by law.

The administrator of the inheritance is appointed by a notary at the place of opening of the inheritance at the request of one or more legal heirs. An heir by law who does not agree with the appointment of an inheritance manager or his choice has the right to challenge the appointment of an inheritance manager in court.

If the heirs by law are absent or unknown, the local government authority or the self-government body of citizens must contact a notary with a request to appoint an inheritance administrator. If the heirs appear by law, the administrator of the inheritance may be recalled at their request with reimbursement of necessary expenses and payment of a reasonable remuneration from the inheritance.

The administrator of the inheritance exercises the powers provided for in Article 1131 of this Code in relation to the executor of the will, unless otherwise follows from the peculiarities of inheritance by law.

The administrator of the inheritance has the right to compensation from the inheritance for the necessary expenses for protecting and managing the inheritance, and, unless otherwise provided by his agreement with the heirs, to remuneration.

Chapter 69. Acquisition of inheritance

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Article 1145. General provisions

The heir acquires the right to the inheritance due to him or his part (share) from the time the inheritance is opened, unless he subsequently refuses the inheritance, is not deprived of the right to inherit and does not lose the right to inherit as a result, of the invalidation of a testamentary order appointing him as heir.

Article 1146. Issuance of a certificate of right to inheritance

The notary at the place of opening of the inheritance, at the request of the heir, is obliged to issue him a certificate of the right to inheritance.

A certificate of the right to inheritance is issued after six months from the date of opening of the inheritance.

When inheriting both by law and by will, a certificate can be issued before the expiration of the specified period if the notary has information that, apart from the persons who applied for the certificate, there are no other heirs in relation to the relevant property or the entire inheritance.

Article 1147. Right to refuse inheritance

The heir has the right to refuse the inheritance at any time from the date of opening of the inheritance.

Refusal of the inheritance is accomplished by the heir submitting an application to the notary at the place where the inheritance was opened.

Refusal of inheritance through a representative is possible if the power of attorney specifically provides for the authority to do so.

Refusal of inheritance subsequently cannot be canceled or taken back.

Article 1148. Restrictions on the right to refuse inheritance

If an heir is called to inherit both by will and by law, he has the right to refuse the inheritance due to him on one of these grounds or on both grounds.

The heir has the right to refuse the inheritance due to him by right of increment, regardless of the inheritance of the rest of the inheritance.

When refusing an inheritance, the heir has the right to indicate that he is abandoning it in favor of other persons from among the heirs by will or by law.

Except for the cases provided for in this article, refusal of part of the inheritance, refusal of inheritance with reservations or under conditions is not allowed.

Article 1149. The right to refuse to receive a testamentary refusal

The legatee has the right to refuse the legacy. Partial refusal, refusal with reservations, under conditions or in favor of another person is not allowed.

The right provided for by this article does not depend on the right of the legatee, who is also an heir, to refuse the inheritance.

If the legatee has exercised the right provided for by this article, the heir burdened with the legacy is released from the obligation to execute it.

Article 1150. Division of inheritance

Any of the legal heirs who accepted the inheritance has the right to demand division of the inheritance.

The division of the inheritance is carried out by agreement of the heirs in accordance with the shares due to them, and if an agreement is not reached, in court.

The rules of this article apply to the division of inheritance between heirs under a will in cases where the entire inheritance or part of it is bequeathed to the heirs in shares without specifying specific property.

Article 1151. Rights of absent heirs

If among the heirs there are persons whose whereabouts are unknown, the remaining heirs, the executor of the will (administrator of the inheritance) and the notary are obliged to take the necessary measures to establish their whereabouts and call them to inherit.

If an absent heir called to inherit, whose location has been established, has not renounced the inheritance, the remaining heirs are obliged to notify him of their intention to divide the inheritance. If within three months from the date of such notification the absent heir does not notify the remaining heirs of his desire to participate in the agreement on the division of the inheritance, the remaining heirs have the right to make a division by agreement among themselves, allocating the share due to the absent heir.

If within one year from the date of opening of the inheritance, the location of the absent heir has not been established and there is no information about his refusal of the inheritance, the remaining heirs have the right to make a division according to the rules of part two of this article.

If there is a conceived but not born heir yet, the division of the inheritance can be made only after the birth of such an heir.

If a conceived but not born yet heir is born alive, then the remaining heirs have the right to divide the inheritance only with the allocation of the inheritance share due to him. To protect the interests of the newborn, a representative of the guardianship and trusteeship authority must be invited to participate in the division.

Article 1152. Inheritance of an enterprise

Unless otherwise established by agreement of all the heirs who accepted the inheritance, the enterprise included in the inheritance is not subject to division in kind and comes into the common shared ownership of the heirs in accordance with the shares due to them.

Article 1153. Preemptive right of individual heirs to property included in the inheritance

When dividing the inheritance, heirs who lived together with the testator for three years before the opening of the inheritance have a priority right to receive from the inheritance a residential house, apartment or other residential premises, as well as household utensils and household items.

When dividing the inheritance, the heirs who, together with the testator, had the right of common ownership of the property, have a preferential right to receive in kind the property that was in common ownership from the inheritance.

When exercising the preferential rights specified in parts one and two of this article, the property interests of other heirs participating in the division must be respected. If, as a result of the exercise of these rights, the property forming the inheritance is not sufficient to provide other heirs with the shares due to them, the heir exercising the preemptive right must provide them with appropriate monetary or property compensation.

Article 1154. Increment of inherited shares

In cases where an heir refuses the inheritance or falls away due to the circumstances specified in Article 1119 of this Code, the part of the inheritance that would be due to such an heir goes to the heirs by law called to inherit and is distributed among them in proportion to their inheritance shares.

If the testator bequeathed all the property to the heirs appointed by him, the part of the inheritance due to the renounced inheritance or the lapsed heir goes to the remaining heirs under the will and is distributed among them in proportion to their inheritance shares, unless otherwise provided by the will.

The rules contained in part one of this article do not apply:

if an heir is assigned to a renounced or fallen heir;

if the heir refuses the inheritance in favor of a certain person;

in cases where, during inheritance by law, the refusal or defection of the heir entails the calling of the heirs of the next line to inherit.

Article 1155. Expenses subject to payment from the inheritance

At the expense of the inheritance, before its distribution among the heirs, claims for compensation of necessary expenses caused by the dying illness of the testator, funeral expenses of the testator, expenses associated with the acquisition of the inheritance. Its protection, management and execution of the will, as well as payment of remuneration to the executor of the will or administrator inheritance. These claims are subject to satisfaction from the value of the inheritance in preference to all other claims, including those secured by a mortgage or other collateral.

Article 1156. Collection of debts of the testator by creditors

The testator’s creditors have the right to present their claims arising from the testator’s obligations to the executor of the will (administrator of the inheritance) or to the heirs. In this case, the heirs are liable as joint and several debtors to the extent of the value of the property transferred to each heir.

Article 1157. Escheatable property

If, there are no heirs by law or by will, or none of the heirs has the right to inherit, or all of them have refused the inheritance, the inherited property is recognized as escheat.

Inherited property is recognized as escheated on the basis, of a court decision upon the application of a local government body or a self-government body of citizens at the place of opening of the inheritance after three years from the date of opening of the inheritance. Inherited property may be recognized as escheat before the expiration of the specified period if the costs associated with the protection and management of the inheritance exceeded its value.

Escheated property becomes the property of the self-government body of citizens at the location of the relevant property, and in case of refusal of the property, it becomes the property of the state.

The protection and management of escheated property is carried out in accordance with Article 1144 of this Code.

SECTION VI. APPLICATION OF INTERNATIONAL PRIVATE LAW TO CIVIL RELATIONS

CHAPTER 70. GENERAL PROVISIONS

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Article 1158. Determination of the law to be applied to civil legal relations complicated by a foreign element

The law to be applied to civil relations involving foreign citizens or foreign legal entities or complicated by another foreign element is determined on the basis of this Code, other laws, international treaties and recognized international customs, as well as on the basis of agreement of the parties.

The agreement of the parties on the choice of law must be expressly expressed or directly follow from the terms of the contract and the circumstances of the case, considered in their entirety.

If, in accordance with the first part of this article, it is impossible to determine the law to be applied, the law most closely related to civil legal relations complicated by a foreign element is applied.

The application of a norm of foreign law cannot be limited solely because this norm is of a public law nature.

Article 1159. Legal qualification

The legal qualification by a court or other government body of legal concepts is based on their interpretation in accordance with the law of the Republic of Uzbekistan as the country of the place of consideration of the dispute, unless otherwise provided by law.

If, legal concepts are not known to the law of the Republic of Uzbekistan as the country of the place of consideration of the dispute or are known under a different name or with a different content and cannot be determined by interpretation according to the law of the Republic of Uzbekistan, then the law of a foreign state may also be applied in their legal qualification.

Article 1160. Establishment of the content of norms of foreign law

When applying foreign law, a court or other government body establishes the content of its rules in accordance with their official interpretation, practice of application and doctrine in the relevant foreign state.

In order to establish the content of norms of foreign law, a court or other government body may apply in accordance with the established procedure for assistance and clarification from the Ministry of Justice and other national competent bodies and institutions, including those located abroad, or involve experts.

Persons participating in the case have the right to present documents confirming the content of the norms of foreign law to which they refer to substantiate their claims or objections, and otherwise assist the court or other government body in establishing the content of these norms.

If the content of the norms of foreign law, despite the measures taken in accordance with this article, is not established within a reasonable time, the law of the Republic of Uzbekistan is applied.

Article 1161. Reversion and reference to the law of a third country

Any reference to foreign law in accordance with the rules of this section, except for the cases provided for in this article, should be considered as a reference to the substantive, and not the conflict of laws, law of the relevant country.

A reverse reference to the law of the Republic of Uzbekistan and a reference to the law of a third country are accepted in cases of application of foreign law in accordance with Article 1168 , parts one , three and five of Article 1169, Articles 1171 and 1174 of this Code.

Article 1162. Consequences of circumventing the law

Agreements and other actions of participants in relations regulated by this Code aimed at subordinating the relevant relations to another law by circumventing the rules of this section on the applicable law are invalid. In this case, the law of the relevant State to be applied in accordance with this section shall apply.

Article 1163. Reciprocity

A court or other government body applies foreign law regardless of whether the law of the Republic of Uzbekistan is applied to similar relations in the relevant foreign state, with the exception of cases where the application of foreign law on the basis of reciprocity is provided for by the law of the Republic of Uzbekistan.

If the application of foreign law depends on reciprocity, it is presumed that it exists unless otherwise proven.

Article 1164. Clause of public order

Foreign law is not applied in cases where its application would contradict the fundamentals of law and order (public order) of the Republic of Uzbekistan. In these cases, the law of the Republic of Uzbekistan applies.

Refusal to apply foreign law cannot be based solely on the difference between the legal, political or economic system of the relevant foreign state from the legal, political or economic system of the Republic of Uzbekistan.

Article 1165. Application of mandatory norms

The rules of this section do not affect the operation of mandatory norms of law of the Republic of Uzbekistan that regulate the relevant relations regardless of the applicable law.

When applying the law of any country in accordance with the rules of this section, the court may apply mandatory rules of the law of another country that have a close connection with the relationship, if, according to the law of that country, such rules should govern the relevant relationship regardless of the law to be applied. In doing so, the court must take into account the purpose and nature of such rules, as well as the consequences of their application.

Article 1166. Application of the law of a country with multiple legal systems

In cases where the law of a country in which several territorial or other legal systems are in force is to be applied, the legal system in accordance with the law of that country is applied.

Article 1167. Rhetoric

The Government of the Republic of Uzbekistan may establish reciprocal restrictions (Rhetoric) in relation to the rights of citizens and entities persons of those states that have special restrictions on the rights of citizens and legal entities of the Republic of Uzbekistan.

CHAPTER 71. CONFLICT OF LAWS RULES

§ 1. PERSONS

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Article 1168. Personal law of a physical person

The personal law of a physical person is the law of the country of which that person is a citizen. If a person has two or more nationalities, personal law is considered the law of the country with which the person is most closely associated.

The personal law of a stateless person is the law of the country in which this person permanently resides.

The personal law of a refugee is considered the law of the country that granted asylum.

Article 1169. Legal capacity and capacity of a physical person

The legal capacity and competence of a physical person are determined his personal law.

Foreign citizens and stateless persons enjoy civil legal capacity in the Republic of Uzbekistan on an equal basis with citizens of the Republic of Uzbekistan, except in cases established by laws or international treaties of the Republic of Uzbekistan.

The civil capacity of a physical person in relation to transactions and obligations arising as a result, of causing harm is determined by the law of the country of the place where transactions were made or obligations arose as a result, of causing harm.

The ability of a physical person to be an individual entrepreneur and to have associated rights and obligations is determined by the law of the country where the individual is registered as an individual entrepreneur. In the absence of a country of registration, the law of the country of the main place of individual entrepreneurial activity is applied.

Recognition of a physical person as incompetent or partially capable is subject to the law of the country of the court.

Article 1170. Recognizing an individual as missing and declaring him dead

Recognizing a physical person as missing and declaring him dead is subject to the law of the country of court.

Article 1171. Name of a physical person

The rights of a physical person to have name, use and protection it are determined by his personal law, unless otherwise follows from the rules provided for in parts four and seven of Article 19, Articles 1179 and 1180 of this Code.

Article 1172. Registration of acts of civil status of citizens of the Republic of Uzbekistan outside the borders of the Republic of Uzbekistan

Registration of acts of civil status of citizens of the Republic of Uzbekistan living outside the Republic of Uzbekistan is carried out at consular offices of the Republic of Uzbekistan. In this case, the legislation of the Republic of Uzbekistan is applied.

Article 1173. Recognition of documents issued by bodies of a foreign state to certify acts of civil status

Documents issued by the competent authorities of foreign states to certify acts of civil status committed outside the Republic of Uzbekistan according to the laws of the relevant states in relation to citizens of the Republic of Uzbekistan, foreign citizens and stateless persons are recognized as valid in the Republic of Uzbekistan if they have legalization or an apostle.

Article 1174. Guardianship and trusteeship

Guardianship or guardianship over minors, incapacitated or limited in legal capacity adults, is established and revoked by the law of the country of the court.

The obligation of a guardian (trustee) to accept guardianship (trusteeship) is determined by the personal law of the person appointed as a guardian (trustee).

Legal relations between the guardian (trustee) and the person under guardianship (trusteeship) are determined the law of the country, whose institution appointed the guardian (trustee). However, if a person under guardianship (trusteeship) lives in the Republic of Uzbekistan, the law of the Republic of Uzbekistan is applied if it is more favorable for this person.

Guardianship (trusteeship) established over citizens of the Republic of Uzbekistan living outside the Republic of Uzbekistan is recognized as valid in the Republic of Uzbekistan if there are no legal objections from the relevant consular office of the Republic of Uzbekistan against the establishment of guardianship (trusteeship) or against its recognition.

Article 1175. Law of a legal entity

The law of a legal entity is the law of the country where the legal entity is established.

Article 1176. Legal capacity of a legal entity

The civil legal capacity of an entity person is determined the law of the entity person.

A foreign legal entity cannot refer to restrictions on the powers of its body or representative to complete a transaction that are not known to the law of the country in which the body or representative of the foreign legal entity made the transaction.

Article 1177. National regime for the activities of foreign legal entities in the Republic of Uzbekistan

Foreign legal entities carry out entrepreneurial and other activities in the Republic of Uzbekistan regulated by civil legislation, unless otherwise provided for by the law of the Republic of Uzbekistan for foreign legal entities.

Article 1178. Participation of the state in civil legal relations with a foreign element

To civil legal relations with a foreign element with the participation of the state, the rules of this section are applied on a general basis, unless otherwise provided by law.

§ 2. Personal non-property rights. Intellectual property

Article 1179. Protection of personal non-property rights

Personal non-property rights are subject to the law of the country where the action or other circumstance that gave rise to the claim for protection of such rights took place.

Article 1180. Intellectual property rights

Intellectual property rights are governed by the law of the country, where protection of those rights is sought.

Contracts that have intellectual property rights as their subject matter are governed by the law determined in accordance with the provisions of this section on contractual obligations.

§ 3. Transactions. Representation. Limitation of actions

Article 1181. Form of transaction

The form of the transaction is subject to the law of the place where it was concluded. However, a transaction made abroad cannot be declared invalid due to non-compliance with the form, if the requirements of the law of the Republic of Uzbekistan are met.

A foreign economic transaction, at least one of the participants of which is a legal entity of the Republic of Uzbekistan or a citizen of the Republic of Uzbekistan, is concluded, regardless of the place where the transaction is concluded, in writing.

The form of the transaction in relation to real estate is subject to the law of the country where this property is located, and in relation to real estate that is included in the state register in the Republic of Uzbekistan – to the law of the Republic of Uzbekistan.

Article 1182. Power of attorney

The form and duration of the power of attorney are determined the law of the country where the power of attorney was issued. However, a power of attorney cannot be invalidated due to non-compliance with the form if the requirements of the law of the Republic of Uzbekistan are met.

Article 1183. Limitation period

The limitation period is determined by the law of the country applied to regulate the relevant relationship.

Claims to which, the statute of limitations does not apply are determined by the law of the Republic of Uzbekistan if at least one of the participants in the relevant relationship is a citizen of the Republic of Uzbekistan or a legal entity of the Republic of Uzbekistan.

§ 4. Property rights

Article 1184. General provisions on the law applicable to real rights

Ownership and other proprietary rights to real and movable property are determined by the law of the country where this property is located, unless otherwise provided by law.

Whether property belongs to real estate or the law of the country determines movable property, as well as other legal qualifications of property, where the property is located.

Article 1185. Origin and termination of real rights

The emergence and termination of real rights to property is determined by the law of the country where this property was located at the time when the action or other circumstance took place that served as the basis for the emergence or termination of real rights, unless otherwise provided by the laws of the Republic of Uzbekistan.

The emergence and termination of real rights to property that is the subject of a transaction is determined by the law of the country to which the transaction is subject, unless otherwise established by agreement of the parties.

The emergence of the right of ownership of property due to acquisitive prescription is determined by the law of the country where the property was located at the end of the period of acquisitive prescription.

Article 1186. Property rights to vehicles and other property subject to inclusion in state registers

Property rights to vehicles and other property subject to inclusion in state registers are determined by the law of the country where these vehicles or property are registered.

Article 1187. Real rights to movable property in transit

Ownership and other real rights to movable property in transit under a transaction are determined by the law of the country from which this property was sent, unless otherwise established by agreement of the parties.

Article 1188. Protection of property rights

The law of the country where the property is located or the law of the country of the forum is applied to the protection of property rights and other real rights, at the choice of the applicant.

The law of the country in which the property is located applies to the protection of ownership and other proprietary rights to real estate. In relation to property that is included in the state register of the Republic of Uzbekistan, the law of the Republic of Uzbekistan is applied.

§ 5. Contractual obligations

Article 1189. Choice of law by agreement of the parties to the contract

The contract is governed by the law of the country, chosen by agreement of the parties, unless otherwise provided by law.

The parties to the contract may choose the applicable law both for the contract as a whole and for its individual parts.

The choice of applicable law can be made by the parties to the contract at any time, both at the conclusion of the contract and subsequently. The parties may also agree at any time to change the law applicable to the contract.

Article 1190. Law applicable to a contract in the absence of agreement of the parties

In the absence of an agreement between the parties to a contract on the law to be applied, the law of the country where the party is established, has its place of residence or has its main place of business is applied to this contract:

by the seller – in the purchase and sale agreement;

by the donor – in the gift agreement;

by the lessor or lessor – in the lease agreement (property lease);

by the lender – in an agreement for the gratuitous use of property;

by the contractor – in the contract;

by the carrier – in the contract of carriage;

forwarder – in the transport expedition agreement;

by the creditor – in a loan agreement or other credit agreement;

for an attorney – in the contract of agency;

commission agent – in the commission agreement;

custodian – in the storage agreement;

by the insurer – in the insurance contract;

by the guarantor – in the surety agreement;

by the pledgor – in the pledge agreement;

by the licensor – in a license agreement on the use of exclusive rights.

In the absence of agreement between the parties to the contract on the applicable law, the following applies regardless of the provisions of part one of this article:

to an agreement on real estate – the law of the country where this property is located;

for an agreement on joint activities and a construction contract – the law of the country where such activities are carried out or the results stipulated by the agreement are created;

to an agreement concluded at an auction, competition or on an exchange – the law of the country where the auction, competition is held or the exchange is located.

For agreements, not listed in parts one and two of this article, in the absence of an agreement between the parties on the applicable law, the law of the country where the party is established, has its place of residence or has its main place of business, which carries out the performance that is decisive for the content of such agreement, is applied. If it is not possible to determine performance that is decisive for the content of the contract, the law of the country with which the contract is most closely related shall apply.

Article 1191. Law applicable to an agreement on the creation of a legal entity with foreign participation

An agreement on the establishment of a legal entity with foreign participation is subject to the law of the country where the legal entity is established.

Article 1192. Scope of applicable law

The law applicable to a contract by virtue of the provisions of this paragraph covers, in particular:

interpretation of the contract;

rights and obligations of the parties;

execution of the contract;

consequences of non-fulfillment or improper fulfillment of the contract;

termination of the contract;

consequences of the nullity or invalidity of the contract;

assignment of claims and transfer of debt in connection with the contract.

With regard to the methods and procedure for execution, as well as measures to be taken in the event of improper execution, in addition to the applicable law, the law of the country in which the execution takes place is taken into account.

§ 6. Non-contractual obligations

Article 1193. Obligations resulting from unilateral actions

The rules of paragraph 4 of this section apply to obligations resulting from unilateral actions (public promise of reward, activity in someone else’s interest without instructions, and others) .

Article 1194. Obligations resulting from causing harm

Rights and obligations under obligations arising as a result, of causing harm are determined by the law of the country where the action or other circumstance that served as the basis for the claim for compensation for harm took place.

Rights and obligations under obligations arising as a result, of causing harm abroad, if the parties are citizens or legal entities of the same state, are determined by the law of that state.

Foreign law does not apply if the action or other circumstance serving as the basis, for a claim for compensation for harm is not illegal under the legislation of the Republic of Uzbekistan.

Article 1195. Liability for damage caused to the consumer

To a claim for compensation for damage incurred by a consumer in connection with the purchase of goods, performance of work or provision of a service, the following applies, at the consumer’s choice:

the law of the country where the consumer’s place of residence is located;

the law of the country where the place of residence or location of the manufacturer or person who performed the work or provided the service is located;

the law of the country where the consumer purchased the product, accepted the result of the work, or received the service.

Article 1196. Unjust enrichment

The law of the country where the enrichment took place applies to obligations arising from unjust enrichment.

If unjust enrichment arises due to the disappearance of the basis on which the property was acquired or saved, the applicable law is determined by the law of the country to which this basis was subordinated. The concept of unjust enrichment is defined by the law of the Republic of Uzbekistan.

§ 7. Inheritance law

Article 1197. Inheritance relations

Inheritance relations are determined by the law of the country where the testator had his last permanent place of residence, since otherwise is not provided for in Articles 1198 and 1199 of this Code, unless the testator has chosen in the will the law of the country of which he is a citizen.

Article 1198. The ability of persons to draw up and revoke a will, the form of the will and the act of its cancellation

The ability of a person, to draw up and revoke a will, as well as the form of the will and the act of its cancellation, are determined by the law of the country where the testator had permanent residence at the time of drawing up the act, unless the testator has chosen in the will the law of the country of which he is a citizen. However, a will or its revocation cannot be declared invalid due to non-compliance with the form if the latter satisfies the requirements of the law of the place where the act was drawn up or the requirements of the Republic of Uzbekistan.

Article 1199. Inheritance of real estate and property subject to inclusion in the state register

Inheritance of real estate is determined by the law of the country where this property is located, and property that is included in the state register in the Republic of Uzbekistan is determined by the law of the Republic of Uzbekistan.

OLIY MAJLIS REPUBLIC OF UZBEKISTAN

The document presented in an unofficial translation from the database of the law firm “S VERENIN’S LEGAL GROUP”.

The document presented from the database of the law firm “S VERENIN’S LEGAL GROUP”.

The document presented as of _______2024г.

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