A detailed answer to the question: what is the difference between a contract and an agreement?

Contract or agreement?

In the broadest sense, the expressions contract, agreement and agreement are interchangeable. These are business customs and established practices. And in certain areas of law this is indeed the case. For example, in labor legislation the concepts of “employment contract” and “employment contract” are absolutely identical.

But in procurement there is a very specific division:

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From January 1 2020 , in order to participate in bidding under 44-FZ, 223-FZ and 615-PP, registration in the ERUZ register (Unified Register of Procurement Participants) on the EIS (Unified Information System) portal in the field of procurement zakupki.gov is .ru.

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• a contract is concluded within the framework of law 44-FZ ;
• within the framework of law 223-FZ - agreement .

Concept

An employment agreement is a type of labor relationship that goes beyond the framework established by the Labor Code of the Russian Federation . They do not have regulated norms and legal force equal to an employment agreement or contract.

They are formed on the basis of the provisions of the Civil Code of the Russian Federation, which distinguishes them from the contractual form of relations that arise between the employer and employees.

They are more mobile, allow you to solve short-term situational problems , but cannot rely on the provisions of the Labor Code of the Russian Federation.

The agreement is concluded when it is necessary to carry out work, without registering the employee under the contract and, moreover, without making an entry in the book.

But in order to determine the guarantees of mutual settlements and fulfillment of the requirements for the work performed, it will be necessary to confirm that the parties have established mutual responsibility in relation to each other.

If the work is one-time in nature, there is no point in introducing a staff unit, but it is advisable to resort to an agreement.

The parties have to resort to a form of recording the fact of activity and calculation, which is determined by civil legal relations.

They reflect contract options:

• contract and subcontract;
• provision of services;
• hiring a servant;
• construction, design work, etc.

The list of features of their application is diverse.

These include agreements with the apartment’s maintenance staff ; similar relationships can be drawn up with a plumber, electrician, etc. Legal relationships with a tutor and medical personnel are acceptable.

What is a contract in procurement?

the state is one of the parties . It may operate through authorities or certain types of organizations. To meet the needs of the state, procurement is carried out in accordance with law 44-FZ. Within the framework of this norm, contracts are concluded between the customer and the contractor. In this case, the executor can be any person who meets certain requirements, both legal and physical. But the second party to contracts is always the state, that is:

• public authority;
• state corporation;
• state-financed organization;
• government agency;
• state or municipal unitary enterprise.

In other words, the contract is concluded with budget money . The customer declares his needs, the contractor satisfies them and receives payment for this from the budget of the appropriate level.

What is a procurement contract?

Unlike a contract, an agreement can be concluded between any persons. The party to the agreement can be an ordinary citizen, an individual entrepreneur or an organization of any type. Including a state corporation or monopoly, a company with state participation, as well as a budgetary institution or unitary enterprise (in terms of purchases using its own funds and not from budgetary funds). In this case, the mentioned persons make purchases within the framework of Law 223-FZ. When the winner is determined, a contract is concluded with him.

You can find out who can become the executor of the contract under 223-FZ from this material.

Explanations on the topic

About the author of this article

Polina GoltsovaLawyer My initial specialty was lawyer, legal consultant. For the first two years of practical activity, she worked in the general legal department of the organization, where she provided comprehensive legal support to the employer’s activities.

However, since 2013, government procurement has become the main focus of my practical activity. I worked in the contract services of several large budgetary institutions at the federal and regional levels and a commercial organization whose activities are related to government procurement. She was involved in legal support of government procurement, contractual and claims work, represented the interests of employers in arbitration courts and the Federal Antimonopoly Service.

For the last three years I have been creating legal content, writing popular articles on current issues of law enforcement for several information portals.

Other publications by the author

• 2021.10.14 Reporting OKZ codes for procurement specialists
• 2021.10.13 Bank guarantees Examples of a bank guarantee to secure a contract under 44-FZ
• 2021.09.30Supplier documentsHow to confirm the experience of a procurement participant under 44-FZ
• 2021.09.27 Procurement control How universal prequalification takes place

What is the difference

In procurement, contract and agreement differ quite significantly. And mainly due to the fact that the first of them is regulated by law 44-FZ, and the second by law 223-FZ. The second law gives the customer much more freedom. For example, they can independently choose the method of determining the supplier, while Law 44-FZ strictly regulates this issue.

The Public Procurement Law regulates almost all aspects - from procurement planning to acceptance of contract results. Any deviation from its norms is punishable by fines. In contrast, Law 223-FZ leaves almost all decisions to the parties to the contract.

How to formalize business partner relationships and avoid trash: nine rules

Recently, an article about the conflict between Swaper and Agalarov, which arose due to illiterate registration of investments by the founder of the project, received quite a wide response. My fellow corporate lawyers and I regularly publish articles on this topic, but, as it turns out, it still remains insufficiently disclosed or insufficiently understandable for a certain part of entrepreneurs.

In this article, I decided to collect the most important principles for formalizing business relationships and investments. I tried to reduce the words to their meaning as much as possible and succinctly outline the main thing. So, let's go.

Each duty must have a sanction for non-fulfillment.

A duty without authorization is an empty declarative promise that is highly unlikely to be fulfilled.

Very often, in documents, business partners and even their lawyers forget to provide sanctions for failure to fulfill one or another obligation. This approach significantly reduces performance discipline, which is important not only for hired employees, but also for business partners.

For less significant duties, monetary sanctions are usually introduced.

For more significant responsibilities (critically important), sanctions are introduced in the form of deprivation of part of the share (the entire share) in the business, which are exercised through options.

Gentlemen's agreements are unstable (work poorly)

All agreements in business must be formalized in writing - at a minimum in the form of electronic indelible correspondence of business partners through duly authorized accounts of email or other instant messengers, and at maximum - in the form of properly executed legal documents (including, if necessary, notarized) .

Gentleman's agreements tend to become distorted over time, one partner remembers one thing, the other another, in the memories of each, most often the most favorable terms of the oral deal remain for him, which almost always entails the emergence of a conflict.

The company's charter, minutes of general meetings of participants (shareholders) and corporate agreements are the main ways to consolidate business relations

There is an opinion among ordinary people that the charter of a company is a purely formal document; it is enough to use some “standard” form. This is a fundamentally wrong approach.

The company's charter is a document that contains the basic agreements of business partners. This is the main regulator of corporate (business) relations.

A corporate agreement is a document that, unlike the charter, can introduce temporary rules that differ from the general rules provided for by the charter. In other words, a corporate agreement provides, among other things, exceptions to the general rules defined by the charter, which are valid for a certain period of time (such a period of time is usually indicated in the corporate agreement itself).

Once again, I will not be lazy to remind you that a party to corporate agreements may be a person who does not own a share in the business, but has one or another business interest in the company (for example, a future investor or lender).

For some reason, the minutes of general meetings of participants (shareholders) are greatly underestimated by entrepreneurs; in fact, these are the main operational documents in the field of corporate governance. It is with the help of these documents that investments in the capital of the company are actually formalized. That is, the main document formalizing investments in a company is the minutes of the general meeting, and not the ephemeral “investment agreement,” which I will discuss in more detail below.

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Contributions (investments) of partners in the business (money and other property) must be made into the capital of the joint legal entity

I very often hear from ordinary people about an “investment agreement,” while this type of agreement is not named at all in the Civil Code of the Russian Federation and, in fact, is a time bomb due to the possibility of different interpretations of its content.

Most often, such investment agreements are actually loan agreements disguised with a beautiful name with all the ensuing consequences.

The top rule in contract law is that it doesn’t matter what the contract is called, what matters is what it actually is.

Therefore, you should not be fooled by beautiful names. If, under an investment agreement, money is transferred from one partner to another for the purpose of business development, then there are significant risks that such an agreement will be regarded as a targeted loan and will have to be repaid with interest.

If the investment agreement does not indicate that the money is being transferred as a gift, then there are significant risks that such an agreement will be regarded as a targeted loan and will have to be repaid with interest.

If this agreement says that for providing money the partner will receive a share in the jointly created legal entity, then such an agreement, roughly speaking, does not make sense, because in order to transfer something legally, it must be owned, but since the legal the entity is created jointly, then the share of the “investor” does not initially belong to the partner who received the money. It generally does not initially belong to anyone (does not exist) until the moment of payment by the “investor”; from the moment of payment, it is the “investor” who becomes its first owner, and not the recipient of the money. But the debt remained as it was, which, again, is confirmed by the case with Agalarov.

In this case, due to the “flaw” in part of the transaction associated with the impossibility of fulfilling the counter-obligation, there are significant risks that such an agreement will be regarded as a targeted loan and will have to be repaid with interest.

Corporate law in Russia is an extremely conservative thing and it is very, very dangerous to “schematize” it. Even corporate lawyers sometimes find themselves in difficult situations when structuring certain investment and corporate transactions, let alone non-lawyers and lawyers who do not specialize in contract and corporate law.

Electronic methods of delivering legally significant messages significantly reduce the likelihood of conflicts in business

It happens that conflicts in business arise due to the fact that, for example, one of the business partners was not warned about the next meeting of participants (shareholders), at which decisions significant for the business were made.

In modern conditions, when businessmen are very mobile, the probability of missing a letter sent by mail “on paper” is quite high. However, until now, a large proportion of the charters of Russian companies provide for precisely this method of delivering legally significant messages to business partners. Inclusion in the company's charter of provisions on electronic delivery of legally significant messages is highly preferable from a corporate security point of view.

The size of the share in the authorized capital of the company does not determine the amount of power in the company

A business partner who owns a share of even 1% can be a “king” in the company if the corresponding status is stated in corporate documents - usually in the charter. Most often, a minority shareholder acquires this status if the company’s charter provides for the need for unanimous adoption of key business decisions or decision-making by a simple majority of votes (with parity of the remaining company participants).

In other words, if in order to make one or another important decision in business, 100% of the votes of all business partners or at least 50% of the votes (in conditions where the other partners have equal shares) is necessary, then around the business partner who owns such one percent , everyone will “run,” because his voice will determine which of the business partners’ will will be decisive when making a particular business decision.

The real amount of power in a company is largely determined by the content of corporate documents, and not by the size of the share in the company's authorized capital.

A significant part of the agreements between business partners should be devoted to the company’s property (including the future).

For some reason, in practice, partners pay little attention to the issue of property in business (business assets) in their agreements.

Property issues concern:

• approval of major transactions of the company (from what amount the transaction must be separately approved at the general meeting of business partners);
• approval of other significant transactions of the company (for example, transactions on the alienation of intellectual property);
• distribution of the company’s net profit, namely, situations when net profit should not be distributed (must be reinvested in the business);
• tenders for the purchase of goods and works for the needs of the company;
• the procedure for financing the company by business partners (procedure, conditions, ratio of contributions (proportional/non-proportional) and so on);
• issuing options to company employees;
• accepting new investments;
• liquidation privileges of a particular business partner;
• the procedure for assigning intellectual property objects to the company in the event that such objects are created by one or another business partner as part of its underpaid activities (payment of dividends does not apply to payment);
• and so on.

Recommendation: Consider all of these issues when discussing the terms of your business partnership.

It makes sense to resolve issues of the company’s reputation related to the behavior of business partners in the legal field

Unreasonable behavior of not only hired employees, but also business partners can harm the company’s business reputation. If the behavior of a hired employee in the performance of his job duties is regulated by an employment contract and job descriptions, then the behavior of a business partner in the context of possible harm to the company’s business reputation is, as a rule, regulated by corporate agreements.

A corporate agreement, for example, can define topics about which business partners cannot speak on social networks, places that business partners are considered inadmissible to visit, and so on. These restrictions must be justified by business goals, otherwise they may be considered illegal, therefore, the text of the corporate agreement must indicate cause-and-effect relationships (substantiate the connection of the restriction with the business), or provide for a sanction for violation of the restriction under the condition of actual damage to business reputation company as a result of such a violation.

Do not trust draft documents prepared by your business partner’s lawyers

There are two main positions of a lawyer when preparing documents for a client.

In one position, a lawyer, when drafting transaction documents, directly or indirectly protects the interests of his client, while clearly infringing on the interests of his business partners.

In another position, the lawyer tries to maintain the parity of interests of all business partners, emphasizing the principles of reasonableness and fairness.

The most common position in practice is the first. This is neither bad nor good, it is a given. There is no point in blaming the lawyer here; he is simply working off his fee in the absence of a task from the client to maintain parity of interests of business partners. The first position is often accepted by lawyers by default, and until lawyers of other business partners indicate the need to make certain amendments, the documents will remain in a “biased” edition.

And yes, a professional lawyer can very subtly distribute the trump cards in favor of his client, so subtly that it will be almost unnoticeable. There are many ways to do this - starting from technical methods (increasing the size of the text and hiding the necessary conditions in it like a needle in a haystack) and ending with the competent use of dispositive rules of law (which work by default in the absence of indications otherwise).

Sincerely, entrepreneur, investment and corporate lawyer Evgeniy Ryabov

[email protected]

t.me/eriabov

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What common

However, there are many similarities between an agreement and a contract under procurement law. By and large, any contract is an agreement. We can say it differently - a contract is a special case of an agreement in which the buyer/customer is the state.

Both the contract and the agreement must contain a number of parameters. Some of them are essential conditions, for example, the name of the parties, the subject of the contract, its cost. In their absence, the agreement will be considered invalid . There are also provisions that are included at the request of the parties. For example, this is an agreement on prepayment or the involvement of subcontractors.

Real and consensual contracts

Consensual (from the Latin consensus - agreement) is an agreement that is considered concluded at the moment when the person to whom the proposal to conclude an agreement was sent agreed. In practice, this moment represents the signing of an agreement (and if the parties do not sign it in person, then this is signing by the last party) or payment of an invoice. Most of the contracts refer to this type.

But if, in accordance with the law, the conclusion of an agreement requires the transfer of property, then such an agreement is called real . Real contracts include a loan agreement, a storage agreement, a transportation agreement, an insurance agreement, and a gratuitous use agreement. The characterization of the reality or consensuality of a contract has important practical significance. If the property that is the subject of a real contract has not been transferred, then the contract is considered not concluded, despite its signing by the parties.

What is an agreement

In Russian law, an agreement is any agreement between the parties. This concept is much broader than an agreement, and even more so a contract (as it is understood in the field of procurement). An agreement can be oral, but in most cases a contract means a paper document.

At the same time, the term in question appears in the expressions “additional agreement to the contract” and “agreement on termination of the agreement (contract)”. These are established expressions that correspond to business customs.

So, the rules of law generally identify the concepts of “agreement”, “contract” and “agreement”. However, when it comes to procurement, the last two terms have clear differences. It is important to remember that no matter what the type of agreement between the parties is called, it must comply with the norms of the Civil Code.

About the features of the contract under 44-FZ:

A little history

It’s worth starting from the roots, namely, with Roman law, which underlies the modern Romano-Germanic legal system. Contracts in Roman law were the most general concept and were divided into contracts (contractus) and pacts (pactum).

A contract meant an enforceable agreement between the parties. Pacts, as a general rule, recognized agreements that were deprived of enforceable protection, although over time some pacts still received it.

Important: The concept of enforceability is inextricably linked with the category of claim protection. Enforceability is a tool by which any party whose rights and interests under a contract have been violated can seek protection in court. Without enforceability, a contract becomes an ordinary agreement, where everything is built on the trust of the parties and is not supported by anything solid. And in case of fraud, the contract without legal protection turns into thin air.

It is important to emphasize that writing was not mandatory for contracts in Roman law. Among the contracts, in addition to other types, there were literal contracts (concluded in writing) and verbal contracts (acquired legal force at the moment the necessary words were spoken orally).

The most important subtype of verbal contracts was recognized as the so-called stipulation - an oral contract that acquired legal force from the moment phrases in the style were uttered

- “Do you promise to pay the amount N?”

- “I promise to pay the amount N.”

The question and answer in the stipulation had to completely coincide in meaning, and the entire stipulation procedure was riddled with formalities. Without compliance with formalities, an oral contract in the form of a stipulation was considered not concluded.

Interesting: During the classical period, a written form of stipulation also appeared, and the formal requirements became less strict.

Taking the concept of Roman law as a basis, many countries began to separate agreements and contracts as independent terms with their inherent legal features. Where an agreement is a mutual agreement between the parties, built on a trusting relationship in the fulfillment of their obligations. A contract is an agreement in writing between two or more parties that creates mutual obligations and is enforceable.