The contract misses essential terms and the counterparty refuses to fulfill it. In response to complaints, he replies that the contract is considered unconcluded, and sends you... to court.
Indeed, the absence of essential terms of the contract is enough for the court to recognize it as not concluded. As a result, all written obligations of the parties evaporate. It will be difficult to hold the counterparty accountable in such a situation.
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Why essential conditions are so important. What is included in this concept? What details influence the recognition of a contract as not concluded? Let's figure it out.
Subject of the agreement
Simply put, this is what the contract is for. The meaning of the agreement.
Everything seems clear. The buyer buys, the seller sells. The tenant rents, the landlord rents... And if you dig deeper. What does it sell, and for how much? For how long is it available for rent? In general, which details are included in the concept of “subject of the contract” and which are not.
Let's study with an example. The arbitration is examining a contract for the supply of rubber ducks. Quantity – 100. Price not specified. Is the contract concluded or not?
Answer: concluded. The subject of the contract is the supply of goods in a certain quantity. The price does not relate to the subject of the contract and is not considered an essential condition. The judge will determine the price based on market quotes. Art. 424.3 of the Civil Code of the Russian Federation “Price”.
The answer to the question helps to understand the subject: will the court be able to determine what the parties agreed on. Restore missing details based on the code or other legislative acts. If the judge determines the meaning of the agreement, then the first condition - the subject of the agreement - has been fulfilled.
FSS claims
Contributions for injuries at work and occupational diseases are still administered by the Social Insurance Fund. Therefore, the fund is also interested in requalifying contracts, especially in organizations with high tariffs.
The FSS is extremely vigilant, so it often goes to court even in cases where the contract does not contain obvious signs of an employment relationship. Because of this, they are less and less able to reclassify the contract.
The contract must be drawn up carefully and competently. Any mistake increases the FSS’s chance of winning a legal dispute.
In one of the latest examples, the territorial branch of the FSS of the Russian Federation conducted an on-site inspection of the company and, as a result, assessed additional insurance premiums, penalties and a fine. The company entered into GPC agreements with the drivers, and the court reclassified them as labor contracts.
The fund believed that contracts with drivers are similar to fixed-term labor contracts; payments under them are a hidden form of salary and are subject to contributions.
The arguments were as follows:
- drivers received working transport and a garage;
- drivers received a regular salary in a fixed amount;
- the contract did not specify a specific scope of work (the parties were not interested in the result, but in the process);
- workers performed a labor function, and not one-time tasks.
The society tried to challenge the position of the FSS in court and received support in three instances. The courts proceeded from the fact that the contracts contained features characteristic of GPD: the presence of a specific type of service (driving a vehicle on the instructions of the customer), a fixed amount for the result of the service, the involvement of drivers as needed and not on an ongoing basis, no payments in the absence of orders .
However, in another similar case, the court satisfied the demands of the Social Insurance Fund for additional contributions.
The Supreme Court found that the organization entered into contracts with individuals to perform permanent, rather than one-time, work. It did not define a specific scope of work, and the relationship between the parties was of a long-term nature: for several years the contract was drawn up with the same person. In addition, the company provided the performers with a workplace, equipment and tools, and the work they performed regularly was paid twice a month. The staffing table contained a position with labor functions similar to the work performed by the contractor under the contract.
The court considered these circumstances sufficient to re-qualify the contract.
The FSS has a letter that it prepared for its territorial branches. The letter provides practical recommendations on the distinction between a civil process contract and an employment contract. These recommendations are still relevant today.
Stipulated conditions
For some types of contracts, additional essential conditions are established. Let's remember the example with the supply of ducks. There was no price required. And for a contract of sale and purchase of real estate that is similar in nature, the price is obligatory. Art. 555.1 of the Civil Code of the Russian Federation “Price in the contract for the sale of real estate.”
The due date is not a mandatory requirement. If the period is not specified, we act in accordance with Art. 314 of the Civil Code of the Russian Federation “Time limit for fulfillment of obligations”. We send a notification to the counterparty, and he fulfills his obligation under the contract within 7 days. However, for a contract, the term must be specified. Art. 708 of the Civil Code of the Russian Federation “Time limits for completion of work”.
You need to look for such additional conditions in Part 2 of the Civil Code of the Russian Federation and legal acts devoted to a specific type of contractual legal relationship.
Liability for violation of government contract
Violation of contract deadlines is usually subject to liability in the form of penalties. They are accrued on the first day of delay in the amount of 1/300 of the current key rate of the Central Bank of the Russian Federation, which is applied to the monetary value of obligations not fulfilled on time. That is, if the customer paid part of the amount on time, then the coefficient applies only to the unpaid part.
For any other violations of the terms of the contract that are not related to delay, the parties to the contract are punished with fines. The amounts of fines are fixed and depend on the NMC of the contract. For example, if the customer fulfilled his obligations improperly, the amount of his fine is calculated according to the following standards:
- 2.5% for NMTsK less than 3 million rubles,
- 2% for NMTsK 3–50 million rubles,
- 1.5% for NMTsK 50–100 million rubles,
- 0.5% for NMTsK more than 100 million rubles.
Conditions upon request
The legislator gives the partners the opportunity to declare their essential conditions. Most often this happens when the acceptor proposes to change a specific point.
Let's look at an example. You proposed a contract. The partner accepts it, except for one point. Let's say you are not satisfied with the amount of the penalty. Such an agreement is not considered concluded.
The size of the penalty is not an essential condition a priori. But it becomes such when the counterparty refuses to agree on it. If a condition is put forward and it is not agreed upon by the parties to the contract, then the contract is not concluded. The conditions put forward by the parties are significant.
Changing contract terms
The deadline for fulfilling obligations is an essential condition of the contract, but if unforeseen circumstances arise, it can be changed and a new deadline can be established using an additional agreement. Also, if there are objective reasons, you can extend the payment period under the contract.
Extension of the contract is possible if its termination will lead to significant financial losses on the part of both the customer and the contractor, and may also cause particular harm to the interests of the state. In addition, there are penalties for terminating the contract.
If there are no significant financial losses, the contract can be terminated or concluded on new terms.
If both parties are satisfied with the conditions for extending the contract, then an additional agreement can be signed. When one of the parties is against the changes, you can go to court.
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Definable conditions
Essential terms do not have to be stated in the text of the contract. It is enough to indicate the algorithm for their determination.
An example is a framework supply contract. The quantity of goods is not directly indicated, but will be established later in the specifications. Art. 465 of the Civil Code of the Russian Federation “Quantity of goods”. The court will accept the essential conditions determined in this way. The agreement is recognized as concluded.
The legislator allows not to indicate significant characteristics in the agreement if there is a way to determine them.
Required details
If an agreement does not explain the essence of the relationship, you cannot work under it. It's clear. But what if an error has crept into the details. How critical is this? Will the contract survive in court if one of the details is missing or incorrect?
Details of the agreement are the type, number, date of conclusion, preamble, subject, term, current account and other details of the counterparties, signatures and seals.
The subject of the contract, as we found out, is a mandatory requisite. It is included in the list of essential conditions. As for the remaining details, their absence is not fatal. The agreement will be recognized as concluded. Let's make sure of this by going through the list.
Contract type
Confusion most often occurs with this prop. For example, the contract is called “purchase and sale”, but in fact the property is leased. Judges are already accustomed to independently determining the type. The agreement is qualified as a lease agreement and the relevant rules are applied during the proceedings.
If the type is specified incorrectly or is completely omitted, this is not a problem for arbitration.
Number
The number is needed for the convenience of the company. Simplifies document management and control. If several contracts are concluded with a counterparty on the same date, it is easy to confuse them without a number. Useful, but not required requisite.
Conclusion date
Forgot to write down the date - Art. comes to the rescue. 433 of the Civil Code of the Russian Federation “Moment of conclusion of the contract.” Whether the date is in the header or not, the contract will be concluded from the moment acceptance is received.
If the contract is signed in person, then the date of signing is considered the receipt of acceptance. When using an electronic signature, the date the offeror received the signed agreement.
Preamble
The preamble is a tradition. Legal tradition in Russia.
All our contracts begin the same. I, so-and-so, and my counterparty, so-and-so, and together we are parties, have entered into an agreement as follows.
To follow tradition or not to follow is your right. But not an obligation.
Validity
For a contract, the start and end dates for the work are specified. Art. 708 of the Civil Code of the Russian Federation “Time limits for completion of work”
For other types, the lack of a deadline is not critical. The contract is terminated when the parties fulfill their obligations. Art. 408 of the Civil Code of the Russian Federation “Termination of an obligation by performance.”
Bank details
The current account is usually indicated. Otherwise you won't receive payment. If the account changes, the details will be specified in an additional letter.
But the debtor has the opportunity to fulfill his obligations even in the absence of the creditor’s bank details. He deposits funds with the notary. The court recognizes such actions as conscientious and obligations fulfilled.
Organization details
We are talking about TIN, OGRN, address. The legislator does not oblige the parties to indicate the details of the organization in the contract, although they serve to identify the legal entity. Transaction participants must independently verify the reliability of counterparties, guided by the principle of due diligence.
Avoidance of signing a contract
The winner of the electronic auction is obliged to conclude a contract with the customer, otherwise he will be recognized as having evaded this with all the ensuing consequences. If the winner still refuses to sign the contract, the customer must offer this to the second place participant.
First, a protocol is drawn up stating that the first participant evaded concluding a contract, without specifying the reason. The protocol includes information about the purchase, the participant’s data and a link to the norm of law 44-FZ, in accordance with which he was recognized as evading. Then the protocol is placed in the Unified Information System, and information about the participant is transferred to the register of unscrupulous suppliers.
The second place supplier has the right to choose whether to enter into the contract or not. If you agree, you need to do the following:
- draw up a draft contract with the terms proposed by the second participant;
- place the project in the Unified Information System no later than 10 days from the date the auction winner is recognized as having evaded;
- conclude a contract according to the standard procedure;
- within three working days from the date of conclusion, send to the RNP information about the winner who evaded signing.
If the second participant refuses the contract, then it is impossible to conclude a contract with the participant who took third place.
Pros and cons of a civil contract for an employee
It is possible that the employee benefits less than the employer when concluding a civil contract, but there are advantages for him in such a relationship. First of all, in this case he already becomes relatively free - he is not subject to internal rules, job descriptions, or official chain of command. He is paid not for working time, but for the amount of work performed or services rendered. He can provide services to several of his customers at the same time, and if he is a professional, then he will not be left without work.
He does not pay insurance premiums for himself; this is the responsibility of his customer. An entry about the performance of work (provision of services) is not made in the work book, but the months worked are included in the length of service for calculating a pension. In a competitive labor market, in some cases it is easier for him to get a one-time order than to find a permanent job that suits him.
Yes, he won’t be able to go on paid leave, and if something happens, he will have to be sick at his own expense. Moreover, you should not count on maternity leave and child care. He will not be notified in advance of his dismissal and will not be paid severance pay. At the same time, insurance against industrial accidents (if the nature of the work has a certain professional risk), you can try to agree on it in the contract, perhaps the customer will agree to it.
In fact, the executor under a civil contract occupies an intermediate position between a full-time employee and an individual entrepreneur. And although he is not socially protected as a full-time employee, he also does not bear the full risks of an entrepreneur (with the exception of damage caused to the customer).
Provisions of the government contract related to general essential
Part 13 art. 34 of the law determines what the essential terms of the contract are under 44 Federal Laws. These are the general mandatory provisions of transactions under the Civil Code for contracts of a certain type and special conditions prescribed in 44-FZ. The project reflects the mandatory points:
- How is the quantity of supplied goods and materials determined, the volume of work performed, services provided, if the purchase is carried out on the basis of customer requests and the volume is not defined in them.
- Information on the transaction price and the final price of each stage, set in proportion to the reduction in the NMCC by the procurement party with whom the government contract is concluded (if the transaction is executed in stages).
- What responsibilities do the customer and supplier bear?
- How and in what terms the goods, work or service are paid for. When a deal is concluded with a government procurement participant who is subject to anti-dumping measures, no advance payment is paid to him. According to the general procedure, payment terms are no more than 30 days from the moment the buyer signs the acceptance document (Part 7, Article 94 44-FZ). An exception is made for procurement with restrictions in which NSR and SONCO organizations participate (Part 8 of Article 30 44-FZ), and situations where other deadlines are established by the government to ensure the defense capability and security of the Russian Federation, or the deadline is determined in special regulations.
- How and within what time frame the customer accepts the product, work, service. How and within what time frame the results of such acceptance are formalized.
- How is the amount payable reduced by mandatory payments (including taxes and fees) associated with payment for the transaction, if these payments are paid to the budget by the buyer. For example, when the supplier is an individual, the customer has to act as a tax agent, reducing the price of government procurement by the amount of personal income tax.
- How is the execution of a government contract ensured (in what time frame is the security returned if the winning organization transferred the money, including parts of the security, etc.). An exception is made for a number of cases listed in Part 27 of Art. 34 and part 1 art. 96 of the law on government contracts.
- How and within what time frame the supplier provides warranty security (if such a requirement is established).
- The need to provide new security for the execution of a transaction if the banking organization that provided a bank guarantee to secure the execution of a government contract has had its license revoked. The deadline for providing new security is one month from the date of proper notification by the purchaser to the supplier of such need. Each day of delay leads to the accrual of penalties, their amount is determined in Part 7 of Art. 34 44-FZ.
- Information about the source of financing.
In 2021, government customers who receive federal budget funds in the cases specified in Law No. 459-FZ of November 29, 2018, include in the contract another significant provision regarding treasury support for the received target funds, and for a number of cases, treasury support for obligations.
Why the Federal Tax Service, labor inspectorate and funds do not like civil contracts
If you enter into civil law contracts with your performing employees (the line between these concepts is often difficult to draw), then be prepared for biased scrutiny by inspectors. They will look for signs of violation of labor rights, tax evasion, and non-payment of insurance premiums.
In general, this is understandable; the functions of these bodies are to fill the budget and social guarantees (which the state, in the event of concluding an employment contract, shifts to the employer). But whether the inspectors take into account the interests of the employee himself is another question.
Interestingly, the courts very often come to protect the right of the employee and the employer to choose the format of their contractual relations - labor or civil law. The Constitutional Court also spoke about this: “the forms that mediate the performance of work (provision of services) under a paid contract can be both an employment contract and civil law contracts, which are concluded on the basis of the free and voluntary expression of the will of interested subjects.”
In order to avoid conditions typical of employment contracts when drawing up civil law contracts, we recommend that you familiarize yourself with their significant differences in the article “Labor relations - how to register personnel.”
How to change essential clauses of a contract
44-FZ allows you to change what relates to the essential terms of the contract under 44 Federal Law, but these cases are strictly specified. Essential provisions can only be changed at the execution stage; they cannot be changed at the transaction conclusion stage. In government contracts the following is adjusted (Article 95 44-FZ):
- Reducing prices without changing volumes.
- A change of no more than 10% in the quantity of GWS.
- Regulated prices in accordance with the acts of the Russian Federation.
- Improving the technical, quality and functional characteristics of GWS.
- Changes, based on medical indications, to the list of services related to the treatment of citizens of the Russian Federation outside our state.
- Other grounds specified in Art. 95 44-FZ.
When the mandatory terms of the contract under 44 Federal Laws change, this is reflected in the additional agreement. Read more about this in the material “How to change the essential terms of a government contract.”
Essential terms of the contract that are not subject to change under 44-FZ are those provisions for which there are no legal grounds for adjustment. For example:
- Country of origin of GWS, if the prohibition is present in the regulations under Part 6 of Art. 14 44-FZ within the framework of the national regime.
- Supplier, with the exception of the assignment to a third party of the right to claim against the buyer for the fulfillment of monetary obligations (clause 17 of the review of the practice of the Presidium of the Supreme Court dated June 28, 2017).
- Subject of a government contract.
- Other conditions, if the requirements under Art. 95 44-FZ.
About the author of this article
Vera Zharova
Other publications by the author
- 2021.09.16 Customer documents One application is participating in the auction: what should the customer do?
- 2021.08.02Purchase from a single supplierComparative table of procurement methods under 44-FZ and 223-FZ
- 2021.07.09EISRegister of unscrupulous suppliers: everything you need to know
- 2021.05.28 Customer documents How to fill out a request for commercial proposals to justify the NMTsK
