ENFORCEMENT OF CONTRACTS IN KAZAKHSTAN.
The contract in the civil circulation.
One of the most important business goals is to minimize the risks of a company in the business. Enforcement of the obligations of counterparties, it is one of the factors to minimize business risks and stable development of the Company. The main way to minimize risks and ensure compliance with the obligations in favor formalization, detailed writing about the important details and regulation of civil relations in the contract as a whole, whether the parties of the transaction individuals and legal entities. Thus, the basic "brick" in the role of ensuring the fulfillment of obligations and minimizing the risks in business stands an agreement.
The Civil Code of the Republic of Kazakhstan defines a contract agreement between two or more persons about the establishment, modification or termination of civil rights and obligations.
From the definition of the contract, it follows that any contracting party not only to acquire the rights, but also takes responsibilities.
However, as practice shows, the contracting parties do not always perform their duties in good faith or do not do them at all, because of which the contracting party could suffer significant damages and losses. Often, such non-performance or improper performance leads to litigation, and even to a complete suspension of the business and the company's bankruptcy.
That is why, while the development and matching of conditions of all types of contracts, it is necessary to pay special attention to the section of responsibilities, because precisely measures of the responsibility can induce the counterparty to fulfill its obligations assumed by him or her under the contract.
Measures of responsibilities of the counterparty in the performance of their commitments.
Usually, in practice, measures of the responsibility leads to establishment in contracts of penalty, or fine for breach of contract, which are some of the ways to enforce the obligations under the legislation.
Of course, there are other ways to enforce the obligations, such as mortgage, deposit guarantees and surety, hold, guarantee fee, which can also induce a particular counterparty to fulfill the obligation or to receive the equivalent of a failure to fulfill obligations under the contract.
However, it should be noted that the above types of ways to enforce the obligations can be used in contracts concluded between the parties, depending on the type of contract.
It is well-known that types of civil contracts are numerous: a contract of sale, supply agreement, barter agreement, donation contract, rental agreement, lease agreement, construction contract, the contract of carriage, storage agreement, franchising agreement, loan agreement, agreement of the bank loan, contract of agency etc.
For example, if a penalty, or a fine can be used in all kinds of civil contracts. The security deposit, deposit guarantees and surety, hold or guarantee fee, you can use not in all types of contracts.
The concept of "obligation."
Before considering ways to enforce the obligations, let us focus on the concept of "obligation".
According to the norms of the Civil Code of the Republic of Kazakhstan, by virtue of an obligation one person (the debtor) is obliged to make in favor of another person (the creditor) a certain action, for instance: to transfer the property, perform work, pay money, etc., or to refrain from certain actions, the lender has the right to demand from the debtor the performance of his duties. The lender is obliged to take from the debtor's execution.
By virtue of a monetary obligation one person (the debtor) is obliged to pay money to another person (the creditor), and the creditor has the right to demand from the debtor the performance of his duties by the payment of money (loan money and other commitments). By the obligation to pay money under onerous contract liabilities for damages and the payment of penalties, as well as the obligations arising from harm or unjust enrichment, the rules of the monetary obligation, unless otherwise provided by this Code, laws of the Republic of Kazakhstan or not derived from the obligation.
For the normal development of civil and legal relations between the parties is characterized by the performance of obligations properly.
Due to article 272 of Civil Code of RK obligation must be performed properly in accordance with the conditions and obligations required by law, in the absence of such conditions and requirements - in accordance with the business customs or other usually made requirements.
According to article 349 of the Civil Code of RK under the breach of the obligation means its non-fulfillment or improper fulfillment (untimely, with defects of goods and works, in violation of other conditions specified content obligations) - improper performance. When arising impossibility of proper execution of the debtor is obliged to immediately notify the lender.
Precisely infringement of obligations is harmful to the subjects of civil relations and may lead to disruptions in the work of the whole mechanism of commodity-money relations between subjects.
In order to prevent such violations and eliminate their consequences established civil law contractors responsible for the violation of obligations in the form of sanctions.
Thus, according to the norms of the Civil Code of the Republic of Kazakhstan, performance of an obligation may be ensured by the penalty, pledge, lien debtor, surety, guarantee, deposit, margin and other methods provided by law or contract.
The penalty, fine.
Penalty (fine) are the most common ways to enforce the obligations that occur in all types of civil contracts to minimize the risks associated with the unconscionable behavior a particular counterparty.
From the contents of this article, the penalty can be divided into two types: legal and contractual penalty.
According to article 295 of the Civil Code of RK the lender has the right to demand payment of a penalty determined by legislation (penalty act), no matter whether it provides such payment agreement between the parties.
That is a penalty act can be presented to the debtor in case of appeal to the courts with a lawsuit to recover the debt, in spite of the fact that such payment is not provided by the contract.
Contractual penalty - is a penalty stipulated by the parties' agreement.
Article 293 of the Civil Code of the Republic of Kazakhstan also includes the concept of penalty act - a fine and a penalty.
In the terminological practice a clear separation of the concept of penalty from a fine concept is not present, but as provided by law, the penalty is recognized exact, the amount of which is determined as a fixed sum or a percentage of the amount of non-fulfillment or unduly fulfillment of obligations (article 296 of Civil Code of the Republic of Kazakhstan), and a fine collection of recognized a fixed amount. The fine is a kind of penalty, it is usually not characterized by a certain ratio with a loss and charged to a certain share percentage (0.1% or 0.5%, etc.) from the amount of unsettled obligations for each day of delay.
Pledge as a way to ensure the obligations (its species mortgage).
In accordance with article 299 of Civil Code of RK, pledge is recognized in such way to ensure performance of an obligation by virtue of which the lender (mortgagee) has the right, in case of default by the debtor of the secured obligation, to receive satisfaction from the value of the pledged property preferentially before other creditors of the person who owns it property (mortgagor), with the exceptions established by this Code.
Pledge arises by virtue of the contract, as well as on the basis of legal acts upon the occurrence of the circumstances specified therein, if legislation provides a property and to enforce a liability is located in the pledge.
The subject of pledge may be any property, including things and property rights (claims), with the exception of items withdrawn from circulation, the requirements are inextricably linked with the personality of the creditor, in particular claims for alimony, compensation for harm caused to life or health, and other rights, concession of which another person is prohibited by legislative acts.
The right of pledge can be extended by the contract on the property, which will go in the future ownership or economic management of the pledger.
Unless otherwise provided by the contract or legislative acts, the deposit provides the requirement that its scope, insofar as it has at the time of actual satisfaction, including the remuneration (interest), damages caused by delay in performance, liquidated damages (fine, penalty), the necessary costs for maintenance of the pledged property and compensation for recovery costs.
A pledge may also be established in respect of claims which arise in the future, provided that the parties agree on the amount of collateral to ensure such requirements.
The types of pledge are as follows:
Mortgage - a type of pledge under which the pledged property remains in the possession and use of the mortgagor or a third party.
The subject of the mortgage can be enterprises, structures, buildings, apartments in apartment buildings, vehicles, space objects, goods in circulation, and the other, not withdrawn from the civil circulation, property.
Mortgage companies, structures, buildings, structures, apartments in apartment buildings, vehicles and space objects subject to registration, with the registration of objects such bodies.
Pawn - a type of pledge under which the pledged property is transferred by the pledgor into possession of the pawnee.
With the consent of the pawnee subject of pawn may be left with the pledgor under lock and seal of the pawnee. The subject of pledge may be left in the possession of the pledgor with drawing marks testifying to the pledge (hard pledge).
When the pledge of rights the subject of pledge is property rights that can be disposed of, in particular, the leasehold rights to the company, construction, building, structure, the right to share in the property of a business partnership, debt claims, copyrights, inventive and other proprietary rights.
If the pledged right is confirmed by the document of pledge contract may be executed by transfer of title document.
When the pledge of bank deposit as pledge investor rights provided under the contract of bank deposit. Pledger-investor is obliged to notify the bank in written form about the pledge of bank deposit with details of the pledgee.
Pledge of securities shall be made in accordance with the law on the securities market.
A pledge of goods in circulation is a pledge of the goods leaving them the mortgagor and the mortgagor to the provision of the right to change the composition and natural form of the pledged assets (inventory, raw materials, semi-finished products, etc.), provided that their total value does not it becomes less than specified in the contract of pledge.
Adoption of the citizens in the pledge of movable property intended for personal use, to secure short-term loans can be as entrepreneurial activity by legal entities registered as a pawnshop.
Generally pledge as a way to ensure the fulfillment of obligations has a long history since the days of Roman law. In modern conditions, pledge takes a special place and is widely used in practice, especially in the activities of banks, MFIs, using the method of implementation of obligations when issuing different loans. However, there are no obstacles to its use for any other obligations except bank. The only use of the pledge involves one condition - a guarantee claim must be valid.
In practice, in addition to the credit, pledge can be provided with the obligations arising from the sale and purchase agreements, contracts, commissions, and other storage contracts provided by Civil Code of RK. This means that the guarantee as a way to ensure that the obligations can be applied not only to banks, but also in the contract for the repair of a particularly valuable object/subject and so on.
Also, pledge is often used in relation to obligations not provided for civil rights, for example, in the activities of the customs authorities. Pledge is used here in order to ensure payment of customs duties and other payments, as well as to ensure the collection of the penalty or the cost of goods and vehicles in the commission of violations of customs rules.
Therefore, the advantage of a pledge - as a way to ensure the fulfillment of obligations: i) a contract of pledge of property ensures the availability and integrity of the property at the time when the debtor will have to settle with the creditor; ii) pledge of property of the debtor provides the creditor-mortgagee to satisfy their claims at the expense of the collateral prior to other creditors; iii) is a real danger of losing the property in kind (as the object of pledge is usually very valuable) is a good incentive for the debtor to fulfill their obligations properly.
Guarantees, sureties as ways to enforce the obligations.
The following types of enforcement obligations are guarantees and warranties.
According to art.329 of Civil Code of the Republic of Kazakhstan, by virtue of guarantee, the guarantor undertakes to the creditor of another person (the debtor) responsible for the execution of the obligations of that person in whole or in part jointly with the debtor, except for cases stipulated by legislative acts.
Those who have given a guarantee jointly are responsible to the creditor jointly and severally, unless otherwise provided by the contract of guarantee.
The contract guarantees can be made as to ensure the obligations that will arise in the future.
According to the art.330 of Civil Code of the Republic of Kazakhstan, by virtue of the guarantee the guarantor undertakes to a creditor of another person (the debtor) responsible for the performance of an obligation of that person fully or partially subsidiary.
The terms "guarantee" and "Guarantee" at first glance, are ambiguous concepts, but they still have differences:
1) The guarantor is responsible to the creditor jointly and severally with the debtor the debtor and the surety liable to the creditor subsidiary. If joint liability creditor is entitled to claim from the debtor and the guarantor jointly or separately from each of the obligation secured by the guarantee.
2) Guarantee arises under a contract or law, and the guarantee is only on the basis of the contract.
3) The guarantor is liable to the same extent as the debtor, including the payment of interest, fees, legal costs to collect the debt, damages, unless otherwise provided by the contract, and the guarantor shall be liable up to the amount specified in the guarantee, unless otherwise It provided the guarantee conditions. At vicarious liability guarantor is responsible only for the debtor of the obligation to the creditor.
4) According to the law guarantee contract may be concluded for the obligations that will arise in the future, the conclusion of the contract of guarantee for liabilities that arise legislation does not provide for the future.
Guarantees and warranties, as well as the pledge is widely used in the activities of banks, MFIs using these methods of execution of obligations under the issuance of various loans. However, any obstacle to their use in other liabilities are also not available. Therefore, guarantees and warranties, other than a bank loan agreements can also be provided with the obligations arising from the purchase and sale contracts, supply contracts etc., Because the end result of the use of guarantees and warranties is a fulfillment by the parties the obligation secured by a guarantee or surety. For the lender does not matter how or in what way, in the alternative, or in solidarity order will be charged the amount of the debt.
With the guarantee, you must pay attention to its validity, as the guarantee may be terminated:
1) upon expiry of the period for which it is given, specified in the contract of guarantee;
2) if the creditor within one year commitment does not submit to the due date of the secured claim a performance guarantee to the guarantor, if the warranty period is not established in the contract;
3) if the creditor does not submit a claim to the guarantor within two years from the date of conclusion of the contract warranty, unless otherwise stipulated by legislative acts, when the period of performance of the principal obligation is not specified and can not be defined or determined by the time of demand.
In practice, it happens when the contract is a guarantee after the date for performance of the principal obligation, enshrined in the treaty, while the warranty period is not specified contract. In such cases it is necessary to consider that legislation such moments remain unresolved.
Therefore, in the case of a contract without a guarantee of its validity and one year after the expiry of the period of performance of the principal obligation, enshrined in the treaty, there is a risk not to receive compensation under the guarantee due to the expiry of its validity.
Thus, despite the unresolved legal aspects, guarantees and warranties can still be regarded as an effective way to strengthen accountability, which are able to minimize the risks associated with non-performance or improper performance by the parties of their obligations.
Deposit.
In accordance with Art. 337 of Civil Code of the Republic of Kazakhstan the deposit is recognizes as the earnest money amount of money issued by a contracting party to the account due from it to the other side and to ensure the conclusion and execution of the contract or execution of any other obligation under the contract payments.
In this article, we can conclude that: i) the deposit should go to the repayment of payments due under the main obligation; ii) serve as proof of the contract; iii) be a means of ensuring commitment.
These characteristics also serve as the difference between the deposit and upfront, because the absence of the latter two features makes the amount paid in advance.
Deposit shall be provided with the obligations arising from contracts of sale, rental, services, leasing and other agreements stipulated by civil legislation.
Upon termination of the obligation prior to its execution by the parties' agreement or due to impossibility of performance, the come without their fault, the deposit must be returned.
Also worth noting is that if for failure to fulfill obligations of the responsible party, which gave the deposit, it is the other party, and if the responsible party that has received a deposit, it is obliged to pay the other side of the double amount of the deposit.
Thus, the deposit is one of the common ways to enforce the obligations, especially commonly used in contracts of sale of real estate, and acts in two capacities: 1) as a partial advance payment for the purchased property (movable / immovable, etc.), 2) as. I guarantee that in the future one of the parties refuses to commitments.
The following types of enforcement obligations - hold and guarantee fee.
According to the art. 338-1 of the Civil Code of the Republic of Kazakhstan st.338-1 lender, who have the thing that must be transferred to the debtor or the person specified by the debtor shall have the right in case of default by the debtor within the period of the obligation to pay for things or compensation to the creditor related costs and other damages her hold it until long as the relevant obligation is not fulfilled.
By holding things can be provided as the requirements, although not related to the payment or reimbursement of things on it and other losses of the costs arising from obligations but whose sides act as entrepreneurs.
The lender can hold the thing in his possession, despite the fact that after this thing came into possession of the creditor, the rights it acquired by a third party.
In general, the regulation of this type of software as a holding as an independent fashion appeared relatively recently. However, to say that the hold has not previously been considered as a way to ensure the fulfillment of the obligation is also incorrect. Since, according to claim 2 st.871 Civil Code of the Republic of Kazakhstan for the commission recognizes the right to keep in his possession the principal thing, according to claim 4 st.697 Civil Code of the Republic of Kazakhstan recognized the right of the carrier to hold the transported cargo and luggage, according to Art.624 Civil Code of the Republic of Kazakhstan for the contractor recognized the right to hold the results of the work, the customer-owned equipment transferred to them for processing (processing) the thing, the remnants of unused materials and other property of the contractor was at the customer, according to st.795 Civil Code of the Republic of Kazakhstan for the warehouse is entitled to hold the stored goods - to full performance by the debtor to pay for services rendered.
Thus, it can be concluded that the deduction and has previously been used in the commission contracts, storage, transportation, and of course in the contract agreement.
Considering hold as a way to enforce, should pay attention to the fact that if all the other types of security arise on the basis of the law and the agreement (contract), the deduction arises only on the basis of the law. Kazakhstan legislation does not provide and does not require special registration of the right to hold things, that is, to enter into a separate agreement or involve the use of retention agreements concluded between the parties. However, the restriction on the use of retention can only be provided by the contract.
Hold though there is the obligation, but direct reference to the principal obligation has not. Therefore, the obligation to provide retention between the debtor and the creditor, regardless of its subject structure and despite the fact from which it arises from the contract, tort, unjust enrichment or other grounds specified in the Civil Code of the Republic of Kazakhstan. The wording of the Civil Code of the Republic of Kazakhstan st.338-1 allows lien things as collateral requirements, non-payment or reimbursement of costs of things on it and other losses, but arising from the commitments which the parties to act as entrepreneurs.
The use of retention as a way to enforce the obligations can have the following impact on the legal relationship of the parties: 1) as a measure of the impact until the proper fulfillment of obligations by the debtor counterparty, as limiting its use to own property; 2) Hold the main security feature is caused by the ability to meet the requirements due to property of the debtor company.
Thus, the lien may secure any obligation, especially in the relationship between employers - as one of the most effective ways to protect the company's interests.
In accordance with the art. 338-3 of CC of RK the margin is recognized as the amount of money transferred by the payer guarantee payment guarantee fee to the recipient in the enforcement of the obligation to conclude a contract with the trading or execution of any other obligation. The obligation to pay the guarantee fee arises in the cases stipulated by legislative acts. The obligation to pay the guarantee fee also arises by virtue of agreement between the parties.
In case of failure the obligation secured by the margin, due to the fault of the payer margin remains with the other hand.
In case of failure the obligation secured by the margin, due to the fault of the recipient guarantee fee or termination of obligations under the agreement of parties or due to impossibility of performance, the come without their fault, the guarantee fee is refundable.
At the conclusion of the contract or the performance of any other obligation secured by the margin, the amount of guarantee fee is included in the account of the guarantee fee payments due to the recipient from the other party on a contract or otherwise secured margin obligation, unless otherwise provided by this Code and other legislative acts, agreement of the parties or It does not follow from the obligation.
Despite the fact that the margin - providing a measure legislated recently, in practice, this measure has been used for a long time. For example, to participate in the auction participants are making preliminary margin, and thereby guarantee the conclusion of the contract and its solvency.
In general, the guarantee fee is very similar to the deposit, but the differences between them still exist.
The first difference - it's consequences. If the deposit - in case of default by the party which has received the deposit, the latter is obliged to pay the other side: a double amount of the deposit, as well as to compensate the other party for losses based on the deposit amount. If the guarantee fee - in the event of default by the fault of the recipient guarantee fee will be refunded only the guarantee fee.
The second difference: Enforcing obligations earnest money - can be provided only by agreement. A guarantee fee - by virtue of the agreement and legislation.
The third difference: While the deposit - an amount of money has always counted on account of the counterparty payments due under the contract. If the guarantee fee - the amount of the guarantee fee can not be counted on account of payments under the contract, if it is provided by the Civil Code and other legislative acts, or the agreement of the parties follows from the nature of the obligation.
There is also a difference between the margin and the guarantee, although they sound similar.
So, when using the guarantees in the legal relations involving three subjects: the debtor, the creditor and the guarantor - a person responsible for the performance of an obligation jointly and severally with the debtor. When using the guarantee fee - how to ensure a measure of legal entities are the guarantee fee payer and the recipient of the guarantee fee. Itself a guarantee fee is a sum of money, and guarantee - the right of a creditor's claim for the recovery jointly and severally with the guarantor of the debtor's debt. The validity of the guarantee fee as a measure shall cease the moment the obligation is complete, ie the completion of the auction, auction, etc. And the validity of the guarantee is terminated, as indicated above (see section "Guarantees"), after the expiration of the period for which it is given; if the lender within one year commitment does not submit to the due date of the secured claim a performance guarantee to the guarantor, if the warranty period is not established in the contract; and if the creditor does not submit a claim to the guarantor within two years from the date of conclusion of the contract warranty, unless otherwise stipulated by legislative acts, when the period of performance of the principal obligation is not specified and can not be defined or determined by the time of demand.
To summarize, I would like to note that it is necessary to distinguish the way to ensure the fulfillment of obligations from the deposit guarantee fee and a guarantee, since they all have different effects when the counterparty default principal obligation.
Based on the above, all the ways to enforce the obligations discussed in this article are measures to protect the rights and interests of the parties to the undertaking, and all of them are aimed at ensuring the fulfillment of the obligation and compensation of property losses that may be incurred by the injured party. What is the mechanism and the combination selected in each case should be considered separately, using experience, ingenuity, knowledge of the law and judicial analogy for similar risks in general, which can be carried out with pleasure lawyers ZAN Company has a long experience in contract law.
This article was prepared by a senior lawyer ZAN Company
Practice Litigation Zhumadilova Zhuldiz
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