Freedom of contract

A lean agreement is better than a fat lawsuit.

A proverb

 

A contract is an agreement of two or several persons on establishment, amendment or termination of civil rights and obligations.

Contracts surround us everywhere, even if it is not obvious sometimes: when buying goods in a market (even when without a signed written contract), leaving things in a storage or in a cloakroom, getting some services, etc… It such cases we usually silently agree with the offered conditions of such public services. In more complicated events including higher contract prices and risks – such as goods supply, buying and selling real estate, cooperation agreements, etc. – it requires not only a written form of agreement (and sometimes a notary legalization and governmental registration of rights), but also accurate and thoughtful participation in agreeing of all the contract conditions.

 

The contract was already written and printed, all I had to do  is just to sign it; I am not a professional in defining whether contract conditions are good or not; I was so excited by the fact of signing an agreement that I missed reading it; I decided to read the contract after I bring it signed at home; I trusted my contracting party and didn’t want to seem impolite, so I decided not to rise any objections; etc…” – These are the most common situations in which the contracting party who missed a chance to negotiate about the conditions of the contract, might bear inconvenience, losses or other unpleasant consequences.

 

One of the fundamental beginnings of private (civil) law is the principle of freedom of contract. This is consistent with the principle “everything that is not prohibited is permitted”.

 

By the way, before, in Soviet civil law, in which the principle of freedom of contract was not recognized, there was another opposite idea widespread, which was rather not familiar for private law: everything that was not explicitly allowed was forbidden. Fortunately, in contemporary Russia this principle is recognized and is getting more and more support in a court practice.

 

What does this principle of freedom of contract include today?

Forcing to conclude a contract is not allowed, except in cases when obligation to enter into a contract is provided by law or voluntarily by the parties.

The parties may conclude an agreement, stipulated or not stipulated by law or other legal acts.

The parties may conclude a contract containing elements of various contracts provided for by law or other legal acts (mixed contract).

The terms of the contract are determined at the discretion of the parties, except when the content of the relevant condition is prescribed by law or other legal acts.

In some cases contract conditions might indeed be determined by one of the parties in standard forms and could be just accepted by the other party only by joining the proposed contract as a whole (for example, in contracts with banks, insurance companies, air and railway carriers, etc.). Though according to the Russian laws, in this case a party to a contract has the right to demand termination or amendment of the contract if the contract is even not in conflict with the laws, but deprives a party of the rights normally provided under contracts of this type, excludes or restricts the liability of the other party for breach of obligations or contains others burdensome conditions for the acceding party.

The party that, when concluding the contract or before or after its conclusion, gave the other party inaccurate assurances, is obliged to compensate the other party for its claim the losses caused by the inaccuracy of such assurances, or pay the contractual penalty.

Remember that in most cases this is not just your right to negotiate about the conditions, but highly recommended, as contracting parties act like painters creating a picture of their rights, duties and obligations, in cases when using such principle of freedom of contract is not restricted by law.

Timely assessment of the terms of the contract and their change, if necessary, can protect against losses and lengthy legal proceedings in the future.

 

Best regards, 

Anna S. Menshova

E-mail: a_menshova@inbox.ru