Termination of the contract due to non-payment of goods. If the buyer has paid more than half of the value of the property, then non-payment of the remaining part is not a material violation of the contract of sale, entailing the right of the seller to demand its termination

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Possible options in this case:

• the parties have agreed to terminate - in this case, the termination of the contract will be by agreement of the parties;
• the parties could not agree on termination - then the initiator will be the party that believes that its rights have been violated and the other party has not fulfilled its obligations;
• termination in court.

Termination of the supply contract by agreement of the parties

The best option is if the parties were able to agree and terminate the contract by agreement of the parties, having previously agreed on the details and completed the calculations. The result of such agreements will be a document signed by the parties - the Agreement on termination of the contract.

What needs to be included in the agreement:

• termination date;
• settle mutual debts. If an advance payment was made, then the term for the return of the advance payment, if the goods were delivered, but not paid on the date of conclusion of the agreement, agree on the date of payment;
• agree on responsibility for the fulfillment of financial obligations stipulated by the agreement, since the contractual penalty will not apply after the termination of the agreement;
• in the event that a warranty period is established for the delivered goods, depending on the duration of the contract, specify the warranty period;
• other obligations, for example, the return of low-quality goods (if the termination is due to inadequate quality), the timing of the return of packaging.

A termination agreement is drawn up only in writing, signed by both parties.

The consequence of termination will be the termination of the obligations of the parties under the contract. That is, the obligations stipulated by the contract, after termination, are not subject to execution.

Important! If the termination agreement provides for obligations, for example, the return of funds or payment for the goods received, then these obligations will be regulated already on the basis of the concluded agreement, and the agreement can indicate liability for failure to fulfill these obligations on time.

Unilateral termination of the supply contract

Unilateral termination, as a rule, is carried out in a judicial proceeding and withdrawal from the contract is allowed only in the cases established by the Civil Code. With regard to the supply contract, the refusal is provided for in Article 523 of the Civil Code of the Russian Federation, that is, the legislation allows for unilateral termination on the initiative of one of the parties out of court.

But Article 523 of the Civil Code of the Russian Federation lists only the grounds for terminating the supply contract, therefore it is recommended that the contract provide for:

• termination procedure - in what period the notification is sent, to what address;
• the procedure for settling the obligations of the parties - how payment for the delivered goods is made, the return of the advance payment in case of non-delivery of the goods;
• moment of termination - how long after sending (or receiving) a notice of termination, the contract is considered terminated;
• obligations of the parties after termination - for example, the procedure for satisfying claims in the event of defects in the delivered goods.

In addition, the parties may provide additional reasons for terminating the supply contract, although judicial practice is ambiguous in this regard.

Termination of the supply contract by the supplier

The reasons for the refusal of the supplier, directly provided for by the section regulating the supply of goods and established by Article 523 of the Civil Code of the Russian Federation:

• violation by the buyer of the terms of payment or non-selection of goods, and such violations must be repeated.

Also in the chapter "Purchase and sale" there are other reasons why the supplier can terminate the contract:

• refusal of the buyer to accept and pay for the goods;
• non-fulfillment by the buyer of the obligation to insure the goods when it is obligatory under the contract;
• failure to receive instructions from the buyer to whom to ship the goods.

In this case, if the supplier terminates the contract due to non-payment, the supplier has the right to demand the return of the unpaid goods.

For example, in case of termination of the contract due to non-payment for the delivered equipment, the supplier has the right to demand the return of the equipment and compensation for wear and tear, while he can demand actual depreciation of equipment, and not calculated.

Termination of the supply contract at the initiative of the buyer

The reasons for the buyer's refusal from the contract may be in accordance with Article 523 of the Civil Code of the Russian Federation:

• repeated cases of delivery with violation of the deadline;
• the quality of the received goods does not correspond to that established in the contract, and it is impossible to eliminate the defects in time.

In addition, it is possible to terminate for the reasons set out in Chapter 30 "Purchase and Sale":

• refusal of the supplier to transfer the sold goods;
• violation by the supplier of requirements for the quality of goods;
• non-fulfillment by the supplier of its obligation to insure the goods.

Termination of the supply contract due to the impossibility of performance

There are two more reasons for terminating a supply contract:

• termination of the contract due to the impossibility of performance (clause 1 of article 416 of the Civil Code of the Russian Federation);
• termination of the contract in connection with the issuance of an act by a public authority (clause 1, article 417 of the Civil Code of the Russian Federation).

These reasons do not depend on the will of the parties and do not require the signing of a termination agreement, but will entail consequences for the parties, therefore, when drawing up an agreement, it is possible to provide for an obligation to immediately notify in the event of such circumstances and provide for possible consequences or a period of agreement in the event of such situations.

At the same time, if the counterparty does not agree with the termination, or the violation of the second party is not directly provided for either by law or by the contract, you will have to go to court to demand that the contract be terminated. If the contract is terminated by court order, then it is considered terminated from the date of entry into force of the court decision.

It is difficult to predict the actions of the other party in the event of a unilateral termination of the contract, so it is recommended that you consult with a lawyer before sending a notice of termination to analyze the situation, documents and correctly formulate your requirements.

ATTENTION! Due to recent changes in legislation, the information in the article could be out of date! Our lawyer will advise you free of charge - write in the form below.

Normal human relations presuppose a conscientious attitude of counterparties to their rights and obligations. What does it mean? Good faith, in this case, is understood as the absence of abuse of one's right and the proper performance of assumed duties. In simple terms, it is customary in society to be responsible for their words, especially those that are reflected on paper and confirmed by a personal signature.

Despite the fact that most people agree with the above thesis, in practice, quite often the parties to the contract violate their obligations and create a dispute that can only be resolved in court.

One of these controversial issues is the counter obligation of the buyer to pay for the acquired real estate. Such a situation may arise in the case of payment after the state registration of the transfer of ownership to the buyer.

Judicial practice on the termination of the contract of sale of real estate

There are different jurisprudence on this issue. So, for example, the Supreme Court indicated that if the buyer of real estate registered the transfer of ownership, but did not pay for the property, the seller, on the basis of clause 3 of Article 486 of the Civil Code of the Russian Federation, has the right to demand payment under the contract and payment of interest in accordance with Article 395 of the Civil Code of the Russian Federation. Registration of the transfer of ownership to the buyer for the sold real estate is not an obstacle to terminating the contract on the grounds provided for in Article 450 of the Civil Code of the Russian Federation. According to Article 1103 of the Civil Code of the Russian Federation, the provisions on unjust enrichment are subject to application to the claims of one party in an obligation to the other for the return of what has been performed in connection with this obligation. Therefore, in the event of termination of the contract, the seller who has not received payment under it has the right to demand the return of the property transferred to the buyer on the basis of Articles 1102, 1104 of the Civil Code of the Russian Federation. A judicial act on the return of real estate to the seller is the basis for state registration of the termination of the buyer's ownership and state registration of ownership of this property of the seller (Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10, Plenum of the Supreme Arbitration Court of the Russian Federation No. 22 of 04.29.2010. arising in judicial practice in resolving disputes related to the protection of property rights and other property rights”).

However, there is another position of the courts, according to which, in the Civil Code of the Russian Federation there are no norms that allow terminating the sale and purchase agreement and canceling the buyer’s ownership of the property due to non-payment of the purchase price, the legal consequences of failure to fulfill this obligation are different. Based on the provisions of Part 2 of Article 450, Clause 4 of Article 453, Clause 3 of Article 486 of the Civil Code of the Russian Federation, the buyer’s failure to fulfill obligations under the sales contract entails the seller’s right to demand payment of the cost of goods and interest, and not termination of the contract.

The courts also point out that if, according to the contract for the sale of residential premises, the seller is not granted the right to demand from the buyer the return of the property transferred under the contract, including in the event of a violation by the buyer of obligations to pay its cost, then the seller’s claim for termination of the contract, return of the residential premises, termination of the buyer's ownership of the premises is not subject to satisfaction.

How not to be left without an apartment (real estate) and without money?

In practice, a very sad situation can arise in which the seller can be left on the street without his property and without money.

Thus, in order for the seller to protect himself and ensure his legitimate interests, the contract can provide for a condition that, in case of violation of the established payment deadline, the seller will have the right to terminate the contract unilaterally, that is, refuse to fulfill the concluded contract and demand the return of the transferred apartment.

It should be noted that the partial payment for real estate does not release the buyer from the obligation to return the goods.

Another way to protect the rights of the seller is to include in the contract a condition that the apartment is sold on credit in accordance with the rules of Article 488 of the Civil Code of the Russian Federation.

It is necessary to exercise care and discretion when concluding any contracts, and if possible, use the help of a lawyer.

So, by signing an agreement, which contains a clause stating that the funds under this agreement were transferred before it was signed, sellers of real estate risk losing the opportunity to receive payment under the agreement, including in court.

The transfer of funds can only be confirmed by written evidence.

And in conclusion, I would like to add that the dispute on changing or terminating the contract can be considered by the court on its merits only if the plaintiff presents evidence confirming that he has taken measures for the pre-trial settlement of the dispute with the defendant, provided for in paragraph 2 of Article 452 of the Civil Code of the Russian Federation. Such evidence may be registered letters, telegrams, receipts for their direction, postal notices.

The consultation was prepared by lawyer Nevidimov G.A.October 18, 2015, Irkutsk

legal advice, legal services of a real estate lawyer, assistance of a lawyer on real estate issues, support for real estate transactions, resolution of real estate disputes, participation of a lawyer in court hearings in Irkutsk for tel.: 8950-100-89-25

In the Review of Judicial Practice No. 5, approved in December 2017, the Supreme Court of the Russian Federation (hereinafter referred to as the Supreme Court of the Russian Federation) summarized the practice in controversial cases in various legal areas. Thus, the Supreme Court of the Russian Federation considered the procedure for resolving disputes about the fulfillment of obligations. In paragraph 8 of the review, the Supreme Court clarifies that non-payment for goods by the buyer in the event that the seller fulfills obligations in good faith is recognized as a material violation of the terms of sale.

As an example, the review cites the decision of the Supreme Court of the Russian Federation (N 5-KG17-13) on the claim of a woman who sold her land plot and house, but did not receive the payment stipulated by the agreement from the buyer.

History of the proceedings

The woman went to court with a statement of claim, in which she asked for the termination of the contract of sale concluded with the defendant and the return of the real estate transferred to him under the contract.

The plaintiff entered into a sale and purchase agreement with the buyer, according to which the latter was to receive a residential building and a plot of land and transfer the amount of money specified in the agreement to the woman. The plaintiff fulfilled her part of the obligations in full. The transfer of ownership to the buyer was properly registered, however, the buyer did not repay the real estate, which, according to the plaintiff, significantly violated the terms of the concluded contract.

At the first consideration of the case, the court satisfied the demands of the woman. The court substantiated its decision by the fact that as a result of the defendant's long-term failure to fulfill the obligation to pay for the acquired property, the plaintiff largely lost what she counted on when concluding the contract. The court considered such a violation significant, and recognized the woman's right to demand termination of the contract and the return of the property transferred to the buyer.

The next instance expressed a different opinion. The appeal made a new decision, the woman's demands were left unsatisfied. The court did not dispute the fact that the buyer failed to fulfill its obligation to pay for the property, but considered that this breach of contract was not material.

In making its decision, the court referred to Art. 486 of the Civil Code of the Russian Federation and indicated: the fact that the goods were not paid for by the buyer does not entail the plaintiff's right to terminate the contract, but only gives rise to the right to demand payment for the house and land and the collection of interest in the prescribed manner. Also, refusing the plaintiff, the court applied the explanations contained in paragraph 65 of the Resolution of the Plenums of the Supreme Court of the Russian Federation and the Supreme Arbitration Court of the Russian Federation of April 2010 N 10/22 (hereinafter referred to as Resolution No. 10/22), In paragraph 65 of Resolution No. 10/22 it is said that by virtue of Art. 453 of the Civil Code of the Russian Federation, the parties to the proceedings cannot demand the return of what was performed by them under the obligation until the moment the contract was changed or terminated, unless other rules are determined by law or agreement.

Conclusions of the Armed Forces of the Russian Federation

The Supreme Court of the Russian Federation pointed out that the conclusion of the appellate instance contradicts the norms of the law, namely the rules of Art. 450 of the Civil Code of the Russian Federation. This article stipulates that such a breach of the contract is recognized as significant, due to which the other party receives damage, due to which it is largely deprived of what it could count on when concluding the agreement. The Supreme Court of the Russian Federation explained: in assessing the materiality of the violation committed by the buyer, the court had to proceed from the fact that the plaintiff did not receive any payment for the land and building, and therefore obviously lost what she expected to receive when concluding the contract.

Regarding the conclusion of the appeal that the fact of non-payment of land and house gives the plaintiff only the right to insist on paying for real estate and collecting interest, the Supreme Court indicated that such a conclusion is erroneous and follows from a misinterpretation of Art. 486 of the Civil Code of the Russian Federation. It does not follow from the meaning of this article that if the buyer refuses to pay for the goods, the seller does not have the right to demand termination of the contract on the grounds provided for in Art. 450 of the Civil Code of the Russian Federation.

The Supreme Court of the Russian Federation also pointed out the incorrect application by the appeal of the clarification of Resolution No. 10/22. In accordance with Art. 1103 of the Civil Code of the Russian Federation, the rules on unjust enrichment are applicable to the claims of one party in an obligation to the other party for the return of what was performed in connection with this obligation. Accordingly, upon termination of the agreement, the seller has the right to insist on the return of the goods transferred to the buyer if this goods is not paid for.

Thus, the Supreme Court clarified that the seller has the right to terminate the contract if the buyer refused to pay for the goods. The court determined that non-payment for the goods received is a material breach of the sales contract, on this basis the seller has the right to demand termination of the contract in court. At the same time, this circumstance does not exclude the possibility for the seller to demand protection of rights in a different manner, by collecting the amount of the debt under the contract and the interest accrued on the amount of the debt.

Noteworthy is the fact that earlier the RF Armed Forces had a different position on the issue under consideration. For example, in a similar dispute about non-payment of the purchase price for an apartment, considered by the Supreme Court of the Russian Federation in 2011 (determination No. 5-B11-27), the Supreme Court determined that non-payment of goods does not apply to material violations of the terms of the sales contract.

It is assumed that the latest clarifications of the Supreme Court of the Russian Federation will be actively applied by the courts and will serve as an additional tool for protecting the rights of the seller, who has fulfilled his obligations in good faith, in the event that these rights are violated by non-payment for the goods.

Lead Counsel

Legal Service Center LLC

Brazhnikov Vladimir Sergeevich

In 2008, the Supreme Court dismissed a lawsuit filed by a seller who demanded the termination of a contract for the sale of an apartment for which the buyer failed to pay. After 10 years in a similar dispute, the position of the highest court changed to the opposite.

Is the contract more expensive than an apartment?

A citizen filed a lawsuit to terminate the contract for the sale of an apartment and return the property. The lawsuit stated that the defendant undertook to pay the cost of the apartment after the state registration of the contract, but so far has not paid, and avoided terminating the contract. The court of first instance satisfied the claim, proceeding from the fact that the defendant's failure to pay the cost of the apartment is a significant violation of the agreement concluded between the parties. Since the contract cannot be considered fulfilled, then in accordance with paragraphs. 2 and 4 Art. 453 of the Civil Code of the Russian Federation, the apartment is subject to return to the property of the seller.

The Supreme Court of Russia in 2008 decided otherwise. He pointed out that if the buyer does not pay for the goods transferred in accordance with the sales contract in a timely manner, the law does not provide for termination of the contract: according to paragraph 3 of Art. 486 of the Civil Code of the Russian Federation, the seller may demand payment for the goods and payment of interest for the use of other people's funds in accordance with Art. 395 of the Civil Code of the Russian Federation. The grounds and consequences of termination of the contract are named respectively in Art. 450 and paragraph 4 of Art. 453 of the Civil Code of the Russian Federation. At the same time, the possibility of the return by the parties of what was performed under the contract until the moment of its termination must be provided for by law or by the contract. However, the contract of sale concluded by the plaintiff and the defendant does not stipulate such a situation.

The Supreme Court changed its mind

In 2017, the position of the Supreme Court changed. The seller filed a lawsuit to terminate the contract for the sale of land and a residential building. The transfer of ownership to the buyer was registered in the prescribed manner, however, the defendant did not fulfill its payment obligations. The district court in 2016 satisfied the claims and terminated the contract.

The Court of Appeal annulled this decision of the court, referring to the same norms of the law that were cited by the highest court in the 2008 proceedings. But this time, the Supreme Court of the Russian Federation recognized the definition of the appeal as erroneous. In the case under consideration, the seller lost what he was entitled to count on when concluding a contract of sale, having received no money at all for the sold property. This is a significant violation of the contract and is the basis for its termination in accordance with paragraph 2 of Art. 450 of the Civil Code of the Russian Federation. The Supreme Court also noted that from a literal interpretation of the text of paragraph 3 of Art. 486 of the Civil Code of the Russian Federation, it does not follow that in case of late payment by the buyer of the goods transferred in accordance with the contract of sale, the seller does not have the right to demand termination of the contract.

As you can see, the same norms of the law can be interpreted by the court in different ways. It is also unclear whether the decision of the Supreme Court of the Russian Federation concerns only the complete non-payment under the transaction or applies to cases of any non-payment. And will the new position be final?

Therefore, in the sales contract, it is necessary to foresee the wording in advance, excluding disputes. For example, to stipulate that the seller has the right to unilaterally terminate the contract of sale and demand the return of the property if he does not receive the agreed price in full and within the time limits established by the contract. And of course, you need to contact a lawyer “before”, and not “after”.

The subject of the dispute in one of the cases considered by the Supreme Court of the Russian Federation was the question of whether the seller has the right to demand termination of the contract of sale if the buyer has not fulfilled the obligation to pay for the acquired property.

The seller, applying to the court with a claim for termination of the contract, referred to the following circumstances. The parties entered into a contract for the sale and purchase of a land plot and a residential building. The transfer of ownership to the buyer was registered in the prescribed manner, however, the defendant did not fulfill its payment obligations, which significantly violated the terms of the contract.

The court of first instance granted the claim. He proceeded from the fact that as a result of a long non-fulfillment by the defendant of obligations to pay for the acquired real estate, the plaintiff had largely lost what he was entitled to count on when concluding the contract. The court pointed out that such a violation of the terms of the contract by the defendant is significant and gives rise to the claimant's right to demand termination of the contract of sale and return of the property transferred to the defendant.

The Court of Appeal overturned the decision. The appeal found that the defendant's failure to pay for the acquired property was not in itself a material breach of contract. In addition, the Court of Appeal with reference to paragraph 3 of Art. 486 of the Civil Code of the Russian Federation indicated that failure to fulfill the obligation to pay for the goods sold does not entail the seller's right to terminate the sale and purchase agreement, but only gives him the right to demand payment for the goods and payment of interest for the use of other people's money.

The Supreme Court of the Russian Federation recognized the conclusions of the appellate instance as erroneous. Since in the case under consideration the seller did not receive any money at all for the sold property, he, in the opinion of the Supreme Court of the Russian Federation, obviously lost what he had the right to count on when concluding the contract. Consequently, there is a material breach of the contract, which is the basis for its termination (Clause 2, Article 450 of the Civil Code of the Russian Federation). The Supreme Court of the Russian Federation also noted that paragraph 3 of Art. 486 of the Civil Code of the Russian Federation, referred to by the court of appeal, does not exclude the seller's right to demand termination of the contract in connection with the buyer's violation of the obligation to pay.

Note that earlier the Supreme Court of the Russian Federation expressed a different point of view on this issue. He proceeded from the fact that the buyer's violation of the obligation to pay for the acquired property is not a material violation of the contract of sale. Therefore, in the absence of a special indication in the law or the contract on the right of the seller to demand termination of the contract and the return of property, the seller can only claim payment and interest for the use of other people's money (see, for example, the definition of the IC in civil cases of the Armed Forces of the Russian Federation dated 07.06.2011 N 5-B11-27).