Issue 3 (13) 2011

THE PRINCIPLE OF BALANCE OF INTERESTS AND THE REPUDIATION OF CONTRACT

THE PRINCIPLE OF BALANCE OF INTERESTS AND THE REPUDIATION OF CONTRACT

A.F. Pyankova

Perm State National research University
15, Bukirev st., Perm, 614990
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article covers some controversial issues connected with the right of repudiation of contract in the light of the problem of balance of contract parties’ interests. Legislation and precedents of Russia and foreign countries (e. g., Germany, France, Great Britain, European Union, Australia, Moldova, Georgia, etc.) are analyzed. As long as the right of repudiation is an exception to the principle “pacta sunt servanda”, the author states a vital necessity of balance of contract parties’ interests’ assurance.

The majority of legislatures (apart from Germany and Turkmenistan), if at all, contain only one general provision dealing with the right of repudiation. Thus, the lack of general provisions on the repudiation of contract (e.g., covering grounds for repudiation) in the majority of countries is criticized.

The legislation of foreign countries on standard form contracts and unfair terms in contracts in the light of the issue is scrutinized. For instance, in many countries standard form contract clauses which allow the trader to repudiate the contract with no serious reason are considered to be void. The absence of such provisions in the national legislation is disapproved, even though there are some precedents based on the article 14.8 of the Administrative Offences Code? according to which such clauses were said to be void.

The classification of cases when legislation grants a right of repudiation is settled. According to the author’s opinion, such cases can be divided into four groups: repudiation determined by the essence of the contract, repudiation in long-term contracts, repudiation as a penalty for breaking the contract by another party, repudiation driven by vital change of circumstance. Different approaches to legal regulation of contract repudiation in all these situations are compared, similarities and peculiarities are elicited.

The author argues that the balance of contract parties’ interests is better provided with special rules than with general provisions of civil legislation. In this regard, amendments to the Civil Code of Russian Federation (part 2) are suggested.

Keywords: repudiation of contract; the balance of contract parties’ interests; standard form contracts; unfair contract terms; civil legislation of foreign countries

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