Legal guarantees
for the performance of obligations in Russia

Legal guarantees of performance of obligations are spedified by the Russian Civil Code as follows.

• Penalty pursuant to article 331 of the Russian Civil Code the amount of which doesn't need to be proved in the court as it is already provided for by parties' agreement (contract). In practical terms it may be of the following types:
  • a fixed sum specified in the agreement and deemed to be a fine which must be paid in addition to compensation for all losses from non-performance or improper performance of obligations
  • a fixed sum specified in the agreement and deemed to be a compensation for losses from non-performance or improper performance of obligations but extra compensation also could be claimed if proved, in the amount which exceeds that sum
  • agreed and liquidated damages
  • statutory penalty which in majority of cases is established by article 395 of the Russian Civil Code and related clarification of the Central Bank of Russia, it is a legal interest for using money
  • non-monetary penalty such as an obligation to make extra delivery of goods
• Pledge
  • mortgage, a pledge of real estate
  • pledge of securities
  • pledge of goods in circulation in in the debtor's warehouse
• Retention of property
• Surety
  • State (Government) or municipal guarantees as they are defined in articel 115 of the Budgetary Code of the Russian Federation
  • guaranties (sureties) of companies (corporations)
  • surety of companies' owners
• Bank guarantees
  • guarantee for repayment of advance payment
  • guarantee of performance of contractual obligations
  • tender guarantee or tender obligation
  • guarantee of warranty and guarantee of repayment of the sums retained under contracts for delivery of equipment
• Earnest money

Other types of legal guarantees in business relationships:

• Irrevocable documentary credit (letter of credit)
  • irrevocable confirmed credit
  • revolving credit
  • red clause credit
  • stand-by credit
  • transferable letter of credit
  • other types of credits
• Insurance contract
• Bill of exchange or promissory note

• Legal check of your business partner before entering into agreement (through information agencies, registration info, etc.)
• Special contract terms and conditions to secure obligations:
  • making a reference to the good faith and fair dealing in the agreement
  • attributing the matarial (o substantial, essential) status to important provisions of the contract
  • establishing clauses about "technical" guaranties such as rights to keys for the softwear, etc.
  • reservation of the right of ownership
  • specifying the rigt of first demand of return of equipment
  • provision and acceptance of goods, services, work on a step-by-step basis
  • right to suspend the performance of your own obligations under different agreements with the same counterpart
  • provisions to connect the agreement to specific executives of parties
  • right to make set-off regarding uniform counterclaims (counter obligations)
  • using third persons to make an inspection of goods
  • simplified procedures to make and consider claims
  • provisions for amicable methods to resolve disputes (mediation, neutral evaluation, and others)
  • provisions for arbitration, jusisdiction, and applicable law
  • other provisions
• Warranty obligations from third parties
• Coditioned assingment of rights to claim
• Using intellectual property rights to prevent the import of counterfeit goods into Russia through Russian customs register of intellectual property objects
• Using the goodwill of and corporate relationships within the counterpart's company
• "Asymmetrical" response to the non-performance of obligations by business partners
• "Check and balances" system in the agreement
• Right selection of the legal form and/or contact(s) to carry out a foreign trade project in Russia
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