How to correctly specify the validity period of a contract

What is the duration of the contract

The Civil Code of the Russian Federation (in particular, Article 425) uses the concept of the duration of the contract, but does not define it. Based on the provisions of Art. 425 of the Civil Code of the Russian Federation, the contract begins to operate from the moment of conclusion or

earlier, if the parties extended its effect to previously established relations.

The termination of the contract is determined by the parties independently, if there are no instructions in the law regarding a specific transaction. As a rule, the parties themselves set the deadline.

The duration of the contract can be limited in different ways:

specific date. For example, “the agreement is valid from November 30, 2020 to November 30, 2021”,
some time period. For example, “1 year from the date of conclusion (signing) of the agreement”,
a fact (event) upon the occurrence of which the contract ends,
the fulfillment by the parties of all their obligations under the transaction, that is, the achievement of the goals for which it was concluded.

It is IMPORTANT to check not only how correctly the duration of the contract is indicated, but also how correctly the clause on termination of the obligation is formulated. If it is not specified that the end of the contract means the end of the obligations, they will remain, and the contract will be valid until the moment designated as the end of their fulfillment (clause 3 of Article 425 of the Civil Code).

Maximum term

The validity period of the government contract is determined based on the provisions of the Civil and Budget Code. Federal Law 44 on public procurement itself does not establish any requirements for this clause of the contract. This means that the time period can be set in any range. The Civil Code allows the parties not to specify deadlines at all.

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Taking into account Part 5 of Art. 161 of the Budget Code, a contract cannot last longer than the limits of budget obligations.

The main thing is that they do not contradict the provisions of the current legislation.

Contracts in which the validity period is necessary

Before specifying the validity period of the contract, check whether this condition is mandatory. If this is the case, an error in the wording can not only lead to disputes, but also lead to the cancellation of the transaction due to non-compliance with the rules of Article 432 of the Civil Code.

For most transactions, the duration of the contract (more precisely, its expiration) is not a prerequisite. But if a specific type of transaction classifies this condition as essential, then the parties are obliged to agree on it and include it in the text of the contract. The same should be done if the parties themselves consider the duration of the contract to be such a condition (for example, as part of a preliminary agreement on a future transaction). To understand whether the term of the contract is necessary, you should refer to the provisions of the Civil Code of the Russian Federation that govern a specific transaction.

For example, a property trust management transaction considers the validity period of the agreement to be mandatory conditions (Article 1016 of the Civil Code of the Russian Federation). If the deadline is not specified, the contract is considered not concluded.

A number of transactions have a maximum (limit) validity period. For example, for some types of rental (clause 3 of Article 610 of the Civil Code of the Russian Federation) or for a rental transaction (clause 1 of Article 627 of the Civil Code of the Russian Federation). In this case, if you indicate in the contract a validity period that is greater than permissible, it will still be considered equal to the maximum period established by the Civil Code.

For some types of contracts there are special rules regarding the duration of their validity, for example, for contracts:

insurance,
rent,
commissions,
license agreement,
agency agreement,
instructions,
loan agreement.

How to correctly specify the validity period of a contract

How to write down the wording on the duration of the contract depends on whether the contract is concluded for an indefinite period or this period is limited. Options depend on a combination of conditions:

What time period did the parties agree on? In particular, contracts can be short-term (several days, several months within a year), annual (term - 1 year), medium-term (1-3 years) and long-term (more than a year and usually for a period of 3-7 years). It is also possible to conclude one-time contracts in which the obligation is fulfilled almost immediately after signing (for example, a purchase and sale transaction);
how the parties decided to formulate the terms of the contract - without a term, indicating a specific period, to link the term of the contract with the fulfillment of an obligation by the date of occurrence of a certain event, or otherwise;
Are there any indications about the duration of the agreement in the Civil Code of the Russian Federation or other laws in relation to a specific transaction.

Examples of wording

Clause of the agreement for a period of 1 year (or 2, 3, etc.): “The duration of the agreement is 1 year from the date of its conclusion (signing)” or “The agreement is concluded for a period of 1 year from the date of its conclusion (signing).” To ensure precise wording, you can additionally specify a specific expiration date for the contract.
The contract clause on the validity period indicated by a specific date: “The contract period is until December 31, 2021 inclusive.”
Clause of the agreement concluded for an indefinite period and planned for further extension: “This agreement comes into force from the date of its conclusion and is valid until December 31, 2021. The expiration of the contract does not relieve the parties from fulfilling their obligations in full and from liability for violation of the terms of the contract. If neither party declares in writing within 30 days before the end of the agreement about its termination, the term of this agreement is extended for each subsequent calendar year on the same terms.”

Please note that the wording “indefinitely” is not used. It is inappropriate to include it in the terms and conditions without specifying the duration of the contract. Fixing the term and the procedure for prolongation allow you to both insure yourself and provide for automatic renewal of the contract.

In general, if the law does not say anything about the term, the wording of the term of the contract can be very different. The main thing is that it can be clearly determined when the contract comes into force and when its validity period ends.

How to correctly write a condition in a contract if the duration of the contract is limited by law? The main thing here is not to exceed the deadline. Less is possible, more is not possible.

Foreign legislation and doctrinal approaches

The ability to set the initial validity period of a transaction is provided for in § 163 of the German Civil Code (hereinafter referred to as the GGU). This situation is regulated by referring to most of the rules on conditions precedent in a transaction. From § 158 of the Civil Code it follows that a transaction concluded under a suspensive condition gives rise to rights and obligations when the condition occurs.

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These provisions, however, do not indicate that in the German legal order a transaction subject to a suspensive period or condition does not give rise to legal consequences at the time of its completion. On the contrary, the German doctrine has developed in detail the concept of a legal connection between the parties to a transaction during a “period of uncertainty.”

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Without going into the details of this concept, we will only point out some properties of the right of expectation that are important for the issue we are studying. According to L. Ennekzerus, such a right, generated by a transaction with a suspensive period, is inherited and can be alienated, since it represents property.

When a suspensive period occurs, the right of expectation is transformed into a full right. Thus, the singular and universal succession in the right of expectation remains valid for the full right. In addition, the right of expectation arising from a transaction with a suspensive period is characterized by the fact that the debtor, before the entry into force of the transaction, can carry out execution, which will be considered as early execution, and not as the occurrence of unjust enrichment on the part of the creditor {amp}lt;8{ amp}gt;. The last characteristic does not apply to the right of expectation from a conditional transaction, since the condition, unlike the term, may not occur.

Many Russian pre-revolutionary civilists who followed the German tradition (G.F. Shershenevich, E.V. Vaskovsky, Y.S. Gambarov, I.M. Tyutryumov, K.N. Annenkov) also believed that the deal could contain a suspensive period, having the same meaning as the condition - with its occurrence, a legal relationship {amp}lt;9{amp}gt; arises.

Although Russian civil law did not know the concept of “right of expectation,” some scientists used this construction, giving it its own name. So, Yu.S. Gambarov characterized conditional rights as a “legally protected expectation of law”, “an intermediate and unresolved state of law”, “a state of inaction”, “a state of undecidedness”, “a preparatory state” {amp}lt;10{amp}gt;.

About forward transactions, he wrote that “the onset of the deadline is preceded by an intermediate stage of the transaction” {amp}lt;11{amp}gt;. Despite the vagueness of the wording and the ambiguity of the legal nature of the intermediate stage, the scientist endowed it with exactly the same properties that L. Ennekzerus endowed with the rights of expectation from transactions with a suspensive period. Including negotiability and the possibility of early execution.

Thus, German, and after it Russian civil law, while recognizing the possibility of delaying the entry into force of a transaction, in relation to an obligatory transaction, deprived the postponement of any meaning. Due to the construction of the right of expectation, the relations of the parties to an obligatory transaction before the due date were given the same importance as the relations of the transaction that comes into force at the time of its conclusion.

In other words, the difference between an unripe obligation was leveled, i.e. an obligation that has not yet been fulfilled, and an obligation with a suspensive period. In both cases, the creditor has no right to demand performance, the debtor, as a general rule, can perform early performance, and rights and obligations can be the subject of universal and singular succession.

L. Ennekzerus and Y.S. The Gambarovs were aware of this effect. L. Ennekzerus wrote: “If we now take a look at the legal consequences of the law of obligations associated with a period in its entirety, we will get a striking result, namely, that it is in all respects interpreted as already existing, but associated with a certain period, i.e. e.

aimed at payment when the due date comes, therefore, as a right of claim for which the due date has not yet arrived” {amp}lt;12{amp}gt;. According to the scientist, the differences between the period for the entry into force of an obligatory transaction and the period for fulfilling the obligation are alien to the parties to the transaction: “Whoever promises me (for example, by accepting a bill) to pay 100 in three months does not think at all about whether he expresses his will to become immediately a debtor under an obligation for which the due date has not yet come, or the will only to enter into an obligatory relationship only after three months” {amp}lt;13{amp}gt;. Many classics of German civil law {amp}lt;14{amp}gt; adhered to the same point of view.

A similar position was taken by Yu.S. Gambarov. First, he defined two meanings of the term in a transaction: “a) the right will be considered to have arisen at the moment of concluding the transaction, and only its implementation is postponed until the deadline, b) the onset of the term will determine the emergence of the right itself” {amp}lt;15{amp}gt ;. But after analyzing the consequences of entering into a transaction with a deferred period for the occurrence of an obligation, I came to the conclusion that “one cannot help but conclude that urgent obligations exist as obligations from the very moment of concluding a forward transaction and that only their implementation is postponed until the due date” {amp}lt; 16{amp}gt;.

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L. Ennekzerus explained the contradiction of the conclusion about the identity of deferred and unripe obligations with the literal meaning of § 163 and 158 of the State Civil Code by the specificity of “the method of expression adopted under the influence of a theoretical construction that is not obligatory in this case” {amp}lt;17{amp}gt;. Probably, the German legislator chose this form of presentation of legal norms because he sought to uniformly regulate the issues of including conditions and terms in any transactions - both obligatory and administrative.

But in contrast to an obligatory transaction, the right of expectation generated by an administrative transaction with a suspensive period has a fundamentally different content than the legal result to which the transaction is aimed {amp}lt;18{amp}gt;. For example, German scientists believe that a conditional administrative transaction transferring the right of ownership gives rise to a conditional right of ownership. This right is negotiable, but in its content it is fundamentally different from the ordinary property right {amp}lt;19{amp}gt;.

The French Civil Code (hereinafter referred to as the FCC), in contrast to the German model, operates with the concepts of condition and term in relation to obligations, not transactions. Apparently, this is why in French civil law the problem of the relationship between the period for the entry into force of a transaction and the period for fulfilling the obligation has not arisen {amp}lt;20{amp}gt;

IN AND. Golevinsky, who adhered to the French legal tradition, formulated the idea of this legal provision as follows: “The main difference between a term and a condition is that the condition makes the very existence of the obligation doubtful, while the term does not at all concern the existence of the obligation, but only delays the fulfillment of it...” { amp}lt;21{amp}gt;.

As far as we can judge, the French civil doctrine proceeds from the fact that the commencement of an obligatory contract is associated with the moment of its conclusion and cannot be delayed. R. Savatier wrote about this: “A term is an element of a contract that does not determine its existence, but establishes only the date of fulfillment of the obligation arising from the contract.