Law consequences of invalid bargain.

In general, the law aims to put the parties into the position they would have been in had the bargain been performed by ordering one party to pay money to the other. Where one of the parties has performed its side of the bargain and is awaiting payment from the other party, this can be achieved by the action for an agreed sum or in sale of goods contracts the action for the price. In other words, the party who has promised to pay for goods or services which have been transferred or performed by the other party, can be required to make good that promise. In other situations, the normal requirement will be for the payment of compensatory damages. An order to perform part of the bargain, other than paying money that is owed, is much more unusual.

By general rule, by the set of art. 216 of Civil Code, the basic consequence of signing of a legal transaction, which does not answer the requirements of law (art. 203 and others of the Code) and acknowledged by invalid is bilateral restitution.

The basic principle of bargains damages is that of restitutio in integrum, or full restitution, which involves putting the innocent party into the position it would have been in had the contract been performed.

Bilateral restitutionconsists in that every side of invalid legal transaction must return to other side everything that it got on execution of such legal transaction.

If to turn in nature it is got after a legal transaction which is invalid is impossible (for example, a legal bargain item was using property, grant of services and others like that), then the cost of that is a subject to returning. Id est carried out a compensation got after an invalid legal transaction in a monetary form.

The estimation of size of compensation is carried out not on those prices that existed in the moment of execution of a legal transaction, and not those which were in the moment of commencement a claim, but on prices that exist in the moment of compensation. If the compensation is carried out voluntarily, then such moment is a moment of calculations between parties. If compensation is carried out on the basis of court decision, then prices are determined in the moment of execution of court decision about a compensation got after a legal transaction which is held by a court invalid.

Bilateral restitution is the general consequence of invalidity of legal transaction, which comes regardless of presence of guilt of parties of a bargain in that a legal transaction is invalid. In those cases, when to acknowledging of legal transaction invalid was a result of party’s guiltiness, bilateral restitution can be accompanied by additional negative consequences for a guilty party. In particular, if in connection with the signing of an invalid legal transaction were injured losses and moral harm to the other party (to parties) of legal transaction or to the third person, such losses are subject to the compensation by guilty party (art. art. 22, 23 of the Code).

By the special norms, the special terms of employment of the indicated higher general consequences or special law consequences can be set for the separate types of invalid legal transactions (advanced or limited responsibility of one of parties and others like that). For example, in relation to legal transactions, carried out as a result of deception an additional property liability for a guilty party is provided by part 2 of art. 230 of the Code that sets that a party who used a deception is under an obligation to recover losses in a double size and moral harm to the party, that was injured as a result of execution of this legal transaction (art. art. 22, 23, 230 of the Code).

As reality or invalidity of insignificant legal transaction is determined directly by a law and does not depend on will of parties, then the consequences of its unreality are determined directly by law. Thus the law consequences of unreality of void bargain, set by law, cannot be changed by agreement of the parties. However, court by own initiative, following own persuasions and matter of the case has a right to determine, which one consequences of unreality of void legal transaction will be used in every special case. Thus, suggestions or desires of parties do not have a legal value.

The main objective of bargain damages is therefore compensation, not punishment. Although, of course, in some situations, a party thinking about breaking an agreement may be deterred by the prospect of having to pay damages, or a party who has broken an agreement may suffer considerably from having to pay compensation, nevertheless these consequences are not the purpose of the award.

Sometimes the special terms of application or special legal consequences of particular types of invalid bargains can be set by law, for example, the consequences of adjudgement the conditional bargain as unreal will result to application to adjusting relations between parties of rules of a bargain which parties executed indeed.

An art. 217 of the Code in this connection sets two variants of decision of question about the legal fate of separate parts of legal transaction that do not answer the requirements of law:

1) if substantial terms of legal transactions conflict with the requirements of law, then such bargain must be acknowledged by court as invalid in whole;

2) in the cases when nonsubstantial terms of legal transactions conflict with that legal transactions which it would exist without, then it is partly actual (in that part that answers to requirements of law).

Unreality of separate part of bargain does not have the consequence of unreality of other his parts and bargain in whole, if it is possible to assume that a bargain would be executed even without including to it the invalid part.

Questions for self-testing:

1. Definition and general characteristic of a bargain.

2. Kinds of invalid bargains.

3. Forms of bargains.

4. Methods of repudiation of a bargain.

5. Consequences of unreal bargains.

Themes for essays:

1. Types of bargains.

2. A contract as a kind bargain.

3. Rules of interpretation of a bargain.

4. Validity of a bargain.

5. Bargains with defects of subject composition (signing of bargain by a person who does not have a necessary volume of capacity).

Date: 2015-12-24; view: 1105