Procedure for termination of a contract in Ukraine

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Publication date: 15.07.2024

Procedure for termination of a contract in Ukraine

Termination of a contract is an important legal instrument that allows the parties to terminate their obligations under the contract. This process is regulated by the Civil Code of Ukraine and other legal acts. In this article, we will look at the procedure for terminating a contract, the grounds for doing so, the necessary documents and practical advice on how to protect your rights.

Legal framework

• The Civil Code of Ukraine

The Civil Code of Ukraine (the "CCU") is the main legal act governing the termination of contracts. It contains general provisions on the grounds for termination, procedure and consequences of termination of contractual obligations.

• Commercial Code of Ukraine

The Commercial Code of Ukraine (the "CCU") supplements the provisions of the CCU on the termination of commercial contracts between business entities by establishing specifics of the procedure and grounds for termination of such contracts.

Grounds for contract termination

1. Termination of an agreement by agreement of the parties

One of the main grounds for contract termination is the mutual agreement of the parties. This is the easiest and most conflict-free way to terminate a contractual relationship. The parties may agree to terminate the contract at any time, provided that it does not contravene the law or the terms of the contract.

2. Unilateral termination of the agreement

Unilateral termination of a contract is possible in cases provided for by law or the contract itself. Such cases may include:

• Breach of contract by one of the parties.
• Failure to fulfil contractual obligations within the prescribed timeframe.
• Change of circumstances that makes performance of the agreement impossible or impractical.
• Other grounds provided for by law or the agreement.

3. Termination of the agreement by a court decision

Termination of a contract by a court decision is a last resort when it is impossible to resolve a dispute in a pre-trial procedure. The court may decide to terminate the agreement based on a claim by one of the parties if it is proved that the other party has breached the terms of the agreement or that it has become impossible to perform the agreement.

Procedure for contract termination

1. Negotiations and pre-trial settlement

The first step in the process of contract termination is negotiations between the parties. The parties may try to agree to terminate the contract and settle all issues related to the termination of contractual obligations. This may involve drafting a termination agreement that is signed by both parties.

2. Execution of the termination agreement

If the parties have agreed to terminate the contract, it is necessary to document it. The agreement to terminate the contract must contain:

• Information about the parties to the contract.
• Grounds for termination of the agreement.
• Terms of termination, including terms and procedure for settling mutual obligations.
• Signatures of the parties.

3. Notice of termination of the agreement

In the event of unilateral termination of the agreement or failure to reach an agreement, the other party must be notified of the intention to terminate the agreement. The notice must be in writing and sent by registered mail with acknowledgement of receipt or delivered in person against receipt.

4. Appeal to the court

If no agreement can be reached or the other party fails to fulfil its obligations to terminate the agreement, the party initiating the termination may file a claim for termination with the court. The statement of claim must contain:

• Information about the parties to the contract.
• A description of the circumstances that gave rise to the termination of the agreement.
• Claims of the plaintiff (termination of the contract, compensation for damages, etc.).
• Documents confirming the circumstances of the case (contract, correspondence, acts of work performed, etc.).

5. Court proceedings

The court considers the case on termination of the contract, establishes the facts of the breach, evaluates the evidence and decides to terminate the contract or dismiss the claim. If the court decides to terminate the agreement, it determines the terms and conditions of termination, as well as the procedure for settling the parties' mutual obligations.

6. Execution of the court decision

After a court decision to terminate the contract is made, the party initiating the termination must ensure that the court decision is enforced. This may include submitting a writ of execution to the executive service, monitoring the execution of the decision and settling all financial and legal issues.

Documents required

The following documents may be required to terminate a contract:

• The original contract.
• Agreement on termination of the contract (if any).
• Notice of termination (for unilateral termination).
• A statement of claim to the court (in case of litigation).
• Documents confirming the circumstances of the case (correspondence, certificates of completion, financial documents, etc.).
• Court decision (in case of termination of the agreement by a court decision).

Practical advice for the parties

• Documentation. All actions to terminate the contract must be documented. This will help avoid misunderstandings and provide legal protection in case of disputes.
• Consultation with a lawyer. In complicated cases of contract termination, it is recommended to seek legal advice from a lawyer or attorney. They can provide professional advice, assist in drafting documents and represent you in court.
• Meeting deadlines. It is important to comply with deadlines for giving notices, entering into agreements and going to court. Missing deadlines may result in the loss of the right to terminate the contract or complicate the dispute resolution process.
• Fulfilment of contractual terms. Even after the decision to terminate the contract has been made, the parties must fulfil their obligations to settle the financial and legal issues stipulated in the contract or court decision.