GILS Commercial contracts: Ukraine

GENERAL CONTRACT LAW REGULATIONS

UKRAINE

1. Is it mandatory for a commercial contract to be governed by local law?

According to part 6 of article 5 of the Law of Ukraine “On Private International Law” the choice of law (legislation) at the discretion of the parties may be made only in the presence of a foreign element in legal relations.

The foreign element, according to Article 1 of the said law, is a feature that characterises private legal relations regulated by this Law and manifests itself in one or more of the following forms:

• at least one participant of legal relations is a citizen of Ukraine residing outside Ukraine, a foreigner, a stateless person or a foreign legal entity;
• the object of legal relations is located on the territory of a foreign state;
• a legal fact, which creates, changes or terminates legal relations, took place or takes place on the territory of a foreign state.

2. What language applies to commercial contracts on the territory of the Country? Is it possible to establish the prevailing language? 

In case one of the parties to the contract is a resident of Ukraine and the applicable law is the law of Ukraine, one of the languages of the contract shall be the Ukrainian language. At their discretion, the parties may conclude the contract in several languages, choosing the predominant one. It should be noted that the legislation does not establish legal consequences in case of improper language of the contract.

3. Is it possible to use electronic signatures for the execution of commercial contracts between private entities? 

Yes.

4. Are there any requirements to the form of a commercial contract? Are there any standard forms of commercial contracts? 

Commercial contracts shall be concluded in writing. A contract shall be deemed to be concluded in writing if its content is documented in one or more documents (including electronic ones), in letters, telegrams exchanged between the parties or sent by them to an information and communication system used by the parties. If the content of the contract is documented in several documents, the content of such contract may also be recorded by reference in one of these documents to other documents, unless otherwise provided by law.

A contract shall be deemed to be made in writing if the will of the parties is expressed by teletype, electronic or other technical means of communication.

5. Are there any types of preliminary agreement or “gentleman’s agreement” in the Country?

A preliminary contract, according to the law, is a contract whose parties undertake to conclude a contract in the future (the main contract) within a certain period of time on the terms and conditions established by the preliminary contract. The law may impose a limitation on the period (term) within which the main contract must be concluded on the basis of the preliminary contract. Essential conditions of the main contract, which are not established by the preliminary contract, shall be agreed in the order established by the parties in the preliminary contract, if such order is not established by acts of civil legislation. The preliminary contract shall be concluded in the form established for the main contract, and if the form of the main contract is not established - in writing.

The legislation does not provide for “gentlemen's agreements”, but at the same time the Civil Code of Ukraine establishes that civil relations may be regulated by custom, in particular by the custom of business turnover.

6. What currency is allowed to be used for commercial contracts in the Country?

Hryvnia - if both parties to the transaction are residents of Ukraine. Any foreign currency, if one of the parties to the transaction is a non-resident.

7. Are there options for the limitation of liability of a party under the commercial contract?

In certain cases, the parties may contractually limit the statutory liability under a commercial contract.

8. Is the concept of release from liability or indemnity enforceable in the Country?

The person, who has violated the obligation, shall be released from liability for breach of obligation, if he proves that this violation occurred as a result of accident or force majeure (Article 617 of the Civil Code of Ukraine).

9. Is there the concept of “consequential damages” in the Country? Can it be excluded from liability? 

Losses, according to the Civil Code of Ukraine, are:

1) losses that a person has incurred in connection with the destruction or damage of a thing, as well as the expenses that a person has made or must make to restore his violated right (real losses);

2) income that a person could actually receive under normal circumstances if his right had not been violated (lost profit).

The concept of “consequential damages” is not provided for by the civil legislation.

10. Is the concept of “force majeure” recognized by the legislation and courts on the territory of the Country?

Yes.

11. Are export control provisions due to the economic sanctions specified by legislation and enforceable in the Country?

Yes.

12. Is there a mandatory dispute resolution regime in the Country for commercial contracts?

The dispute resolution regime is stipulated by the economic procedural legislation. 

13. May the arbitration (local or foreign) be chosen by parties as a method of dispute resolution? 

Yes.

Author: Mykola Aleksiuk, Partner