Business Legislation and Policy 1

1. Transaction is an action (deliberate, goal-oriented, willful,

legally acceptable) of an individual and legal entity aimed
at:
 establishment
 modification or
 termination of civil rights and obligations (e.g. a right to
demand repayment of debt; an obligation to repay debt).
2. Transaction is an action aimed at achievement of legal
consequences (e.g. purchase of goods, office rental).
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Unilateral (1) – when
one party’s expression
of will is necessary and
sufficient.
E.g. testament -
завещание, power of
attorney -
доверенность.
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 It is a legal document you sign and
appoint a person, called your
agent, to handle legal, tax and
financial matters for you if you
cannot do so.
 A power of attorney is a vital legal
document every adult should have.
Especially now, with the worries of
the coronavirus and the risk that
you might fall ill and be unable to
handle financial and legal matters,
every adult should have one.
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 Bilateral (contracts) (2) –
when expression of two
parties’ concerted
(coordinated, agreed) will
is necessary and
sufficient.
 E.g. sale-purchase
agreement, loan
agreement.
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 Multilateral (contracts) (more
than 2) – when expression of
more than two parties’
concerted (coordinated,
agreed) will is necessary and
sufficient.
 E.g. foundation agreement of
participants of a limited
liability company;
shareholders’ agreement.
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Under suspensive condition/ condition precedent (под
отлагательным условием):
 if parties make arising of rights and obligations depend on
a circumstance, which is unknown to occur or not.
 E.g. contracts stipulating payment for goods by
installments/ в рассрочку:
purchaser’s rights to goods arise after it repays the
total amount of money for the goods.
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Under resolutory condition/ condition subsequent (под
отменительным условием):
 if parties make termination of rights and obligations depend on a
circumstance which is unknown to occur or not, e.g.:
the lessor and lessee conclude a car rental contract for a year and
agree that, if within this year the lessor him/herself obtains the
driving license, the car rental contract shall be terminated;
the lessor and lessee conclude a contract on lease of a cottage for a
year and agree that, if within this year the lessor’s daughter returns
from her academic trip, the contract (and the lessee’s rights) shall be
terminated.
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 Non-gratuitous/refundable/compensated – a transaction that
provides for consideration (встречное удовлетворение/
предоставление), i.e. something of value given by a party to a
contract in exchange for something given by the other one:
oe.g. payment of money, delivery of goods, provision of counter
services, performance of works. A seller transfers goods to a
buyer for money consideration (price).
 Gratuitous/free of charge/without compensation – a transaction
that does not provide for consideration
oe.g. gift agreement, testament, power of attorney, gratuitous loan
agreement (without interest %).
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Verbal agreement is a transaction concluded when parties directly express
their will by words during a meeting, a phone call, etc.
A TRANSACTION MAY BE CONCLUDED VERBALLY:
 if no written (simple or notarial) form is stipulated by law or by an
agreement between parties;
 if it is executed at the moment of making (e.g. retail sale-purchase
agreements when payment and transfer of a product are simultaneous;
contracts on transportation by public transport);
 in order to perform (execute) a written contract upon agreement
between parties: e.g. a written contract stipulating that delivery of goods
shall be performed upon purchaser’s verbal demand/order. 12
Implicative/implied action
 a transaction may be deemed as
concluded verbally when
behaviour of a person clearly
testifies to its will to conclude a
transaction (e.g. purchase of goods
through vending machines –
actions of a seller and purchaser
testify to their intention to make
the transaction).

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Silence (молчание)
may be deemed as expression of will in cases
provided by legislation or an agreement
between parties
E.g. extension of a lease agreement if a lessee
continues using the property after expiration
of the contract and there are no lessor’s
objections for this. 14
Transaction in written form:
 shall be concluded by way of compiling a document expressing
content of the transaction and signed by a person or persons who
are concluding the transaction or by other persons properly
authorized by them (e.g. testament, power of attorney, loan
agreement);
 bilateral transactions may be concluded by exchange of documents,
each of which shall be signed by a party from which the document
originates/comes (e.g. exchange of electronic letters, of contracts
in electronic form via e-mail, fax).
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The following transactions shall be concluded in simple
written form:
1. Transactions of legal entities between each other and
with individuals (Company A – Company B; Company –
Mr/Ms);
2. Transactions of individuals between each other (Mr/Ms
– Mr/Ms) if:
their amount is at least KGS 1000 - 10 times higher than the
amount of the estimate indicator (KGS 100) and
in cases provided by law - regardless of the transaction’s
amount.
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Notarization of Transactions
Notarization is mandatory:
 in cases provided by law;
 upon demand of any party.
Notarization is performed by
certification statement on a
document by a notary or
another authorized officer (e.g.
executive authorities, consular
offices).
State Registration of rights
 Transactions with real property
and rights arising from such
transactions are subject to state
registration (e.g. lease/pledge
of a building, enterprise, land
plot);
 The Civil Code or a law may
provide for state registration of
rights arising from movable
property (e.g. vehicles, fire-
arms). 17
Contract is an agreement between two (bilateral) or more
(multilateral) persons on establishment, modification or termination
of civil rights and obligations.
Principle of freedom of contract:
 Individuals and legal entities are free to conclude a contract;
 Parties may conclude a contract that is not provided by the
legislation;
 Parties may conclude a contract containing elements of different
contracts (mixed contract) (e.g. public-private partnership
agreements);
 Contract terms may be determined at the discretion of parties,
except for cases when terms are provided by the legislation. 18
A contract shall be in compliance with
mandatory rules of legislation (imperative
provisions)
E.g. mandatory state registration of transactions
with real property.

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A contract shall be deemed as concluded if parties
have come to an agreement on all essential terms of
contract:
Subject matter of contract (предмет договора);
Terms determined in the legislation as essential and
necessary for this type of contracts;
All the terms upon which an agreement shall be
reached upon application of a party.
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A contract shall be concluded
by sending an offer (proposal to conclude a
contract) by a party and
its acceptance (adoption of proposal/ consent
to accept the proposal and conclude a
contract) by another one.

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Offer shall:
obe definite;
obe expressing intention of the offeror to consider
itself as a person who has concluded a contract with
the offeree who has accepted the offer;
ocontain essential terms of contract.
Acceptance shall:
be complete and
without reservation/ unconditional. 22
Moment of conclusion Place of conclusion
A contract shall be deemed as  If no place of conclusion has been
concluded: indicated in the contract, it shall be
recognized as concluded at the place
 at the moment of receipt of
of residence of an individual or at the
acceptance by an offeror;
place of location of a legal entity who
 at the moment of transfer of property (which) has sent an offer.
(if it is necessary pursuant to a law);
 from the moment of notarization or
state registration (if a contract is
subject to one of them) or from the
moment of state registration (if a
contract is subject to both of them).

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a contract concluded by a commercial organization
and establishing its obligations for sale of goods,
performance of works or provision of services that
this organization by nature of its activity shall make
with respect to everyone who applies to it;
retail trade, carriage by transport for common use,
communication services, energy supply, medical
services, hotel accommodation, banking services.
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a contract, terms of which are defined by one of the
parties in official lists or other standard forms and
can be accepted by the other party only by way of its
joining the offered contract as a whole;
e.g. contracts with banks, insurance companies using
standard forms of contractual documents; application
for opening a bank account; certificate of insurance.
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a contract in which parties establish that the
debtor has the obligation to make performance
not to the creditor, but to a third person
indicated or not indicated in the contract,
having the right to demand performance of the
obligation from the debtor in its favour (e.g.
contract of insurance of a third person; bank
deposit contract in favour of a third person).
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 A contract may be concluded by bidding. In this case the
contract shall be concluded with the winning bidder.
 The bidding shall be held in the form of an auction or
tender (e.g. sale of debtor’s property during enforcement
proceedings).
 The winning bidder at an auction is a person who has
offered the highest price.
 The winning bidder at a tender is a person who has
offered the best terms/conditions. 27
https://www.forbes.com/sites/martinshenkman/202
0/03/22/power-of-attorney-an-essential-legal-
document-you-may-have-to-prepare-
yourself/#5804290c72af
Pictures used are taken from open sources.

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