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Book five of Civil Code of Ukraine – “The right
of obligation”
Notion of Obligation.
An obligation shall be a legal relation where one party (a debtor) shall
be obliged to perform
an action (to transfer property, to do a job, to render service, to pay
money etc.) to the benefit
of the other party (a creditor) or to abstain from a certain action,
while the creditor shall have
the right to claim from the debtor to fulfill his obligation.
Parties in Obligation.
A debtor and a creditor shall be the parties in obligations.
Both a creditor and a debtor may be presented in obligation by one or
simultaneously by
several persons.
If each of the parties in obligation has simultaneously both rights and
obligations, the party
shall be deemed a debtor in what he/she is obliged to perform to the
benefit of the other party
and at the same time a creditor in what he/she has the
right to claim from the other party.
General Conditions for Obligation Fulfillment.
An obligation shall be properly fulfilled according to conditions of the
contract, requirements
of Civil Code of Ukraine, other acts of civil law, and in absence of such conditions
and requirements – according to traditions of business practice or other
universally recognized requirements.
Term (Period) of Obligation
Fulfillment.
If for fulfillment of obligation a time period (term) is established,
the obligation must be
fulfilled within this time period (term).
Obligation whose term of fulfillment indicates a certain event that will
inevitably happen
shall be subject to fulfillment since this event happens.
If a time period (term) for debtor’s fulfillment of his obligation is
not specified or determined
by a moment of raising a claim by the creditor, the latter shall have
the right to claim its
fulfillment any time. The debtor must fulfill this obligation within a
seven-day period since
the day of raising a claim, unless otherwise results
from the contract or acts of civil law.
Place for Obligation
Fulfillment.
Place for obligation fulfillment shall be established in the contract.
If a place for obligation fulfillment is not specified, the obligation
shall be fulfilled:
on obligation on transfer of real estate – at the location of this real
estate;
on obligation for transfer of commodities (property) based on the
contract of carriage – at
the place where the commodities (property) are handed over to the
carrier;
on obligation on transfer of commodities (property) based on other
transactions – at the
place of production or storage of commodities (property), if this place
is known to the
creditor at the moment of obligation arising;
on liabilities – at the place of the creditor’s residence, and if the
creditor is a legal person –
at the place of its location at the moment of liabilities arising. If
the creditor changes his
residence (location) at the moment of the liabilities arising and
informs the creditor thereof –
liabilities are fulfilled at the new residence (location) with all the
expenses related to the
change of the place for fulfillment to be covered at the debtor’s
account;
on other obligation – at the place of the debtor’s residence (location).
Obligation may be fulfilled at the other place, if this is specified by
the acts of civil law or
results from the essence of obligation or traditions
of the business practice.
Currency for Fulfillment of
Obligation.
Currency liabilities must be fulfilled in hryvnia.
If a money equivalent in obligation is determined in foreign currency,
the amount due to
payment in hryvnia shall be determined according to the official
exchange rate for the
respective foreign currency at the day of payment, unless a different
procedure for its
determination is established in a contract or act of law.
Use of foreign currency and payment documents in foreign currency to
make settlements on
obligations at the territory of Ukraine shall be allowed in the cases,
per the procedure and
conditions established by
law.
Types of Security for the
Obligation Fulfillment.
Obligation fulfillment may be secured by forfeit, bailment, guarantee,
collateral/pledge,
retention, deposit (down payment).
The contract or the law may establish other types of
security for the obligation fulfillment.
Grounds
for Termination of Obligation:
The obligation shall be terminated by the proper
fulfillment of it.
Upon the parties’ consent the obligation shall be terminated in the
result of an indemnity
(money, other property etc.) transfer to the creditor by the debtor. The parties shall
determine
the size, terms, and procedure of the indemnity
transfer.
Offset of similar counter claims being matured as well as claims with
non-identified maturity
or the maturity established by the moment of the
claim, shall terminate the obligation.
The obligation shall be terminated upon the parties’ consent.
The obligation shall be terminated upon the parties’ consent to
substitute the initial obligation
by a new one between the same parties (novation).
The obligation shall be terminated as a result of the creditor’s release
of a debtor from his
obligations (remitting the debt) unless this violates the rights of the
third persons as to the
creditor’s property.
Uniting the debtor and the creditor in one person shall terminate the
obligation.
The obligation shall be terminated through impossibility to execute it
in connection with a
circumstance, for which none of the parties is responsible.
The debtor’s death shall terminate the obligation if it is inseparably
connected with his
personality and due to it cannot be executed by
another person.
Liquidation of a legal entity (a debtor or the creditor) shall terminate
the obligation, except
for the cases when the law or other regulatory acts impose fulfillment
of the obligation of a
liquidated legal entity on another legal entity, especially the
obligation to reimburse for the
damage inflicted by disability, another damage to
health, or death.
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