Contract

Contract (договір; dohovir). Principal source for contract law, a part of civil law. A bilateral or multilateral contract is a legal act based on the concordance of all parties; it establishes or changes their rights and obligations towards each other.

In the law of ancient Kyivan Rus', contract was an important institution in customary law, and its conclusion involved a number of formal and symbolic acts. In the Ruskaia Pravda, contract, which was known as riad (settlement), was not associated with only one form. It was most often a verbal act. In old Rus' law there existed contracts of buying and selling, borrowing, rent, and deposit. Under the Lithuanian Statute, contracts concerning the buying, selling, and exchange of immovables, as well as loans exceeding a certain amount, had to be drawn up in writing. The statute also normalized contracts of rent, deposit, gifts, and guaranty and included joint obligation, which attested to the more complex conditions of socioeconomic life. In the civil law of the Hetman state, and principally in the Code of Laws of 1743, contract was referred to as zapys (written document), and most cases demanded written contracts. The conditions necessary for a contract to be binding were the manifestation of free will, the agreement of the contract with law and popular custom, the moral nature of the object of contract, and the legal accountability of the persons involved. The following types of contract were included in the code: pledge, guaranty, loan, deposit, purchase and sale, lease, grant, and redemption.

Under Russian and Austrian rule the norms of contractual law constituted part of the civil law that had been codified at the beginning of the 19th century under the influence of the Napoleonic Code and strongly emphasized the principle of freedom to enter into contract. These contract laws were still in force in the Ukrainian National Republic and the Western Ukrainian National Republic from 1917 to 1920.

In the Ukrainian Soviet Socialist Republic, the postulates of contract law were set down in the Civil Code of 1922 (arts 130–398). Contracts of rental, purchase and sale, exchange, loan, undertaking to supply, guaranty, bestowal, grant, commission, insurance, and association were normalized in this code. The sections of the Civil Code of the Ukrainian SSR regarding contract as an institution of civil law still had a relatively great deal in common with the law of non-Soviet states; however, their application became progressively more limited owing to the extension of government control over the social and economic sectors and to the planned character of the economy.

The function of contract changed with the introduction of a wholly planned economy in the Ukrainian SSR. In legal relations between private individuals, contract retained its old meaning, although the number of types of contract decreased. In the private sector, freedom of contract existed in principle (for contracts of purchase and sale, conveyance, exchange, bestowal, rental of domicile, rental of goods, etc).

Contracts of undertaking, in which one party obligates itself to carry out a certain task on the request of the second party (the parties may be private citizens, legal persons, or institutions), were regulated by chapter 28 of the Civil Code of the Ukrainian SSR. There were various types of contracts of undertaking, for example, for capital construction, housing, research, and construction work. These were regulated in detail by the standard regulations (typovi polozhennia) for drawing up commercial contracts and by the decrees of the Council of Ministers of the Union of Soviet Socialist Republics.

In place of contracts of association there existed a contract of joint action between socialist enterprises and, to a limited extent, between private persons. However, such a contract was not one between legal persons. There also existed a contract pertaining to an employee's material responsibility, which is drawn up in writing between the enterprise and the employee.

In the socialist sector freedom of contract did not exist. Enterprises and organizations must draw up contracts according to the plan of, and on the basis of instructions from, the responsible state institutions (ministries, material- and technical-supply agencies). The instructions defined the parties and the main terms of the contract, so that the parties were left to stipulate only the secondary conditions (eg, delivery date, type of packaging). The planned division of the means of production was effected by means of the plan and orders from above in the socialist sector, and the contract served here as a means of controlling both parties. The drawing up of planned contracts took place at designated times during the contracted period.

The major contract of the planned economy was the one for the delivery of goods. It was drawn up and carried out according to the Regulations for Goods' Delivery ratified by the Council of Ministers of the USSR and the Special Conditions of Goods' Delivery, established for various types of production by the Council of Ministers of the USSR and in certain necessary cases by the Council of Ministers of the Ukrainian SSR. Penalties for contraventions of goods'-delivery contracts include fines for breach of contract (monetary fines and imprisonment) and compensation for non-fulfillment of obligations by the contracted party (Civil Code of the Ukrainian SSR, 1964, art 253). Contractual disputes were resolved by state arbitration. The contracting parties were bound by contractual discipline, whose contravention (through, for example, expiration of term or non-fulfillment of contract) was punishable by stipulated contractual sanctions.

Other types of planned contracts included those regarding agricultural production drawn up between state supply organizations and collective farms or state farms. The state's purchase of agricultural products was based on these contracts.

In the labor law of the Ukrainian SSR there existed collective contracts, that is, agreements between trade-union organizations and the administrations of enterprises, by means of which the parties established their mutual obligations in fulfilling state plans. Individual labor contracts had no particular significance, because all workers' rights and obligations were defined in the Code of Labor Laws and the ‘rules of internal labor management’ that exist in every enterprise.

In the branch of copyright law, there were contracts between authors and the state publishing institutions, which were drawn up according to the model contracts ratified by the Council of Ministers of the Ukrainian SSR or, on its authority, by the appropriate departments and the ‘creative associations.’

In the post-Stalinist period voluntary insurance contracts (personal and property) were introduced. The form and conditions of these contracts were defined by the instructions of the Ministry of Finance of the USSR. These contracts differed little, in essence, from their counterparts in the free-market system.

Regulations for drawing up all contracts in the Ukrainian SSR were found in the 1964 Civil Code of the Ukrainian SSR (arts 153–60).

Andrii Bilynsky, Vasyl Markus

[This article originally appeared in the Encyclopedia of Ukraine, vol. 1 (1984).]