Lawyer's answers
Questions and answers on business contract disputes
Answers on supply, works and services contracts, acceptance, delay, termination and pre-action claims.
In a contract dispute, what matters more: the contract itself or the performance records?
The contract and performance documents should be read together. A strong claim is one in which they support the same factual account. Unexplained inconsistencies tend to weaken the party relying on those documents.
The contract sets the legal model: obligations, remedies and dispute procedure. Performance documents show what actually happened—what was invoiced, delivered, accepted and paid, and how the parties reacted to deviations. A court may need both to understand the relationship.
Where the written terms and actual performance align, the evidentiary position is clearer. Where they diverge, the issue may be breach, a later amendment, waiver, course of dealing or another legal consequence. The court's characterisation depends on the facts and applicable rules.
Examples include a contract requiring signed acceptance certificates when none were signed, amendments discussed only in messaging apps, or invoices repeatedly using a different price from the written contract. The court will assess the parties' conduct, authority, form requirements and evidence before deciding what legal effect those differences have.
A strong file either shows the contract and performance documents working together or explains documented departures from the written terms. Where the contract is weak, contemporaneous performance evidence can still be important, but it does not automatically become a new “factual contract.”
Should every possible claim be included in the first formal demand?
No. An overloaded pre-action claim can obscure the core breach and create inconsistent demands. Lead with the remedy that follows from the facts and contract, then add only legally compatible ancillary claims.
Identify the principal breach, quantify its direct consequences and choose the main remedy—such as payment, repayment of an advance, replacement or another contract remedy. Then test any penalty, damages or interest claim against the contract and applicable law. The claim should make the primary demand and its calculation easy to follow.
Avoid mutually inconsistent remedies unless pleaded lawfully in the alternative. Do not stack penalties, Article 395 interest and full damages without checking how they interact. Lost profit requires evidence and calculation. Non-pecuniary damages are generally not a standard remedy for a commercial dispute between legal entities.
A practical pre-action claim states the breach and relevant contract term, the main remedy and calculation, any compatible ancillary claims, the performance deadline, the intended next procedural step and the supporting documents.
A pre-action claim is an early formal statement of the company's position. Later changes may need explanation, so it should be drafted with the likely court case in mind rather than as a catalogue of every conceivable demand.
Can you go to court if the acceptance documents are imperfect?
Yes, if other evidence proves the fact and scope of performance. A signed acceptance document is strong evidence, but its absence or defect does not automatically prevent recovery.
Other evidence may include invoices, payment orders identifying the transaction, business correspondence confirming receipt or use, the customer's internal records where available, reconciliation statements and the parties' conduct after performance. The weight of each item depends on the contract and the disputed obligation.
If an acceptance document contains reservations, the dispute may concern quality or completeness. If it is unsigned but the result was used, actual acceptance may be proved by other evidence. If an unauthorised person signed, authority and the counterparty's reasonable understanding of that authority must be examined. A lost document may sometimes be reconstructed from the wider record.
The legal basis depends on the contract type. Articles 720 and 753 of the Civil Code contain specific acceptance rules for work and construction contracts; Article 432 concerns formation of a contract; Article 10 addresses good faith and abuse of rights. None creates a universal rule that use of a result automatically cures every defective acceptance document.
If a customer refuses to sign without giving substantive reasons, the contractor should follow the contractual notice and acceptance procedure, preserve proof of delivery, send a focused pre-action claim and, if payment remains due, file with the full set of evidence showing performance and use. The precise Civil Code rule depends on the contract type.
When does a contract conflict require preparation for court?
Court preparation should begin before the dispute becomes irretrievable. A useful trigger is a material breach combined with clear signs that ordinary correspondence is no longer resolving it.
Move toward litigation preparation when correspondence produces no concrete result, the breach becomes material, the counterparty reverses an earlier factual position, complex damages or interest must be calculated, or delay threatens the evidence or limitation period.
Court preparation includes legal and evidentiary assessment, review of originals and usable copies, collection of any additional evidence, expert material or translations that are genuinely needed, calculation of the remedies, a document-linked chronology and a procedural plan covering any mandatory pre-action steps and interim relief.
Early preparation makes negotiations better informed, shortens the work needed if filing becomes necessary and allows any interim-relief application to be prepared with the claim. It also helps ensure the pre-action letter is consistent with the later case.
Late preparation reduces the time available to collect and preserve evidence and may leave the company working against an expiring limitation period. It can also mean that useful contemporaneous confirmations are no longer obtainable.
Which limitation periods apply to contract disputes?
The general limitation period is three years under Article 196 of the Civil Code, but special periods apply to particular claims. The applicable period and its starting point must be determined for the specific remedy.
Different claims can carry different limitation periods. The general period is three years, while transport, defective-work, insurance and invalid-transaction claims may be subject to special rules. Check the current Civil Code provision for the exact contract and remedy rather than applying a list of periods mechanically.
The starting date depends on the obligation and claim. For a payment due on a fixed date it will normally be tied to non-payment when due; other claims may turn on when the claimant knew or should have known of the violation and the proper defendant. Calculate the date from the actual facts and the specific limitation rule.
Suspension, interruption and the effect of a mandatory pre-action procedure are governed by Articles 202–204 and related Civil Code rules. A lawsuit, acknowledgment of debt and pre-action process do not all affect time in the same way, so the calendar should be calculated under the specific provision rather than described as a universal “reset.”
A partial payment, reconciliation statement or written response may amount to acknowledgment of a debt, depending on its wording and context, and can affect the limitation period under the Civil Code. Do not assume every payment or document automatically acknowledges the entire debt.
Review filing readiness well before the limitation period becomes critical. Where time is genuinely short, preserving the claim procedurally may take priority over perfecting every part of the written argument, provided the filing itself complies with the required rules.
How should a contractual penalty be calculated and defended against reduction?
A contractual-penalty calculation is both arithmetic and legal. The contractual basis, calculation base, period and rate must be correct, and the amount may still be tested for proportionality under Article 333 of the Civil Code.
Article 333 of the Civil Code allows a court to reduce a contractual penalty that is clearly disproportionate to the consequences of the breach. In business disputes, the procedural conditions for reduction and the parties' burden of argument should be checked under current law and Supreme Court guidance.
A defensible calculation identifies the contract clause or statutory basis, the amount on which the penalty accrues, the start and end dates, the rate, any changes by period and the final arithmetic. Show the calculation so the court and counterparty can reproduce it.
To resist reduction, explain why the agreed rate and resulting amount are proportionate to the breach, including its duration, commercial consequences and the parties' conduct. Do not rely on a universal “normal” daily percentage; market practice varies by transaction.
Arguments for reduction may include a large disparity between the penalty and the consequences of the breach, an unusually long accrual period, or other facts showing disproportionality. Financial difficulty by itself is not an automatic ground.
Reduction is not automatic. A creditor should be ready to explain the commercial rationale and consequences of the agreed penalty with evidence rather than assume a correctly calculated amount will be awarded in full.
What if the counterparty enters bankruptcy during the dispute?
Once a counterparty enters bankruptcy, ordinary recovery may have to give way to the bankruptcy process. The correct procedure, filing window and priority depend on the stage of the case and the nature of the claim.
Russian corporate bankruptcy can include supervision, financial rehabilitation, external administration and liquidation proceedings. A creditor should identify the procedure actually introduced and the publication triggering any claims deadline before deciding how to file.
Bankruptcy claim deadlines differ by stage and purpose. Do not use a blanket “30 days from recognition of bankruptcy” rule for every creditor claim. Check the relevant publication, procedure and current Bankruptcy Law provision immediately.
Confirm the bankruptcy case in the official sources, identify the procedure and court, determine how and when the claim must be lodged, and assess the claim's priority and security. Parallel proceedings may be affected by bankruptcy rules, but they do not all simply “move” into the bankruptcy case in the same way.
Depending on the facts, a creditor may also have rights arising from security, grounds to challenge debtor transactions or grounds for subsidiary liability of controlling persons. Each route has its own standing, timing and evidentiary requirements.
Bankruptcy usually increases recovery risk. For material transactions, consider counterparty financial checks, security such as guarantees or pledges where appropriate, diversification and earlier action when payment problems emerge.
Can goods delivered to a non-paying buyer be recovered?
Sometimes, through remedies available under the contract and Civil Code. Whether the goods themselves can be recovered depends on title, the contract, what has happened to the goods and the legal basis for the remedy.
A retention-of-title clause under Article 491 of the Civil Code can preserve the seller's title until payment, subject to its terms and the facts. Other structures may include agreed return rights or security over the goods, each with its own enforcement requirements.
Without a specific retention clause, rescission, restitution, proprietary claims or unjust-enrichment rules may be relevant only where their statutory elements are met. Non-payment alone does not automatically restore title or create a right to reclaim goods once ownership has passed.
If goods were delivered on deferred payment and remain identifiable, review title and termination rights before choosing between return and payment. If the buyer has used, transformed or sold the goods, a monetary claim may be the practical route. The remedy depends on the contract and property status, not simply on whether the goods still look saleable.
Recovery in kind becomes harder once goods are used, processed or transferred to third parties. If title already passed without a basis for a proprietary claim, the seller will usually need a contractual payment remedy. Article 302 protections for good-faith acquirers may also matter in a true proprietary dispute.
Where non-payment risk is material, consider retention of title and suitable security at contract stage. After default, act promptly to preserve evidence and any available proprietary remedy, but do not assume that speed alone creates a right to take the goods back.