The consequences of the invalidity of a transaction under the Civil Code of the Russian Federation are events that relate to persons who took part in it at the initiative of the interested party.
The concept of an invalid transaction
A transaction is an action of a person that leads to a change in existing civil rights and obligations or to the emergence of new ones. A transaction is a general concept that contains a lot of things, starting with the purchase of bread and ending with contracts between the largest companies. For this reason, the concept and consequences of the invalidity of a transaction is a popular topic among practicing lawyers.
The law obliges parties to the transaction to adhere to certain rules. Their failure or violation makes the transaction invalid or illegal.
Each type of invalid transaction entails a certain set of consequences. The law refers to the general consequences for all transactions and to specific ones that are characteristic of any one category. For example, the consequences provided for invalid transactions with incompetent citizens. The types of consequences of transaction invalidity serve as a separate criterion for their classification.
Another transaction is divided into two large groups: disputable and insignificant.
The legality of the first group is only being questioned, acts from the second group are considered illegal automatically. The law gives the court the right to declare a void transaction legal if one of the parties to the transaction submits a justified claim.
Legislative regulation
Art. 167 describes the general consequences of the invalidity of transactions. The following articles describe the consequences of a particular violation. For example, invalid transactions involving minors.
The most large-scale amendments to the articles of the law on transactions were introduced in 2013.
Periodically, the Armed Forces of the Russian Federation give clarifications on the application of these provisions. General recommendations are set out in the Resolution of the Plenum of 2015, explaining the application of the 1st part of the Civil Code.
In reviews describing specific cases, more attention is paid to specific standards. For example, it is discussed what serves as the basis for invalidating a social contract of employment when the procedure for concluding it is violated. Disputes over the conclusion of state and municipal contracts are constantly being investigated. Thus, the general rules on the invalidity of transactions are applied together with other norms.
What options are proposed by law?
According to the Civil Code, the consequences of the invalidity of the transaction are a short list. It:
- mutual restitution;
- unilateral restitution;
- denial of restitution;
- termination of the transaction for the future.
Legal value of invalidity
What is the essence of the law on the consequences of invalidity of transactions? An act of this kind does not lead to legal consequences from the point of view of law. The parties do not have any rights and obligations that would arise if the transaction were legal.
If consequences arise, they are primarily associated with the illegality of transactions and the elimination of the negative consequences of their completion.
For example, the purchase of real estate recognized as illegal does not give the buyer or seller the rights to real estate and money, respectively. And if we are talking about the acquisition of things that cannot be had without special permission or are they generally forbidden to have by citizens? The transaction is considered illegal, goods are taken from its participants, and the state transferred the money transferred for it. Confiscation is a kind of punishment.
Mutual restitution
The term restitution means a return to the original legal position, in this case, the parties to the transaction. They return to each other the property received as a result of the transaction. If the return of property is not possible, a monetary refund is provided. For example, a car or other property was resold or destroyed, then the owner is obliged to pay monetary compensation. The obligation to pay compensation lies with the acquirer. Who is to blame for the loss of property does not matter.
Double restitution applies unless otherwise provided by law. Partial execution of the transaction is enough for its application.
Unilateral restitution
Unilateral restitution as a consequence of the invalidity of a transaction under the Civil Code of the Russian Federation is applied with direct reference to the law. It takes place either in unilateral transactions, or in transactions made under the influence of deception, violence, error. The clarifications indicate that the unscrupulous party is deprived of the right to request that the transaction be declared invalid if its actions gave other participants reason to consider it legal. In addition, she is effectively deprived of the right to redress.
An example of one-sided restitution is the return of real estate rights alienated as a result of illegal donation.
Denial of Restitution
Art. 167 of the Civil Code of the Russian Federation gives the court, which recognized the transaction invalid, the right to refuse to its participants in restitution, if this contradicts the foundations of morality and the rule of law.
The contradiction of the essence of the transaction of morality and the rule of law is an evaluation category, and the debate about the appropriateness of introducing it into the text of the law has not yet ended. As you know, valuation categories give place to arbitrariness and contribute to the violation of citizens' rights.
The introduction of this formulation is connected with the desire to fill in the gap that could have arisen, but the idea was unsuccessful.
Refusal of restitution applies to criminal transactions (trafficking in persons, weapons, drugs, etc.). If the money obtained by criminal means is not completely withdrawn, then the participant in the transaction who received it remains a debt to the state.
If we talk about making imaginary transactions, for example, under the guise of a gift contract, they made an act of selling property, the consequences are not so serious. The transaction is recognized illegal, the parties will return to their original position. Such transactions, aimed more often at tax evasion, do not lead to the loss of property and cash.
Indemnification
The fact of evidence of unfair conduct entitles the other party to claim compensation.
Its occurrence is due to the indication of the law. For example, a deal with an incompetent person. Recognition of the transaction as unlawful and the presence of the fault of a competent participant are grounds for requesting compensation for damage in court. The law may also establish the obligation to pay damages in the absence of fault of the party to the transaction.
Some features of invalidation of a transaction
First of all, the party to the transaction has the right to action, however, the law does not prohibit other persons whose rights and interests are affected by the transaction from going to court.
The plaintiff indicates how the transaction between third parties concerns his rights and interests. If the claim does not have appropriate instructions, it shall be left without movement.
A party or other interested person can only seek to invalidate the transaction. The claim may not contain clauses affecting the application of the consequences of the invalidity of the transaction; the Civil Code of the Russian Federation allows such actions.
At the same time, the court is entitled on its own initiative to apply the consequences of an invalid transaction. This is one of the exceptions when a judge has the right to go beyond the requirements of a lawsuit. Thus, the parties are given the right to defend their rights to the extent that they consider it necessary, while the guarantee of protecting the rights of the injured party remains. Especially if the participants in the process, representatives of children, refuse to apply the consequences.
The prerogative of exercising this power remains entirely in the hands of the judge; the law does not limit it in any way.
The impact of court decisions on the future
Participants in the civil turnover are trying to insure themselves by concluding deals for the future. A striking example is the preliminary contract. Its participants undertake to conclude an agreement in the future. Its terms are stipulated.
Invalidation of a preliminary contract cancels all obligations between its participants that they had to fulfill in the future. Thus, the legal consequences of the invalidity of transactions concern both the past and the future. Another example is delivery. A supply contract that is recognized as completely incompatible with the law means the cancellation of the obligation to make deliveries and pay for them in the future. Sometimes this is the only consequence of an illegal transaction, as parties did not have time to acquire rights or obligations.
Filing a lawsuit
There is a rule that the actions of a person are considered conscientious and lawful, unless otherwise proved by the court. So with transactions, only a judge has the right to declare them invalid and apply the corresponding consequences. Up to this point, regardless of the content and how it is framed, the transaction is considered formally legal. What art. 167 of the Civil Code with comments speaks of a lawsuit?
The scheme for compiling the application to the court is as follows:
- name of institution;
- full name or name of organization (applies to both the plaintiff, and the defendant, and a third party);
- Full name of a person - a participant in the process;
- statement of circumstances related in the opinion of the plaintiff with his claims;
- claim requirements (invalidate the contract);
- inventory of attached documents;
- signature of the submitter (plaintiff or his representative) and date.
The number of copies of statements of claim and documents attached to it is determined by the number of alleged participants in the process, one set is attached to the court.
Whether or not to ask the court to apply the consequences of the invalidity of transactions in a statement of claim is solely the choice of the plaintiff.
The court decision on the application of the consequences is canceled only by a higher court on the complaint of one of the parties or both of them.
The law does not prohibit filing a lawsuit to declare the transaction illegal, and then in a new lawsuit to ask for the application of the consequences.
In a dispute over property, its assessment is necessarily carried out, and on its basis the size of the state duty is calculated. A copy of the assessment report is attached to the application to the court. The original payment receipt is also attached to it. If we are talking about real estate, the lawsuit is sent to the court at its location. In other cases, the proceedings take place at the defendant's place of residence.
What evidence is needed?
Illegal transactions often border on criminal acts, so an assessment given by law enforcement agencies in an appropriate form is often required. For example, where it comes to violence, threats to life, deception or fraud, positive results from a police investigation cannot be dispensed with. A simple letter from the district police officer that some events may have taken place is not considered proper evidence.
The assessment of errors is based in part on the results of the examination if the person was in a serious emotional state, although not considered to be mentally ill.
Challenging transactions is possible with the help of documents, examinations and testimonies, the latter play a secondary role and must correspond to other case materials.
Statutes of limitations
Appeal to the court is limited in time. Depending on the transaction in question, the law defines 1 year, 3 years and 10 years for going to court. As a rule, the timing starts from the day when it became known about the illegal transaction.
Skipping a term for good reason is not a reason for refusing to accept the application by the court. Moreover, the fact of missing the deadline does not matter, unless the second party declares this.Nevertheless, it is better to hedge and, citing a good reason, ask the court to restore the deadline for filing a lawsuit.
Where to look for help?
There are cases of filing a generally substantiated application, but the plaintiffs lose the case or the gain is less than could be expected. What is the reason? Ignorance of the law or its incorrect interpretation plays into the hands of the defendant or his representative. Judges are inclined to rely on the arguments of the parties and documents, one little thing is enough to convince the court to dismiss the lawsuit. So a refusal to help a lawyer can be fatal.