When concluding an agreement, it is often necessary for one party to ensure that the second party will accurately comply with the requirements of the agreement. For this, different methods can be used, represented by ensuring the performance of the contract. The specific method is negotiated by the two parties until the signing of the contract. Collateral is required both in a situation where both participants are private individuals or companies, and in the event that a state organization participates in the agreement.
Concept of collateral
Securing the performance of the contract is represented by a special guarantee of one participant that the other party will timely and fully fulfill the obligations listed in the agreement. Information on this guarantee is contained in Federal Law No. 94. Most often, such a financial guarantee applies to suppliers or borrowers.
If, for any reason, the party to the transaction is unable to fulfill its obligations, then losses incurred by the other party are covered by the security used in advance.
Warranty Size
The amount of contract enforcement can vary significantly in different situations. Under standard agreements, it is only 30% of the initial price of the agreement, for example, if an agreement is signed at the state order.
If a loan agreement is signed, then it requires the transfer of property as a pledge. The value of such property should be equal to the amount of funds issued.
The exact amount of security for the execution of the contract is agreed upon by the two parties in advance. In addition, it is decided which type of guarantee will be used.
Rules for registration
Ensuring the execution of the contract is required when concluding various transactions. At the same time, such a guarantee is introduced in two different ways:
- information on collateral is included in the direct contract, for which the relevant clauses are formed;
- an additional agreement to the contract is drawn up, which describes in detail the selected guarantee.
The first option is most often chosen, since before signing the direct contract, the parties immediately stipulate all conditions of cooperation.
Ways to enforce contractual obligations
There are many methods to ensure that all conditions of the agreement are met by both parties to the transaction. Each option has its own nuances. The most common ways to enforce a contract include:
- payment of a penalty, the amount of which is clearly specified in the agreement;
- transfer of valuable property as a pledge, and the value of the item must be equal to or greater than the transaction price;
- the transfer of a thing by the debtor to another party to the agreement, and it is returned only after the fulfillment of all obligations under the contract;
- attracting a surety who is able-bodied, employed and responsible citizen, who will fulfill the obligations of the debtor under the contract, if for various reasons he cannot cope with them independently;
- payment of a deposit guaranteeing that the second party to the transaction will not be able to refuse obligations before signing the contract directly;
- use of a security payment;
- applying a bank or independent guarantee, which is a paid service.
The use of different warranties is allowed only on condition that they in no way violate the requirements of the law.
Use of forfeit
Securing the performance of obligations under a contract with the help of a penalty is considered a popular way. It is represented by the fine applicable if one party to the transaction refuses to sign a contract or fulfill obligations under an agreement. The amount of the penalty is agreed upon by the two parties before signing the contract. This amount is transferred to the creditor by the debtor if he is unable to fulfill the obligation. The rules for the application of such a contract enforcement include:
- the agreement, in which the penalty is indicated, is drawn up in writing regardless of which form of the main contract is chosen by the parties to the transaction;
- the penalty stipulated by the agreement is paid if the debtor does not fulfill his obligations under the document;
- the penalty shall be recovered even if the creditor did not incur losses, but the debtor did not fulfill his obligations;
- the penalty can be applied for any kind of obligation;
- by court decision, the amount of payment may be reduced if the amount does not correspond to the consequences of violation of the terms of the contract;
- even the lender can reduce the payment.
According to the law, a lender may require a penalty even if information about it is missing in the contract. For example, if housing is purchased in a house under construction according to the DDU, then if the developer does not put the house into operation on time, then buyers of premises may demand a forfeit, calculated on the basis of the Central Bank refinancing rate.
Bank guarantee
Securing performance of obligations under the contract may be represented by a bank guarantee. The bank acts as the guarantor, since it is he who pays the beneficiary the necessary amount of funds if there is a request from the principal. The nuances of using a bank guarantee include:
- warranties are in writing only;
- during the preparation of the contract, the required amount of funds is transferred to the bank, after which the money is paid to the second party to the contract solely on condition that obligations under the agreement are fulfilled;
- the guarantor cannot present his claims or discuss the possibility of transferring money under the obligation, therefore his responsibilities include only the payment of funds on the basis of documents submitted by one participant in the transaction that confirm that he fulfilled the obligations.
A bank guarantee is offered by almost every modern bank. Its value depends on the price of the contract. Instead, a letter of credit may apply. Such bank security for the execution of the contract is considered beneficial and convenient for each participant in the transaction.
Independent Warranty
It is represented by an analogue of a bank guarantee, but is offered not only by credit organizations, but also by various commercial companies.
Under the terms of an independent guarantee, different types of obligations can be prescribed, therefore, it is possible to transfer not only money, but also various securities or items with certain established generic characteristics. Their transfer should not contradict the requirements of the agreement drawn up between the two parties to the transaction.
The guarantor must consider the requirements of the beneficiary within the deadlines established by law, so the process is carried out within 5 days. It is allowed to provide for a different period of time in the contract, but it should not exceed 30 days.
Use of collateral
Securing the fulfillment of obligations under a pledge agreement is considered a popular process. In this case, the debtor pledges his property to the creditor. This process is formalized in an official way, for which the necessary information is entered into the Rosreestr. Most often, this method of collateral is chosen when obtaining a large loan at a bank.
The features of using collateral include:
- the subject of the pledge is property belonging to the debtor, and property rights may also be used;
- it is not allowed to use valuables that are already secured or arrested;
- items can be transferred physically or an encumbrance may be imposed only at the Federal Registration Service, therefore, in the latter case, the mortgagor can use the property;
- if the debtor does not fulfill obligations under the contract or carries them out with serious violations, then the pledge becomes the property of the creditor, who uses it for sale at the auction with the aim of paying off the debt.
The law provides for the use of various property in the form of collateral. The most commonly used is such security for the execution of a loan agreement if housing or a car are purchased with the help of borrowed funds. Purchased property is immediately pledged to the bank.
Deposit
Another method of collateral is considered a deposit. It is represented by a certain amount of funds transferred by one party to the other party to the agreement as the first payment under the agreement. The provision of such an amount acts as a guarantee that a particular party will not refuse to sign an agreement or fulfill obligations under this document.
An advance is not a guarantee, since it is only a preliminary payment, therefore, upon request, it is returned to the paying party if there is no counter-provision.
The deposit is not returned to the second party if it violates the terms of the contract. If the obligation is not fulfilled due to the fault of the participant who received the deposit, then he must return these funds in double size.
Deposit Application Rules
When using the deposit, the nuances are taken into account:
- the deposit agreement is concluded exclusively in writing;
- the procedure for registering the advance payment process is not regulated at the legislative level;
- if there is no information in the contract that the transferred amount is a deposit, then it is recognized in advance;
- the size of the deposit may vary significantly, since it depends on the features of the direct contract and the price of the contract.
The deposit is used by the parties to the transaction only if they are sure of the advisability of concluding a contract.
Application of guarantee
The most popular security for fulfilling obligations under a loan agreement is guarantee. It consists in the fact that the borrower invites responsible, solvent and reliable persons as guarantors. The features of the use of this software include:
- the surety signs a guarantee agreement with the bank;
- the guarantor undertakes to repay the borrowed funds to the bank if the direct borrower fails to cope with the credit load for various reasons;
- the citizen assumes the risk of non-return of money by the debtor;
- in case of problems with obtaining funds from the debtor, the creditor may require that the obligation be fulfilled by the guarantor, therefore, under such conditions, banks provide large amounts of funds at low interest rates;
- several guarantors may be involved, but the bank has the right to independently choose who will repay the debt;
- most often, a guarantee is applied when registering large loans, in which the debtor cannot transfer personal property as collateral;
- collateral is valid only if there is a basic obligation, therefore, after repayment of the debt, the guarantee becomes void.
The guarantee is used by banks exclusively in the event of the circumstances specified in the contract related to the fact that the direct debtor cannot or does not want to cope with his obligations.
Conclusion
When drawing up any contract, the parties can use different types of collateral.They act as a guarantee that each participant will fulfill the obligations of the agreement.
Any security is executed in writing, for which information may be indicated in the main contract or an additional agreement may be drawn up. The choice of a specific warranty option depends on the price of the contract and its features.