CHAPTER 12 Contracts in General The soviet law of contracts evolved from the efforts of the soviet legislators and jurists to use within the framework of socialist economy the concept of contract as developed in the civil law countries. Therefore, a person schooled in Anglo-American legal theory must be prepared to sustain a double handicap in studying the soviet law of contracts. On the one hand, the Con­ tinental European law of contracts, which is the start­ ing point of the development of the soviet theory of contract, deviates from basic concepts of Anglo-Ameri­ can law. On the other hand, the notion of a contract as outlined in the Civil Code no longer covers, in reality, all ramifications of contract in soviet law, in particular contracts between government agencies engaged in in­ dustry and commerce. But the concepts implied in the provisions of the Civil Code have not been totally aban­ doned, and it seems appropriate, therefore, to begin with a consideration of those concepts. 1. Legal Transactions and Contracts ln outlining the law of contracts, the framers of the soviet Civil Code followed certain theoretical construc­ tions of European law, of German law in particular, as developed by Professors Shershenevich, Gambarov, and Korkunov, the Russian prerevolutionary legal writers of renown. 1 Since these constructions have been taken 1 Shershenevich, 1 Textbook of the Russian Civil Law (in Russian 11th ed. 1915) 86, 190; Gambarov, 1 Course in Civil Law (in Russian 1911) 632; Korkunov, General Theory of Law (in Russian 7th ed. 1907) 161 et seq., English translation by Hastings ( 1922) 167 et seq. 415 416 SPECIAL TOPICS over by soviet jurisprudence,2 they are stated here in brief ; this will also explain the terminology and arrange­ ment of the provisions on the law of contracts and torts in the soviet Civil Code. Events capable of producing legal effects (legal facts) are visualized as being either events independent of the will of persons whose rights or duties they affect­ events in a narrow sense-or human acts. Thus, death which opens succession, the burning of an insured build­ ing which gives rise to the claim for insurance, lapse of time which bars a suit-all are legal events in a narrow sense. Now, human acts may be undertaken without the intention to cause the effect which the law neverthe­ less attaches to it, or may be expressly directed towards causing a certain legal consequence, to which intention the law may give full effect. Contracts fall among such human acts as are directly designed to bring about cer­ tain legal effects, viz., to establish, modify, or terminate rights and obligations. But while a contract requires at least two contracting parties, a concurrence of at least two wills, there are instances where the expression of a single will is under the law sufficient by itself to pro­ duce legal consequences. Thus, notice by the landlord terminates his relation with the tenant occupying prem­ ises under a lease for an indefinite period; renunciation by the heir of his share extinguishes his succession rights. In other instances, a unilateral expression of a single will produces the contemplated legal effect only if accompanied by a legal event. This is the case of a testament which produces its effect-testate succession 2 Agarkov, "The Concept of a Legal Transaction un<ler the Soviet Law" (in Russian 1946) Soviet State No. 3/4, 41 et seq.; 1 Civil Law Textbook (1938) 138; 1 Civil Law (1944) 62-72, 89; Zimeleva, Civil Law (1945) 11-12, 45. CONTRACTS IN GENERAL 417 --only upon the death of the testator. While, in the Anglo-American law, contracts are not combined with such legally relevant expressions of a single will under a generic concept, the doctrine of the civil law, followed by the soviet law, employs a generic expression serving this purpose. Thus, "legal transaction" (negotium iuris) 3 is a generic term designed to unite, as two species, both contract as the legally relevant concurrence of at least two wills and the legally effective expres­ sion of a single will! The terms bilateral and unilateral are used in this connection, in Section 26 of the soviet 3 Rechtsgeschiift is the term used in the German Civil Code; the term acte juridique is used by the French legal writers Planiol. Colin et Capitant, Josserand, Demogue. See especially Saleilles, Declaration de Volante (1906). 4 There are human acts other than legal transactions that cause legal con­ sequences. Characteristic of a legal transaction, and contract in particular, is that the parties to it directly desire the legal effect flowing therefrom. Vendor and purchaser seek to transfer title; the testator to bequeath his property. But in some instances, the law attaches to an act a consequence not contemplated by the actor. This is true of an unlawful act (tort), be­ cause, although the tortfeasor may have intended to inflict the injury, he probably did not desire to bring about the legal consequence thereof, viz., his liability for damages. The effect not intended may also result by opera­ tion of law from a lawful act. Thus, under the soviet law, a finder of lost property acquires, by the act of finding, a right to remuneration (Section 64 et seq.). The author of a work of art acquires copyright by the fact of its creation. Moreover, acts of public authorities (administrative acts) and certain kinds of judicial decisions establish private rights and obligations. The soviet textbook of 1944 emphasizes that "under the planned socialist economy, administrative acts as bases of civil legal relations are of great importance." (1 Civil Law (1944) 65). Thus, the variety of legally rele­ vant facts may be presented in the following scheme, partly derived from the soviet textbook ( id.) : Legally relevant facts are either events independent of human will (legal events) or human acts. Human acts are either lawful or unlawful. Lawful acts embrace (a) legal transactions which may be either unilateral or bilateral, called contracts; (b) acts of authorities, administrative or judicial; and (c) unintentional acts which result in legal consequences by operation of law. Unlawful acts may result only in punishment or in liability for damages or in both. When treated from the point of view of damages, they are torts. [Soviet Law]-27 418 SPECIAL TOPICS Code in particular, in a meaning somewhat different from that of the Anglo-American law, viz., to denofe whether two wills or a single will is the constitutive ele-:­ ment of a legal transaction. A legal transaction formed by a single will (e.g., testament, notice, renunciation of a right) is called unilateral, while contracts formed by the. meeting of at least two minds are called bilateral legal transactions. But, as in Anglo-American law, contracts themselves are subdivided into bilateral con­ tracts, in which the obligations of both parties are mutual, and unilateral contracts, under which all the obligations arise for one party and all the rights for the other.6 Thus, the term bilateral is applied to a legal transaction to denote simply a contract of any kind, while, when applied to a contract, it denotes a contract establishing mutual obligations of both parties thereto (e.g., sale). 2. Law of Contracts in the Civil Code Visualizing contracts as a species of the generic con­ cept of legal transaction, the framers of the soviet Civil Code covered a portion of the law of contracts by a body of general provisions equally applicable to all legal trans­ actions, including contracts (Sections 26-43), and placed these provisions in the introductory General Part of the Code. Here such subject matters are treated as form (Sections 27-29), illegality (Section 30), capacity (Sec:. tion 31), duress (Section 32), necessity (Section 33), pretended transactions (Sections 34-35), invalid~ty (Sections 36-37), contracts made through an agent (Sections 38-40), and conditions (Sections 41-43). Of all these provisions, only those of Section 30 depart from r. Civil Code, Section 139, Note. [Soviet Law] CONTRACTS IN GENERAL 419 the standards of nonsoviet laws; these are discussed· infra under 5. Unilateral legal transactions play a smaller role than contracts, and therefore the impor­ t;mce of these provisions lies mainly in the fact that they are part of the soviet law of contracts. But another part of the Civil Code must also be examined to obtain a complete picture of the provisions governing the law of contracts. The framers of the Code segregated into a separate part of the Code, under the heading Law of Obligations, provisions dealing with obligations in gen­ eral, regardless of the grounds from which they ar.ise, whether contract, tort, or any other (Sections 106-129), general provisions concerning obligations arising from contracts (Sections 130-151 ) , provisions respecting in-· dividual contracts, viz., lease, sale, barter, loan, inde­ pendent contracting, suretyship, agency, power of at­ torney, contract of commission, partnership, and insurance.6 A separate chapter in the same part deals with unjust enrichment and another with torts.7 Thus. with the exception of these two chapters, the whole of the Law of Obligations deals in fact with the law of. contracts. 3. Obligations Arising from Contract The Civil Code defines contract in conjunction with legal transactions in general. The pertinent section reads as follows: 26. Legal transactions, that is to say, acts intended to estab­ lish, modify, or terminate civil legal relations may be uni· lateral or bilateral (contracts) . & Lease, Sections 152-179; sale, Sections 180-205; barter, Sections 206- 207; loan, Sections 208-219; independent contracting, Sections 220-235; suretyship, Sections 236--250; agency, Sections 251-263; power of attorney, Sections 264-275; contract of commission, Sections 275 a-y; partnership, Sections 276--366; and insurance, Sections 367-398.