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27.5.2022

Issues of non-fulfillment of supply contracts during the COVID-19 epidemic

Project manager:

Managing partner
Corporate practice, Litigation, Investment projects
May 27, 2022

Issues of non-fulfillment of supply contracts during the COVID-19 epidemic

Case description

BBNP's clients — organizing the production cycle and wholesale trade in non-food products — faced serious difficulties during the coronavirus pandemic and the non-working days declared in connection with it¹. The company's lawyers have received requests for assistance in resolving issues related to the fulfillment of obligations under supply agreements, both from the supplier and from the buyer (clients include organizations that are both suppliers and buyers).

BBNP employees analyzed each specific case, established the factual circumstances and gave a legal assessment, pointing out the possibility of applying certain civil law provisions both in the interests of the supplier and the buyer. As a result, notification letters or responses were sent with legislative justification for the inability to fulfill its obligations under the contract or the need for the other party to fulfill its obligations, warning of the application of liability measures under the contract and the law.

After analyzing each case, BBNP specialists identified the general legal structures of such conflicts, identified trends in their occurrence and developed ways to resolve such situations. At the same time, such legal aspects and phenomena as the emergence of force majeure circumstances, the amendment and termination of an agreement due to a significant change in circumstances, the termination of obligations by the inability to perform, and the termination of obligations under an act of a public authority were used.

Result

В результате оперативных и грамотных действий юристов BBNP типовые спорные ситуации, имея четкие пути разрешения, не переходили в разряд конфликтных. Ни один случай невыполнения обязательств по договорам поставки не стал причиной судебного разбирательства с участием клиентов компании.

Information

During non-working days announced by the President of the Russian Federation from March 30 to May 8, 2020, many business entities faced serious problems in carrying out their normal economic activities. In addition to formal non-working days, regional authorities have imposed restrictions on the activities of legal entities. These restrictions hampered the normal functioning of companies, some of which were unable to continue operating at all for a variety of reasons related to the measures taken.

First of all, organizations of the production cycle and the wholesale trade in non-food products began to face such problems, because their supply chain for both production components and goods began to literally break due to the inability of producers and suppliers to fulfill their obligations.

On March 25, 2020, Decree No. 206 of the President of the Russian Federation was issued, establishing non-working days from March 30 to April 3, 2020. Subsequently, by Presidential Decree No. 239 dated April 2, 2020, the non-working days regime was extended until April 30, 2020, and by Decree No. 294 dated April 28, 2020, until May 8.

In addition, at the regional level, a number of resolutions and decrees were adopted to introduce a high alert regime, and then self-isolate citizens and suspend the activities of enterprises and organizations. So in the territories of Moscow. In Moscow and the Moscow Region, the high alert regime was introduced by Decree No. 12-UM of the Mayor of Moscow dated March 5, 2020 and Decree No. 108-PG of the Governor of the Moscow Region dated March 12, 2020, respectively.

Project team

Olga Aladysheva (Alibayeva)
Head of the Accounting and Tax Department
Certified Chief Accountant
Diana Bugulova
Certified Chief Accountant
Accounting and Tax Department
Maxim Barashev
Managing partner
Corporate practice, Litigation, Investment projects