1. Civil Law #3 Zhanat Alimanov, assistant professor

2. Home assignment 1 12. Section 3 (Обязательственное право), Sub-Section 1, Civil Code (General Part)

3. Terms 1. Unconscionable contract – кабальная сделка 2. Duress - принуждение 3. Fraud - обман 4. To repeal – признать недействительным 5. To void - признать недействительным 6. Rescission – расторжение 7. Voidance – недействительность 8. Malicious contract – злонамеренное соглашение

4. PLAN V. Defenses to contract formation

5. V. Defenses to formation of Contract (art. 159)

6. Step 1 (Formation of Contract) Is there an offer? (art. 393- 5) Is there an acceptance? (art. 397) If not, is there a counteroffer? (art. 396) If yes, there is a CONTRACT

7. Step 2 (Consequences) CONTRACT FORM (форма договора, articles 151, 152, 153) Non Observance* of the Notarized form No Contract Restitution Non Observance of the Simple Written Form Contract No witnesses DEFENSES (основания недейств-сти, art. 159) Restitution *несоблюдение

8. Example (Let’s assume..) KZ factory Katel insured its buildings and equipment in KZ against fire & other accidents with the Golgans, English insurance company. Insurance fee was USD 10 mln. Value of assets insured amounts to USD 1 bln The contract is governed by KZ law.

9. Example (Let’s assume..) Let’s assume that fire has occurred. Katel demands insurance. Golgans says that there is no contract as it was not aware of licensing requirement of KZ legislation.

10. Example (Let’s assume..) Can Golgans repeal (признасть недействительным) the contract? What are the consequences of contract voidance? What are the consequences of the validity of the contract?

11. Example (Let’s assume..) Can Golgans repeal the contract? Art. 159 What are the consequences of contract rescission? Art. 157, Restitution What are the consequences of the validity of the contract? 1 bln.

12. Defense 1. NO LICENSE

13. Example 2 Parents gave Malika, a 13 year old girl, money to buy a coat. Instead, Malika bought a golden necklace, saying that she just turned 18. Malika broke the necklace. Parents would like to give back the necklace, and take the money back.

14. Example 2 Can parents repeal the contract & take back the money?

15. Example 2 Can parents repeal the contract & take back the money? Art. 159

16. Defense 2. NO DEED CAPACITY

17. Example 3 Aibek would like to sell his old dombra for KZT 7,000. Masha, an antique expert, recognized dombra made by Stradivari, ancient Kazakh dombra maker. Approximate price of it is KZT 950,000 000. She offered KZT 3,000, and Aibek agreed.

18. Example 3 Aibek recognizes his dombra and Masha on the TV. He learns about his mistake. He brings action into the court. Can Aibek repeal the contract?

19. Example 3 Aibek recognizes his dombra and Masha on the TV. He learns about his mistake. He brings action into the court. Can Aibek repeal the contract? Art. 159

20. Example 4 Marusya rents an apartment thinking that it is the cheapest offer in the area. However, the offer appeared to be one of the most expensive. Can she repeal it because of significant mistake?

21. Example 4 Marusya rents an apartment thinking that it is the cheapest offer in the area. However, the offer appeared to be one of the most expensive. Can she repeal it because of significant mistake? Mistake in motives

22. Defense 3. SIGNIFICANT MISTAKE Not in motives

23. Example 4 Vika bought carpets in Iran, and now have them transported to KZ. The cargo costs USD 100 mln. In KZ territorial waters, storm hits her ship, and the ship starts to sink (тонуть).

24. Example 4 Aziz came to Vika’s SOS signal. Vika says, “Aziz save my carpets!” Aziz replies, “I can buy them for USD 1 mln.” They made contract.

25. Example 4 Vika brings action to the court. She would like to repeal (признать недействительным) the contract. Can Vika repeal the contract?

26. Example 4 Vika brings action to the court. She would like to repeal (признать недействительным) the contract. 1. Duress? 2. Is it unconscionable contract (кабальная сделка)?

27. Criteria to determine Duress ILLEGALITY (противозаконность)*

28. Example 4 Michael sold it for 400,000 tenge. Is it unconscionable contract (кабальная сделка)?

29. 5. UNCONSCIONABLE CONTRACT Did not have any choice = illegal pressure

30. Example 5 Rustem sells a house. The house is completely rotten with huge hole in the walls. He uses paper to stuff the walls, and paints the house all over. Ainura would like to buy the house. Rustem says, “Look at the house, it costs USD 500,000.

31. Example 5 Ainura buys the house. After 3 months, the house collapses in front of Ainura’s eyes. Ainura brings action to repeal the contract. Is there a contract between Ainura & Rustem?

32. Example 5 Ainura buys the house. After 3 months, the house collapses in front of Ainura’s eyes. Ainura brings action to repeal the contract. Is there a contract between Ainura & Rustem? Art. 159

33. Criteria to determine Fraud 6. FRAUD* includes action & inaction Alternative => Breach (art. 349) Умысел – как критерий определения

34. Example 6 Madina is a bank employee. She is in charge of sale of assets of bank’s “stressed” debtors. She knows that soon a nice car would be on sale at the bank’s auction. She arranges that notification about the auction was made 1 day before the auction, and she sold the car to her brother for KZT 500,000.

35. Example 6 Can owner of the car or the bank repeal the contract? Умысел – как критерий определения от отсутствия опыта

36. Defense 7. MALICIOUS CONTRACT

37. Example 6 Madina is a bank employee. She is in charge of sale of assets of bank’s “stressed” debtors. She sells the car which costs 10 mln for 100 000. Is this a malicious contract?

38. Defense 7. MALICIOUS CONTRACT Умысел – как критерий определения от небрежности

39. III. Defenses to formation of Contract (art. 159) 1. No license 2. No deed capacity 3. Significant Mistake 4. Duress 5. Unconscionable contract 6. Fraud 7. Malicious Contract

40. III. Defenses to formation of Contract (art. 159) 8. Mental disorder (душевное расстройство) or dementia (слабоумие) 9. State when one could not realize significance of his actions or have control over them.

41. Step 1 (Formation of Contract) Is there an offer? (art. 393- 5) Is there an acceptance? (art. 397) If not, is there a counteroffer? (art. 396) If yes, there is a CONTRACT

42. Step 2 (Consequences) CONTRACT FORM (форма договора, articles 151, 152, 153) Non Observance* of the Notarized form No Contract Restitution Non Observance of the Simple Written Form Contract No witnesses DEFENSES (основания недейств-сти, art. 159) Restitution *несоблюдение