Comment to article 404. Unilateral refusal to perform an agreement (renunciation of an agreement) of the Civil Code of the Republic of Kazakhstan  

The commented article is set out in the new version of the Law of the Republic of Kazakhstan dated March 2, 1998.

Previously, the article was called "Cases of modification and termination of the contract at the request of one party" and it was not divided into paragraphs.  

The purpose of the amendments is to clearly distinguish between judicial termination of the contract and unilateral refusal to perform the contract (renunciation of the contract). In accordance with this, when the term "termination of the contract" is used in the text of the Civil Code (in a Special part), it means judicial termination. When a contract is terminated without judicial review, at the request of one party, the term "unilateral waiver of performance of the contract" or "waiver of the contract" is used. The last two terms are used as equivalent terms.  

In paragraph 1 of the commented article, the new version fixes the provisions previously contained in paragraph 3 of Article 401 of the Civil Code. Lawful unilateral refusal to perform a contract is allowed only in cases where it is expressly provided for by law or contract. This provision corresponds to the norm of Article 273 of the Civil Code on the inadmissibility of unilateral refusal to fulfill an obligation, except in cases stipulated by law or contract (see commentary to Article 273 of the Civil Code).

Paragraph 1 of this Article should be applied inextricably with paragraph 3 of Article 401 of the Civil Code in the new edition. In particular, paragraph 3 of Article 401 of the Civil Code refers to the unilateral refusal to perform the contract, respectively, partially or completely. If the agreement is partially cancelled, the agreement is considered amended, and if it is fully cancelled, it is terminated.  

The cases when it is allowed to withdraw from the contract are fixed in paragraph 2. Subparagraph 2 of Article 404 in the previous version is excluded from this list: violation by the other party of the conditions stipulated by the legislation or the contract on quality, terms of performance and other conditions. This is due to the fact that it was very difficult to distinguish between this subparagraph and subparagraphs 1 and 2 of art. 401 of the Civil Code, which deals with a material violation of the contract by the other party and where the judicial procedure for changing or terminating the contract is applied. Clearly, there was a contradiction here.

The list of cases set out in paragraph 2 is not closed, which is confirmed by the use of words such as "in particular."  

Legislation provides for the right to unilaterally refuse to execute a contract most often in such contracts where execution is closely related to the identity of the debtor or creditor, for example, contracts for assignment, paid services, bank account, bank deposit, passenger transportation. Other examples can be given.

For example, if the seller refuses to transfer the sold goods to the buyer, the buyer has the right to refuse to execute the purchase contract. The buyer has the right to cancel the contract even if the supplier transfers the goods of inadequate quality to him.  

The customer has the right to withdraw from the contract if the deviation in the work from the contract or other shortcomings in the work are significant and irremediable, or if the discovered shortcomings have not been eliminated within a reasonable period specified by the customer.  

As an example of other legislation that establishes the right to unilaterally withdraw from a contract, we can mention the Law on Housing Relations, Article 102 of which establishes the right of the tenant of a dwelling from the state housing stock to terminate the rental agreement at any time. The contract may be terminated by the employer even without notifying the landlord, by performing specific actions indicating the termination of the contract. In accordance with paragraph 2 of art. 102 of the Housing Relations Act, if the tenant and his family members leave for permanent residence in another place, the rental agreement is considered terminated from the date of departure.  

Termination of the contract means its early termination. However, it was unclear what the mechanism for terminating the contract was in cases where the contract was concluded without specifying a deadline. Therefore, the new version of Article 404 included clause 4, which gave the parties the right to terminate the contract concluded without specifying the deadline at any time, unless otherwise provided by legislative acts (for example, Laws on housing relations, the landlord is not entitled to unilaterally withdraw from the contract) or the contract.

The obligation to notify the other party no later than one month in advance applies to all types of contracts, including those concluded without specifying a deadline. Otherwise may be provided for by legislative acts or an agreement. So, in relation to the above example, the tenant of the dwelling has the right to cancel the lease agreement at any time without notifying the landlord about it.

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The commentary was prepared within the framework of the scientific and practical research program of the Scientific Research Center of Private Law of the Kazakh State Law University.  

Head of the working group on the preparation of the draft Civil Code of the Republic of Kazakhstan, Corresponding Member of the Academy of Sciences of the Republic of Kazakhstan, Professor Suleimenov M.K.

Deputy head Professor Basin Yu.G.