UNILATERAL EMPLOYER’S REFUSAL
OF A CONTRACT OF WORK AND LABOUR:
KEY PRACTICE ISSUES
The article discusses several topical case law issues regarding employer’s unilateral
refusal of a construction contract which are currently characteristic in Russia and
which were quite surprisingly found together in the same case of a commercial court.
The author comes to a conclusion that as a result of unilateral refusal an obligation
connecting parties of an agreement passes into a liquidation stage in which the
equivalence of counter performances agreed by the parties should remain. But the
contents of the parties’ obligations at this stage differ considerably depending on whose
initiative and what reason leads to termination of the agreement. Nevertheless even in
case the employer refuses without any motive he is not obliged to reimburse the expenses
of the contractor under Art. 729 of the Civil Code along with damages under Art. 717
of the Civil Code because it leads to double and unfair enrichment of the contractor.
Anyway among the other expenses of the contractor the cost of the equipment and
the materials purchased by the contractor should not be reimbursed to him if they are
not transferred to the employer or the latter does not derive any value from them in
any other way. Correct evaluation of the contractor’s costs to be reimbursed becomes
especially important in case the result of the works is transferred to the employer only
in part. The author thoroughly describes contractors’ expenses separating them into
direct and indirect costs and also offers recommendations for contractual and law
enforcement practice. The article pays particular attention to so called conversion
(transformation) of unilateral refusal in case of its invalidity due to the fact that the
declared grounds for the refusal are absent or do not comply with the contract.
Keywords: contract of work and labour; unilateral refusal; contractor’s expenses; loss
on termination of an agreement; conversion (transformation) of unilateral refusal.
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Information about the author
Egorov A.V. (Moscow) – Candidate of Legal Sciences, First Deputy Chairman
of the Board of the Alexeev Private Law Research Centre under the President of the
Russian Federation, Professor, Director of the Russian School of Private Law (103132,
Moscow, Ilyinka St., 8, Bldg. 2; e-mail: firstname.lastname@example.org).