Head of practice
Attorney. Specialist in commercial and labor law. Over 16 years of experience in legal support of businesses - debt recovery, contract enforcement, recovery of damages, commercial property and lease disputes.
Declaration of invalidity of the contract
Grounds for declaring a contract invalid
Any commercial contract must meet a number of requirements stipulated by the Commercial Code of Ukraine and other regulatory legal acts in order to have legal force. Otherwise, it will be considered invalid and will result in the invalidity of the contractual provisions. Firstly, the grounds for declaring a commercial contract invalid are the following:
- violation of the current provisions of the law (in particular, regarding the form of the transaction, the absence of mandatory registration and notarization), public order, moral principles of society, rights, freedoms and legitimate interests of third parties;
- recognition of the incapacity of one of the parties to the contract, the absence of an appropriate level of will in its actions (for example, when it was limited or did not correspond to the internal will of the person as a result of deception);
- fictitiousness of the commercial contract (the contract was concluded without the intention to create real legal consequences, to conceal another transaction).
It is worth emphasizing that the main feature of an invalid commercial contract is that it harms the interests of the state and society (for example, there is an intention to violate the current legal order, in particular in the field of conducting economic activity). A contract can be declared invalid both in full and in part. At the same time, if only part of the contract is declared invalid, this does not necessarily mean that it all becomes invalid. To confirm the fact of the reliability of the agreement, it is necessary that there is an intention of the parties, the direction of their actions to violate the legal economic order.
Invalid contracts: types and their features
Based on the analysis of the provisions of the Commercial Code of Ukraine, invalid transactions are divided into two main categories: null and void and contestable. Below, we will examine each of these types in more detail.
Firstly, invalid contracts are transactions whose invalidity is directly established by law. These are agreements that were not notarized when required, concluded by persons beyond their legal capacity, without the necessary permission of the guardianship and trusteeship authorities. At the same time, it is important to emphasize that in some cases the court may recognize a transaction as valid, even if it was carried out in violation of current national legislation (for example, if it was concluded without the permission of the guardianship and trusteeship authorities, but it is proven that it meets the interests of the ward).
Secondly, contestable commercial contracts are transactions whose invalidity is established by a court decision. Thus, one of the parties, another interested person, must file a lawsuit in court to challenge the validity of the relevant transaction and declare it void. Examples of such agreements are transactions made under the influence of error, grave circumstances, etc.
Consequences of declaring a contract invalid
An invalid contract, as already noted above, does not give rise to any legal consequences, except for those arising from its invalidity itself. Recognizing a contract as invalid also has the following consequences:
- first, taking restitution measures (returning the parties to the initial state before the invalid agreements were concluded). In other words, property, money, other valuables transferred under such agreements must be returned to their original owners or compensated;
- secondly, making compensation for losses. Therefore, if, in connection with the conclusion of an invalid transaction, losses and moral damage are caused to the other party or a third person, they are subject to compensation by the guilty party. In addition, the court may apply additional consequences of the invalidity of the contract, based on the specific circumstances of the case.
The execution of a commercial contract declared invalid by the court in whole or in part shall be terminated from the date the decision becomes legally effective. Lawyers “Prikhodko & Partners” provide a range of professional support services in cases of declaring transactions invalid for interested clients and protecting their rights.
Procedure for declaring a contract invalid: legal support
Support for declaring a commercial contract invalid is a complex legal process that requires careful attention to detail and compliance with the norms established by law. Its main stages include:
- analysis of the transaction and collection of evidence. The lawyer conducts a detailed analysis of the relevant transaction in order to identify the grounds for declaring it invalid;
- preparation of a statement of claim. The specialist files a claim with the court, in which he sets out the requirements and justifies them with reference to the norms of the law, adds the collected evidence and submits it to the court;
- consideration of the case and examination of evidence. The lawyer participates in court sessions, represents the client’s interests, files motions and objections in the case;
- the decision by which the court satisfies, refuses to satisfy the claim. In case of disagreement with the court decision, the party has the right to appeal it in the appellate or cassation procedure (if necessary). In such a case, the lawyer helps to prepare an appellate or cassation complaint and represents the client’s interests in higher courts.
- execution of the court decision. After the court decision enters into force, the specialist ensures proper control over its execution, in particular, the return of property or compensation for losses.
Thus, the recognition of a commercial contract as invalid is aimed at nullifying the legal consequences of a transaction that does not meet the requirements of the law. The grounds for the reliability of a transaction today may be a violation of the law regarding its form and content, the incapacity of the parties or the lack of free will when concluding it, etc. The main types of invalid contracts are void (invalid by law) and contested (invalid by court decision) transactions in economic activity. The procedure for declaring the relevant contract invalid involves a mandatory appeal to court and obtaining professional legal assistance.
Legal support from Prikhodko & Partners allows you to minimize risks and ensure the protection of the rights and interests of the parties in cases of recognizing a contract as invalid. To get advice and find out the cost of legal support, please fill out the form below.
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Yes, of course, we take companies for permanent support.
The subscription form of service allows you to receive a full range of legal services on an ongoing basis for a fixed monthly fee.
Our lawyers will accompany all economic legal relations of your company: from drawing up contracts and solving corporate issues to representing interests during inspections by regulatory bodies and in court disputes.
We have very flexible pricing, so contact us and we will discuss your specific case.
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Fortunately, modern technologies allow us to effectively solve almost any legal issue online regardless of your location. In cases where personal presence is necessary, our lawyers are ready to travel to any point in Ukraine. Moreover, thanks to our network of reliable partners abroad, we can provide legal support even in international cases. Our goal is to provide you with quality legal assistance wherever you are.
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