In the modern world, contractual obligations are one of the main means for business, which allows you to ensure stable relationships between various counterparties. However, even if a contract is concluded, legal entities may violate their obligations, which can have serious consequences for all parties. In this article, we will consider the concept, types and liability for non-fulfillment of contractual obligations by legal entities under Ukrainian law.
The concept of non-fulfillment of contractual obligations by legal entities
Failure to fulfill contractual obligations by legal entities means the inability of one or more parties to fulfill their obligations in accordance with the terms of the contract agreed between them. Such commitments may be substantive or financial. Typically, non-fulfillment of contractual obligations covers several points, such as: performance of work, supply of goods, provision of services or payment of funds for such services, etc.
Types of non-fulfillment of contractual obligations by legal entities
There are several types of non-fulfillment of contractual obligations by legal entities:
- Partial default is a situation where one of the parties fulfills its obligations partially, deviating from the terms of the contract, which were provided for from the very beginning. For example, if an enterprise delivers goods late, this may be recognized as a partial non-fulfillment of the terms of the supply contract.
- Complete non-performance is a situation where one of the parties does not fulfill its obligations at all, as provided for by the contract. For example, if an entity does not deliver the goods or provide the specified services as stipulated in the contract, then this is a total default.
- Delay in performance is a situation where one of the parties delays the performance of its obligations. Typically, such non-performance is associated with changes in the terms of the contract, such as: a change in the timing of the terms of the contract or an increase in the cost of services. In this case, the parties may agree on new terms of the contract or use the mechanism for terminating the contract.
Liability for non-fulfillment of contractual obligations by legal entities
Liability for non-performance of contractual obligations by legal entities depends on the type of non-performance and the terms of the contract. Typically, the contracting parties agree on mechanisms for settling disputes arising from non-fulfilment of contractual obligations.
If the contracting parties have not been able to agree on new terms of the contract or resolve a dispute about non-fulfillment of obligations, then the case may be taken to court. In this case, the court can determine which of the parties has not fulfilled its obligations and establish liability for breach of contract. Liability may include the payment of a penalty (fine, penalty), compensation for damages and moral damages, lost profits or termination of the contract.
Non-fulfillment of contractual obligations by legal entities has serious consequences for enterprises and relations between the parties to the contract. To avoid such situations, it is important to comply with the terms of the contract, agree on new conditions in case of force majeure and promptly report delays in fulfilling obligations. In case of disputes about non-performance of the contract, it is better to resolve them by amicably resolving the dispute and finding a compromise in order to avoid the costs of litigation and maintain partnership between the parties. It is also important to have clearly defined terms of the contract and take into account possible risks when concluding it.
In order to ensure the effective fulfillment of contractual obligations, legal entities can use various control methods, such as a monitoring system for deadlines, a quality control system, audits, etc. It is also important to keep a regular record of commitments and monitor their implementation in order to avoid future defaults.
If you have any questions regarding non-fulfillment of contractual obligations by legal entities, please contact the law office “Prikhodko and Partners”. We have a team of highly qualified lawyers who will provide you with legal assistance in any legal matters. Our company will provide you with advice, assistance in drafting contracts, representation in litigation and much more. Entrust us with your legal issues and get competent assistance from us professionals.