Contestable? Or is it still insignificant?

On January 1, 2021, 218-FZ of July 13, 2015 “On State Registration of Real Estate” (hereinafter referred to as the Registration Law) came into force; the amendments to this law allowed realtors to claim that now the consent of the spouse is not required for the transaction. Is it so? Let's figure it out.

In accordance with the provisions of paragraph 15 of part 1 of Article 26 218-FZ of July 13, 2015 “On state registration of real estate”, state registration is suspended by decision of the state registrar of rights, including if the submitted documents do not contain confirmation of availability in cases provided for by federal law, consent to a transaction subject to state registration of a right, restriction or encumbrance of a right, a third party, a body of a legal entity, a state body or a local government body, if it follows from the federal law that such a transaction is void.

Transactions are recognized as actions of citizens and legal entities aimed at establishing, changing or terminating civil rights and obligations. (Article 153 of the Civil Code of the Russian Federation).

The legislation provides for 2 options for invalid transactions - a voidable and void transaction

What is invalidity of a transaction?

In essence, this is the non-occurrence of the outcome and result that the parties or one of the parties who entered into the agreement would have desired, but, on the contrary, the occurrence of such a result of the transaction that is required by law. In order to invalidate an agreement between the parties, it is necessary to take into account the nature of the violations committed during its conclusion. A voidable transaction and a void transaction are different.

Voidable transaction

In the event that after the conclusion of the agreement, even if it was concluded with some violations, none of its participants declared to the judicial authorities to declare it invalid, such an agreement can be executed by the participants. However, such a claim should not be filed by any interested parties.

Such execution of the contract will not contradict the law. That is, a voidable transaction is an agreement or a unilateral transaction, although completed in violation, but in certain cases entailing the appearance of a legal result for the participants who committed it.

In this case, the parties retain the right to judicial protection of their interests. An example would be a situation in which a minor child between the ages of 14 and 18 entered into a major deal. However, his parents did not give his consent to this.

Legally, there is a violation of the law, and parents have the right to file a claim in court with a claim to declare the concluded agreement invalid. However, they have the right not to file a claim, thereby, as it were, approving the conclusion of the transaction. This nature means that a voidable transaction is a relatively invalid transaction.

What is legal invalidity

The area of concluding transactions relates to civil law: this means that both parties must perform their actions in the designated legal field (strictly within the framework of current legislation and in accordance with the requirements of regulations).

What are the relationships between fictitious, imaginary and sham transactions ?

As for transactions, they are characterized by 4 significant categories that determine their legal existence:

parties (participants, subjects of the transaction);
the external expression of the will of the participants is the subjective area of the transaction;
transaction form;
conditions (content, subject of the transaction).

Any non-compliance with the law in at least one of these elements will invalidate the transaction.

On what grounds can a transaction be declared invalid ?

Types of voidable transactions

Thus, the legislator has provided citizens and legal entities with the opportunity to determine for themselves whether they need to contact the judiciary to protect their own interests, or whether there is no such need, and the parties themselves will resolve this issue. A voidable and void transaction can be divided into types, depending on the grounds. The list of these grounds is established by regulations. Civil legislation considers that a voidable transaction is a transaction completed:

organization and beyond the boundaries of its legal capacity;
under the influence of delusion;
persons limited by the court in legal capacity;
through a confluence of grave factors, violence, threat, deception, deliberate agreement between an agent of one party and the other;
persons who cannot realize the significance of their own actions or control them;
a person outside the boundaries of her powers;
children aged 14 to 18 years.

Legal consequences of declaring a transaction invalid - what are they?

The consequences of an invalid transaction depend on the following factors:

the stage of its execution at which it was recognized as such;
the impact they have on existing norms of law and order and/or morality;
presence/absence of profits/losses on its part.

In this case, several consequences are possible in legal practice:

Cancellation (if the transaction was not executed).
Restitution (if the transaction was executed in whole or in part), and it can be bilateral or unilateral.
Non-application of restitution.
Other property consequences (for example, payment of interest due to unjust enrichment or compensation for losses incurred by one of the parties to the transaction as a result of its conclusion).

If the parties did not fulfill their obligations, they will not have to take any additional actions in relation to each other, since the transaction is automatically canceled without the execution of additional papers. If the transaction was executed (regardless of the volume of fulfilled obligations), the question arises about the property consequences that it entails. The main consequence of the invalidity of a transaction of this kind is restitution.

Insignificant transactions

As already noted, there are two types of transactions that can be declared invalid. This is a voidable and void transaction. The difference between them is that the latter is considered absolutely invalid from the moment of its immediate conclusion. As a result of such conclusion of an agreement, the principles of civil law are seriously violated.

Recognition of a transaction as void is required when its completion, as well as further execution, grossly violate not only the rights of an individual citizen, but also the interests of the entire society. Such transactions contradict the established value system of society, and therefore cannot be made dependent on the will of its participants, as in a contestable transaction.

Commentary to Art. 166 Civil Code of the Russian Federation

1. The commented article establishes the division of invalid transactions into voidable and void, which was previously carried out only in the doctrine of civil law. The validity and justification of this division, both in previous years and now, is questioned by many scientists, but the position of the legislator has to be taken into account.

As criteria by which the distinction is made between voidable and void transactions, the commented article names:

a) the procedure for recognizing the relevant transaction as invalid (clause 1 of Article 166);

b) the circle of persons who can declare the transaction invalid (clause 2 of Article 166). Both of these criteria are formal in nature and indicate that, in essence, any invalid transaction, at the will of the legislator, can be classified as either voidable or void transactions.

2. According to paragraph 1 of Art. 166, such an invalid transaction is considered voidable if it can be recognized as such by a court. In other words, a voidable transaction gives rise to the legal consequences for which it was intended, but they can be annulled if the court declares the transaction invalid. If there is no appeal to the court or the deadline established by law for challenging it is missed, the transaction is considered valid, despite the presence of relevant defects in it.

3. Only those transactions that are recognized as such by law are considered voidable (see Article 168 of the Civil Code and commentary thereto). However, in the law, not a single transaction is directly called voidable (in contrast to the direct indication of the nullity of some transactions - see, for example, Articles 22, 144, paragraph 1 of Article 165, 169, 170, etc. GK). Therefore, external indicators of the contestability of a transaction are the direct or indirect references contained in specific legal provisions to the judicial procedure for invalidating it (“can be declared invalid by a court”, “in court”, “at the claim of the owner, shareholder, prosecutor, etc. “ ).

4. Unlike a voidable transaction, a void transaction is invalid in itself, regardless of whether it is recognized as such by the court. In other words, a void transaction does not give rise to legal consequences inherent in a valid transaction and does not require confirmation of its invalidity by a court. Therefore, void transactions, which are often called absolutely invalid, may simply not be executed by the parties without any subsequent negative consequences.

This approach is apparently based on the premise that the invalidity of void transactions is so obvious that it does not require special proof. In fact, in a number of cases, the defect in the transaction, and, as a rule, irreparable, lies on the surface. These include, in particular, transactions concluded by incompetent persons, transactions with defects in form, transactions that directly violate the prohibitions established by law, etc.

However, this is not always the case. The nullity of transactions in many cases requires significant evidence and can only be established by a court. It is no coincidence that Resolution of the Supreme Court and the Supreme Arbitration Court No. 6/8 emphasizes that the Civil Code does not exclude the possibility of filing claims to invalidate a void transaction within the time limits established by paragraph 1 of Art. 181 Civil Code. If the claim is satisfied, the reasoning part of the court decision must indicate that the transaction is void (clause 32).

The foregoing allows us to conclude that the procedure for recognizing transactions as invalid cannot serve as a reliable criterion for dividing them into voidable and void. In addition, sometimes specific articles of the law only speak about the invalidity of transactions, but do not indicate whether this or that transaction is voidable or void (see, for example, Articles 331, 362, paragraph 2 of Article 930 and others. GK).

5. Indication of paragraph 1 of Art. 166 on the judicial procedure for recognizing a contestable transaction as invalid creates the erroneous impression that this procedure is the only possible one, i.e. that only a court can declare a voidable transaction invalid. In fact, neither substantive nor procedural legislation contains any obstacles to the recognition of both a void and a voidable transaction as invalid by the agreement of the parties themselves.

At first glance, this issue has no practical significance, since the parties can agree to terminate the contract at any time. However, in a number of cases, the legal consequences of termination of a contract are not equivalent to the consequences of its annulment. As for unilateral transactions, in a number of cases refusal from them is generally impossible or is considered an offense, while the person who made the transaction does not face any risk of having them declared invalid.

6. In accordance with paragraph 1 of Art. 166 the grounds for invalidity of both voidable and void transactions are established by the Civil Code. This provision should hardly be understood to mean that the Civil Code establishes an exhaustive list of grounds for declaring transactions invalid, as is sometimes stated in the literature (see, for example: Scientific and practical commentary on the Civil Code of the Russian Federation. Part one / Edited by V.P. Mozolina, M.N. Maleina. M., 2004. P. 378 (commentary author - A.M. Erdelevsky)). This conclusion is refuted by Art. 168 of the Civil Code, according to which any transaction that contradicts the requirements of the law or other legal acts is considered void, unless the law establishes that such a transaction is contestable or does not provide for other consequences of the violation.

Regardless of the interpretation of this article, it is important that the validity of many transactions must be assessed from the standpoint of their compliance with the requirements not only of the Civil Code, but also of other laws and other legal acts.

7. The second criterion for distinguishing between voidable and void transactions is the circle of persons who can declare the transaction invalid. In relation to voidable transactions, this can only be done by persons specified in the law; the requirement to apply the consequences of the invalidity of a void transaction can be made by any person whose interests are affected by this transaction; in addition, the court may apply such consequences on its own initiative.

At first glance, this criterion makes it possible to distinguish between voidable and void transactions more clearly than the procedure for recognizing transactions as invalid. However, upon closer examination, it turns out to be insufficient. Firstly, in a number of cases, when it comes to clearly contestable transactions, the law does not indicate who can file claims to invalidate them.

Secondly, in paragraph 2 of Art. 166 names authorized persons in relation to only two requirements, namely: to recognize a voidable transaction as invalid and to apply the consequences of the invalidity of a void transaction. Meanwhile, in addition to them, demands may also be made for the application of the consequences of the invalidity of a contested transaction and for the recognition of a void transaction as invalid. Obviously, any interested parties can make the last two demands.

Thus, the division of invalid transactions into voidable and void based on the circle of persons authorized to make relevant claims also turns out to be unclear. In addition, it is obvious that this feature does not underlie the division under consideration, but rather is its consequence.

Other differences that exist between voidable and void transactions are of the same nature. These include: a) different limitation periods established for recognizing voidable transactions as invalid and applying the consequences of invalidity of void transactions (Article 181 of the Civil Code); b) the possibility of terminating voidable transactions for the future (clause 3 of Article 167 of the Civil Code), which is not allowed in relation to void transactions.

8. The application by the court of the consequences of the invalidity of a void transaction in accordance with the commented article is the right, but not the obligation of the court. According to the meaning of the law, the court must use this right when it comes to transactions that are contrary to public interests, the foundations of law and order and morality, as well as when this is necessary in the interests of protecting the weaker party in the transaction.

9. Invalid transactions should be distinguished from failed transactions. Although the concept of “failed transaction” is absent in the Civil Code, in the doctrine of civil law it is highlighted by the majority of scientists. In recent years, it has been widely encountered in practice, especially in the practice of arbitration courts.

Failed transactions usually include transactions for which no agreement has been reached between the parties (the transaction is not signed by the party, the offer is not accepted in the proper manner, etc.), at least one essential condition has not been agreed upon, there is no state registration, etc. In these and In such cases, the transaction should be recognized as failed (not concluded), and not invalid. Elimination of the consequences of the execution of a failed transaction is carried out mainly on the basis of the rules on unjust enrichment, and if there are a number of additional conditions - on the basis of the rules on tortious liability.

Legislative regulation of the procedure

In addition to the above Resolution of the Plenum of the RF Armed Forces, the procedure for declaring a transaction voidable is regulated by a large number of other legal documents. The most important of them are the following:

Resolution No. 6/8, issued on July 1, 1996 by the Plenums of the Armed Forces of the Russian Federation and the Supreme Arbitration Court of the Russian Federation;
Art. 288 Arbitration Procedure Code of the Russian Federation. The Code was adopted after the signing of No. 95-FZ of July 24, 2002. Today, the version of the document approved on December 2, 2021 is in effect;
No. 127-FZ, signed by the President on October 26, 2002 and introducing bankruptcy procedures in Russia;
No. 229-FZ, adopted on October 2, 2007 and defining the procedure for enforcement proceedings;
Federal Law No. 4015-1, issued on November 27, 1992 and establishing the rules of insurance in Russia;
No. 179-FZ, dated December 21, 2001. Contains the basics of state policy in the field of privatization of property owned by the state and municipalities;
No. 161-FZ, approved on November 14, 2011. Includes rules for the activities of state unitary enterprises and municipal unitary enterprises;
No. 1-FKZ, signed by the President of the country on April 28, 1995 and introducing the institution of Arbitration Courts on the territory of the Russian Federation;
Resolution No. 6288/02, adopted by the Presidium of the Supreme Arbitration Court of the Russian Federation on November 12, 2002;
Resolution No. 5-P, issued by the Constitutional Court of the Russian Federation on April 10, 2003;
No. 208-FZ, approved by the Head of State on December 26, 1995 and defining the rules of operation of joint-stock companies.