Making Gratuitous Business Contracts in Russia: Limits of Permissibility

Abstract

The paper is devoted to analysis of current limits during making gratuitous business contracts in Russia. The aim of the research is determination of the Russian legislator's attitude to making gratuitous business contracts and estimate of need of its prohibition. For this purpose the author goes into category «consideration» and pays attention to presumption of compensatory nature of civil contracts relations irrespectively to its parties. On the base of the norms of the Russian Civil Code four restraints concerned gratuitous business contracts are set up. Critical assessment of actual prohibition on donation between commercial companies fixed in the Code is made. It is concluded that the sole rational reason for this prohibition is protection of interests of minority corporate members or corporate members who did not know and could not know about making such contracts. It is stated there are abusive practices appeared in contradictory behavior of a party that makes gratuitous contract and afterwards claims for invalidity of such a contract. Also there are abusive practices concerned with denial of judges in recognition of partial debt release as a donation. One more negative aspect of prohibition on donation between merchants is placing burden of evidence of consideration presence for a respondent party because of difficulties in probation of negative fact about absence of consideration. During analysis of judicial practice and doctrine the trend is revealed а provision prohibiting donation between merchants is enlarged upon other contracts. Such practice should be blocked because of different thrusts of contracts and impossibility of appliance by analogy of statute. It is conceptually concluded provisions of civil legislation prohibiting making gratuitous business contracts should be excluded, as there is another way to protect interested parties — to contest gratuitous contract on the base of clause 2 of Article 174 of the Code.