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Draft law expected to grant suppliers the right to ‘unilateral termination’
Prior to the second reading of the draft law “On the Federal Contract System”, lawmakers are expected to adopt amendments to allow not only a customer to terminate a contract unilaterally, but a supplier as well. The latest version of the document also proposes introducing a veto on the purchase of expensive items. Consequently, lawmakers have taken into account the comments of the State Legal Directorate of the President (the “SLD”). A draft of the comments was available to RBC daily.
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According to the SLD, the document provides a customer “with almost infinite opportunities to terminate a contract unilaterally, taking into account the fact that an expert examination is not required and the regulatory body does not have specific powers”. The same approach is seen when determining the procedure for reimbursing inflicted damage, where a customer is reimbursed for all inflicted damage, while a supplier is reimbursed only for damage actually incurred, notes the SLD.
Besides this, the current version of the draft law may result in many disputes, especially in the area of construction, as “unilateral termination may actually occur after any waiver of the terms and conditions of a contract, while a contractor does not have the specific right to unilateral refusal”, notes Yaroslav Kulik, Expert of the National Procurement Association, and Head of the Anti-monopoly Regulation Practice Group at ART DE LEX.
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According to the SLD, the document provides a customer “with almost infinite opportunities to terminate a contract unilaterally, taking into account the fact that an expert examination is not required and the regulatory body does not have specific powers”. The same approach is seen when determining the procedure for reimbursing inflicted damage, where a customer is reimbursed for all inflicted damage, while a supplier is reimbursed only for damage actually incurred, notes the SLD.
Besides this, the current version of the draft law may result in many disputes, especially in the area of construction, as “unilateral termination may actually occur after any waiver of the terms and conditions of a contract, while a contractor does not have the specific right to unilateral refusal”, notes Yaroslav Kulik, Expert of the National Procurement Association, and Head of the Anti-monopoly Regulation Practice Group at ART DE LEX.