Formation of Contracts Under Russian Law

General Principles

The formation of contracts under Russian law is governed by Chapter 28 (Articles 432–449) of the Civil Code of the Russian Federation. The code adopts the classical offer-and-acceptance model, in which a contract is concluded when the offeror receives acceptance from the offeree (Article 433(1)). The formation rules are based on the principle of party autonomy: the parties are free to determine the terms of their contract, subject to mandatory rules of law.

Article 432 defines a contract as concluded when the parties reach agreement on all essential terms. The essential terms (sushchestvennye usloviya) of a contract include: the subject matter of the contract; terms expressly stated as essential by law; terms necessary for contracts of that type; and terms that either party considers essential. The requirement of agreement on essential terms is a gateway requirement: if the parties have not agreed on an essential term, the contract is not concluded.

Offer

An offer (offerta) is defined by Article 435 as a proposal addressed to one or more specific persons that is sufficiently definite and expresses the intention of the offeror to consider themselves bound by contract with the offeree who accepts the proposal. The offer must contain all essential terms of the proposed contract. The definiteness requirement distinguishes an offer from mere negotiation or an invitation to treat.

An offer becomes binding on the offeror when it is received by the offeree (Article 435(2)). The offeror may withdraw the offer before it is received by the offeree; after receipt, the offer may be revoked only if the revocation is received before or simultaneously with the acceptance, or if the offer itself provides for the possibility of revocation. An offer that specifies a period for acceptance is irrevocable during that period (Article 436).

Acceptance

Acceptance (akcept) is defined by Article 438 as the response of the person to whom the offer is addressed, indicating acceptance of the offer. Acceptance must be complete and unconditional: a response that purports to accept the offer but introduces additional or different terms constitutes a counter-offer (vstrechnaya offerta), not an acceptance (Article 443).

Acceptance may take various forms: a written or oral statement; the performance of actions in accordance with the terms of the offer (so-called conclusive actions or konkludentnye deystviya); or, where permitted by law or by the offer, silence. The performance of actions in fulfilment of the contract — such as the shipment of goods, the provision of services, or the payment of money — is treated as acceptance unless the offer or the law provides otherwise (Article 438(3)).

Receipt Theory

Russian law adopts the receipt theory (teoriya polucheniya) for the formation of contracts. Under Article 433(1), a contract is concluded at the moment the offeror receives the acceptance. This contrasts with the dispatch theory (posting rule) of some common law jurisdictions, which treats a contract as concluded when the acceptance is dispatched.

The receipt theory has important consequences for timing. The offeror bears the risk of delay or loss in transmission of the acceptance. If the acceptance is delayed in transmission, the contract is concluded at the moment of receipt, and the consequences of delay are governed by the rules on offer and acceptance. Where the acceptance is received after the period specified in the offer (or, if no period is specified, after a reasonable period), the acceptance is treated as a new offer (Article 442).

Withdrawal and Revocation

The withdrawal and revocation of offers and acceptances are governed by Articles 436 and 439. An offer may be withdrawn at any time before it is received by the offeree; a withdrawal received before or simultaneously with the offer renders the offer void. After receipt, the offer is binding on the offeror for the period specified in the offer or, if no period is specified, for a reasonable period. An offer may be revoked during this period only if the offer expressly reserves the right of revocation.

An acceptance may be withdrawn if the notice of withdrawal is received by the offeror before or simultaneously with the acceptance. After the acceptance is received, the contract is concluded and may not be unilaterally withdrawn.

Irrevocable Offer

An irrevocable offer (bezotzyvnaya offerta) is an offer that cannot be revoked by the offeror after its receipt by the offeree. Article 436 establishes that an offer specifying a period for acceptance is irrevocable during that period. The rule reflects the reasonable expectation of the offeree that the offer will remain open during the period specified.

Irrevocable offers are common in certain types of transactions, including: public offerings of securities; tender offers for the acquisition of shares; and offers to enter into preliminary contracts. The irrevocability of the offer protects the offeree’s reliance interest and encourages the offeree to invest in evaluating the offer and arranging acceptance.

Public Offer

A public offer (publichnaya offerta) is governed by Article 437(2). A public offer is a proposal addressed to an indefinite number of persons that contains all essential terms of the contract and expresses the offeror’s intention to conclude a contract with any person who responds. The offeror is bound by the public offer to any person who accepts.

Public offers are common in: retail sales (goods displayed on shelves); public transportation services; and standard-form consumer contracts. Article 437(1) distinguishes a public offer from an invitation to make offers (vyzov na oferty), which is addressed to an indefinite number of persons but lacks the intention to be bound by acceptance. Advertisements and catalogues are generally treated as invitations to make offers, not public offers.

Auction and Tender

The formation of contracts through auction (auktsion) and tender (konkurs) is governed by Articles 447–449 of the Civil Code. Auctions and tenders are competitive procedures in which the contract is awarded to the person who offers the best terms. An auction may be open (any person may participate) or closed (participation by invitation only). A tender may be open or closed, and the winner is selected by a contest committee.

The procedure begins with the publication of a notice of the auction or tender, which constitutes an invitation to make offers. Participants submit their offers in accordance with the published conditions. The auction or tender is conducted by an auctioneer or contest committee, and the winner is determined in accordance with the rules. The contract is concluded between the organiser and the winner at the time the protocol of results is signed (Article 448(6)).

The auction or tender may be declared invalid if: fewer than two participants participate; the winner fails to sign the contract within the prescribed period; or the procedure violates the established rules. A contract concluded in violation of the auction or tender rules may be declared invalid by a court.

Preliminary Contract

Russian law recognises the preliminary contract (predvaritelny dogovor) as a distinct formation instrument. Under Article 429, a preliminary contract obliges the parties to conclude a principal contract on the terms specified in the preliminary contract in the future. The preliminary contract must contain all essential terms of the principal contract.

Where a party refuses to conclude the principal contract, the other party may apply to the court for an order compelling the conclusion of the contract. The claim must be filed within six months of the date on which the obligation to conclude the principal contract arose (Article 429(5)). Preliminary contracts are widely used in real estate transactions and corporate acquisitions.

Mandatory Contract

The Civil Code provides for the conclusion of mandatory contracts (obyazatelnye dogovory) in certain circumstances. Under Article 445, where the law establishes an obligation to conclude a contract, or where a party has entered into a preliminary contract, the party entitled to demand the conclusion of the contract may apply to a court to compel the conclusion of the contract. The court determines the terms of the contract in accordance with the applicable rules.

Mandatory contracts arise in: public utility services; transport services; services of natural monopolies; and bank account services. The mandatory contract regime limits party autonomy in the public interest, ensuring access to essential services on reasonable terms.