Liquidated damages in Russian contract law

1. Liquidated damages in Russian contract law. Neustoika

Daria Zdanovich
Tatiana Belova

2. Plan:

Definition;
Attributes;
Classification 1 (depending on the form of breach of contract);
Classification 2 (depending on the grounds for invoking);
Classification 3 (depending on the relationship of liquidated
damages to ordinary damages);
• Literature.

3. Definition

Liquidated damages (neustoika) – a monetary sum determined by
a statute or contract that a debtor must pay to the creditor in case
of nonperformance or improper performance of an obligation.

4. Attributes:

• a prior determination by the parties of liability upon conclusion
of the contract;
• the amount of liability in the event of breach;
• the possibility of collecting liquidated damages to be paid;
• the possibility granted to the contracting parties to formulate all
critical aspects of the liquidated damages to be paid (including
the payment amount, relationship between liquidated damages
and actual damages, the method of computing the liquidated
damages amount).

5. Classification 1 (depending on the form of breach of contract)

In the event of nonperformance
fine (shtraf)
In the event of improper performance
penalty (penua)

6. Classification 2 (depending on the grounds for invoking)

Imposed by law
•Statutory
Stipulated by the
agreement
•Contractual
Set by the parties in
addition to the
statutory liquidated
damages
•Mixed

7. Classification 3 (depending on the relationship of liquidated damages to ordinary damages)

The amount of
liquidated
damages to be
paid exceeds
actual damages.
The contract dictates
liquidated damages
over damages.
Discounted
l.d.=2
a.d.=1
Alternative
l.d.=0/1
a.d.=1/0
Exclusive
l.d.=1
a.d.=0
Punitive
l.d.=1
a.d.=1
The contract posits only
the payment of actual
damages or liquidated
damages.
In addition to paying ful
damages the debtor also
pays full liquidated
damages.

8. Literature

Link