Article 28. Consequences of violation by the contractor of deadlines for completing work (rendering services)
1. If the contractor violated the deadlines for performing the work (providing a service) - the start and end dates for the execution of the work (provision of the service) and intermediate deadlines for the execution of the work (provision of the service) or during the execution of the work (provision of the service) it became obvious that it would not be completed in term, the consumer, at his choice, has the right: (as amended by Federal Law dated December 17, 1999 N 212-FZ)
assign a new term to the executor; (as amended by Federal Law No. 212-FZ of December 17, 1999)
entrust the performance of work (provision of services) to third parties for a reasonable price or perform it on their own and demand compensation from the contractor for expenses incurred;
demand a reduction in the price for performing work (providing a service);
terminate the contract for the performance of work (provision of services).
The consumer also has the right to demand full compensation for losses caused to him in connection with violation of the deadlines for completing the work (rendering the service). Losses are compensated within the time limits established to satisfy the relevant consumer requirements. (as amended by Federal Law No. 212-FZ of December 17, 1999)
2. New deadlines for the completion of work (provision of services) assigned by the consumer are indicated in the contract for the performance of work (provision of services). (as amended by Federal Law No. 212-FZ of December 17, 1999)
If the new deadlines are missed, the consumer has the right to present to the contractor other demands established by paragraph 1 of this article.
3. The price of the work performed (service provided), returned to the consumer upon termination of the contract for the performance of work (provision of services), and also taken into account when reducing the price of the work performed (service provided), is determined in accordance with paragraph 3 of Article 24 of this Law.
4. Upon termination of a contract for the performance of work (provision of a service), the contractor has no right to demand reimbursement of his expenses incurred in the process of performing the work (provision of a service), as well as payment for the work performed (service provided), except if the consumer accepted the work performed (service provided). (as amended by Federal Law No. 212-FZ of December 17, 1999)
The paragraph has been deleted. — Federal Law of December 17, 1999 N 212-FZ.
5. In case of violation of the established deadlines for the completion of work (provision of a service) or new deadlines assigned by the consumer on the basis of paragraph 1 of this article, the contractor pays the consumer for each day (hour, if the period is defined in hours) of delay a penalty (penalty) in the amount of three percent of the price of performance work (provision of a service), and if the price of performing the work (providing a service) is not determined by the contract for the performance of work (provision of services) - the total price of the order. The agreement on the performance of work (provision of services) between the consumer and the contractor may establish a higher amount of the penalty (penalty). (as amended by Federal Law No. 212-FZ of December 17, 1999)
A penalty (penalty) for violation of the deadline for the start of work (provision of a service), its stage is collected for each day (hour, if the period is defined in hours) of delay until the start of the work (provision of a service), its stage or the consumer submits the requirements provided for in paragraph 1 of this article. (as amended by Federal Law No. 212-FZ of December 17, 1999)
A penalty (penalty) for violation of the deadlines for completing the work (rendering a service), its stage is collected for each day (hour, if the period is defined in hours) of delay until the completion of the work (rendering the service), its stage or the consumer submits the requirements provided for in paragraph 1 of this article. (as amended by Federal Law No. 212-FZ of December 17, 1999)
The amount of the penalty (penalty) collected by the consumer cannot exceed the price of a separate type of work (provision of a service) or the total price of the order, if the price of a separate type of work (provision of a service) is not determined by the contract for the performance of work (provision of a service).
The amount of the penalty (penalty) is determined based on the price of performing the work (providing the service), and if the specified price is not determined, based on the total price of the order that existed in the place where the consumer’s requirement should have been satisfied by the contractor on the day of voluntary satisfaction of such requirement or on the day of the court decision, if the consumer’s demand was not voluntarily satisfied.
6. The consumer’s requirements established by paragraph 1 of this article are not subject to satisfaction if the contractor proves that the violation of the deadlines for completing the work (rendering the service) occurred due to force majeure or the fault of the consumer.
Commentary on Article 28
1. The legislator, taking into account the specifics of performing work and providing services, differentiates possible forms of violation of deadlines for work (services): the contractor did not start performing the work (providing services) in a timely manner; he completes it so slowly that it has become obvious that the work will not be completed on time; the contractor did not complete the work within the stipulated period, i.e. There was a delay in completing the work. The obvious impossibility of completing the work on time should be understood as a clear impossibility, the absence of which must be proven by the contractor.
The consequences provided for by the Law may be applied regardless of the form of violation of the term of work (service).
Federal Law of the Russian Federation of December 17, 1999 N 212-ФЗ the terminology used in Art. 28 of the Law, brought into compliance with Art. 708 of the Civil Code and provides for the following deadlines for completing the work: start date, end date, interim. Terminology art. 708 of the Civil Code (contractual agreement), the said Law also applies to the terms of provision of services. According to paragraph 1 of Art. 708 of the Civil Code, the contractor bears equal responsibility for violation of any of the three specified deadlines, unless otherwise established by law, other legal acts or contract.
2. According to the Law, new deadlines for completing work (services) are assigned by the consumer unilaterally. In contrast, the initial deadlines for completing work are determined by law or contract. Within the meaning of the Law, the contractor is obliged to be guided by the new deadline established by the consumer. This period is indicated in the contract or in a document confirming its conclusion (receipt, order, invoice, etc.). The appointment of a new period must be confirmed in the specified documents with the signature of the consumer and the contractor.
In case of delay in new deadlines, the consumer has the right to present one of the other requirements established by clause 1 of Art. 28 of the Law.
According to the original version of the Law, this right arose for the consumer if the delay was more than one month. In the 1996 edition, this condition is not provided and, therefore, the right to make other demands does not depend on the length of the delay, i.e. practically occurs the next day after the expiration of the new period assigned by the consumer.
The mentioned Federal Law from the second paragraph of clause 1 of Art. 28 of the Law excludes terminology about deadlines that does not comply with the Civil Code, as well as the right of the consumer, along with assigning a new deadline to the contractor, to demand a reduction in the price for performing work (services).
Thus, provided for in paragraph 1 of Art. 28 of the Law, the consumer’s right to demand a price reduction can only be used independently, as one of the alternative consequences of the contractor’s violation of the deadlines for completing the work (service).
3. As amended by the 1996 Law, the right of the consumer, in case of violation of the deadlines for the execution of work (service), to entrust its implementation to another person, is supplemented with an indication that this order must be performed for a reasonable price. In the event of a dispute about the price, its unreasonableness must be proven by the contractor. The consumer’s right to perform work (service) on his own was absent in the original version of the Law. Obviously, the scope of application of this right is limited to works (services) that do not require special qualifications, for example, purchasing train tickets, booking a hotel room yourself, etc. work that the consumer can perform independently. In any case, the expenses incurred must be supported by appropriate evidence.
4. When choosing any of the consequences specified in the Law for the contractor’s violation of the deadlines for completing the work (service), the consumer also has the right to demand full compensation for the losses caused by this. A similar rule is provided for in Art. 405 of the Civil Code, which in this case also provides for the liability of the debtor (performer) for the consequences of the impossibility of fulfilling an obligation accidentally occurring during the delay and gives the creditor (consumer) the right to refuse to accept the performance, and therefore to refuse to pay for the service. However, refusal to accept performance is permitted if it has lost interest for the creditor. The existence of such an interest, for example, the conclusion of an agreement regarding the same subject with another person, must be proven by the debtor.
When applying the specified general provisions of Art. 405 of the Civil Code (clause 2), it should be borne in mind that, according to clause 3 of Art. 708 of the Civil Code, in relation to a work contract, they could only be used if the deadline for completing the work was violated. However, Federal Law of the Russian Federation of December 17, 1999 N 213-FZ, clause 3, art. 708 of the Civil Code is supplemented by the indication that those provided for in paragraph 2 of Art. 405 of the Civil Code, consequences also occur if other deadlines established by the contract are violated.
5. The price of the work (service) performed, if it is reduced or returned to the consumer upon termination of the contract, is determined according to the rules established for similar cases under a purchase and sale agreement (clause 3 of Article 24 of the Law).
On termination of the contract, see paragraph 7 of the commentary to Chapter. III of the Law.
6. Federal Law of the Russian Federation of December 17, 1999 N 212-FZ amended the wording of paragraph 1, clause 4, art. 28 of the Law, and the second paragraph of this paragraph is excluded. In the new version of paragraph one, there is no mention of the impossibility of fulfillment on time, and it is also established that the rules provided for therein do not apply if the consumer accepted the work (service) performed, despite the violation of the deadlines for its completion. In this case, acceptance of the work means the consumer fulfilling part of his obligations under the contract and at the same time refusing to exercise the right to terminate the contract. In turn, these circumstances entail the consumer’s obligation to fulfill his obligations to reimburse the contractor’s costs and pay the stipulated cost of the work (service).
7. On the concept of a penalty, see paragraph 6 of the commentary to Art. 13 of the Law. The law limits the collection of penalties for violation of deadlines for performing work (services) to the collection period, depending on the nature of the violation and the size.
If the deadline for the start of the work (service) and its stage is violated, the penalty is collected before the start of the work (service) or the presentation of other requirements provided for by the Law. In case of violation of the deadline for completion of work (service), its stage, the penalty is collected before its actual completion or presentation of other requirements provided for by the Law.
The amount of the penalty is limited to three percent of the price of the work (service). In the case where the price of the work is not separately determined, for example, when the work is performed from the contractor’s material, the amount of the penalty cannot exceed three percent of the total order price. The price of the work (service) and the price of the order are determined based on their size on the day of voluntary satisfaction of the consumer's claim for a penalty or on the day of the court decision in the place where the claim should have been satisfied. Such a place is the location of the performer or the subject of the contract (see paragraph 4 of the commentary to Article 23 of the Law).
8. The contractor may be released from liability for failure to comply with deadlines for completing work (services) if he proves that this occurred due to force majeure or the fault of the consumer. Thus, for the liability of the performer to arise, the presence of his guilt is not required. He is also responsible for an accidental violation of the deadlines for completing work (services).
Responsibility for violation of work deadlines
To protect your interests in case the counterparty fails to fulfill its obligations, the contract provides for liability for their violation. They may, in particular, provide for compensation for losses, collection of penalties or payment of interest for the use of other people's funds.
Let's consider the Determination of the Judicial Collegium for Economic Disputes of the Supreme Court of the Russian Federation dated July 14, 2020 No. 308-ES19-27287 on the collection of debt, interest and penalties.
The essence of the dispute
Between 2012 and 2014, the company entered into six subcontracts for design and survey work.
Due to the presence of mutual claims during the execution of contracts related to the violation of the terms of payment by the general contractor for the work performed by the subcontractor and the quality of this work, in 2021 the parties entered into an agreement to resolve them. The agreement established a debt repayment schedule by the general contractor, and the subcontractor was obligated to eliminate deficiencies and defects during construction and installation work.
The general contractor's failure to fulfill the obligation to pay the debt was the basis for the company's appeal to the arbitration court with an initial claim to collect the existing debt and interest for the use of other people's funds.
In addition, a counterclaim was filed for the recovery of penalties provided for in the subcontract agreements in connection with the subcontractor’s violation of the deadlines for completing the work.
Has the statute of limitations expired or not?
According to the cassation court, at the time of filing the counterclaim, the statute of limitations for all claims filed by it for the collection of a penalty had expired.
The cassation court believed that the statute of limitations is limited to the three-year period following the day on which the work completion period established in each contract began, which had already expired on the date of the appeal to the court, without taking into account the date of actual completion of the work by the subcontractor.
The panel of judges noted that such conclusions of the cassation court cannot be considered legitimate, since when determining the period of the penalty to be collected, it is necessary to proceed from the three-year period preceding the date of filing the claim in court.
It should also be taken into account that the accrual of penalties continues every day until the subcontractor actually performs the work under the contracts.
This position is contained in paragraph 25 of the Resolution of the Plenum of the Armed Forces of the Russian Federation dated September 29, 2015 No. 43 “On some issues related to the application of the norms of the Civil Code of the Russian Federation on the limitation period”, according to which the limitation period for a claim for the recovery of a penalty (Article 330 Civil Code of the Russian Federation) or interest payable according to the rules of Article 395 of the Civil Code of the Russian Federation, is calculated separately for each overdue payment, determined in relation to each day of delay. Every day during the period from the moment of violation of the obligation to the moment of fulfillment of the obligation to pay for the result of the work, an obligation to pay a penalty arises on the customer’s side.
A similar position has been repeatedly expressed by the Judicial Collegium for Economic Disputes of the Supreme Court of the Russian Federation in rulings dated 03/04/2019 No. 305-ES18-21546, 05/30/2019 No. 305-ES18-25243.
Collection of penalties
Collection of penalties is the most common method of compensation for losses.
According to paragraph 1 of Art. 330 of the Civil Code of the Russian Federation, a penalty is a measure of civil liability for non-fulfillment or improper fulfillment of an obligation, including late fulfillment. It may be provided for by law or contract.
Penalties are possible in contractual relationships. It happens in a row:
- household;
- construction;
- for design and survey work.
Thus, in case of violation of deadlines, the customer has the right to demand a penalty from the contractor for each day of delay.
The penalty is established in the form of a penalty or fine. Depending on what is stated in the contract, a calculation is made.
A fine is a one-time amount, assigned as a percentage or in a fixed equivalent, and the penalty, according to general rules, is calculated based on the amount of unfulfilled work for each day of delay.
Penalties are calculated for a period of time until the violator fulfills the obligation or compensates for losses.
The parties have the right to determine the amount of the penalty at their own discretion. It should be borne in mind that it must be reasonable and consistent with the consequences of breach of contract.
Interest on late payment
Another common type of violation of contractual obligations is the illegal use of other people's money. This happens if the party:
- does not return money after the deadline for its return has arrived;
- refuses to pay for goods delivered, work or services performed on time;
- Having received an advance payment for goods, services or work, for a long time does not fulfill its obligations to supply goods, perform work or services.
If the agreement of the parties provides for a penalty for non-fulfillment or improper fulfillment of a monetary obligation, then the interest discussed above is not subject to recovery. This rule applies with the caveat that otherwise is not provided by law or contract.
