Note: Unilateral termination of construction contract

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Unilateral termination of construction contract

First, let's analyze what the contract is. According to Article 378 of the Civil Code of the Republic of Kazakhstan, the contract recognizes as: "an agreement of two or more persons on the establishment, amendment or termination of civil rights and obligations."

As we see from the definition contract is an agreement of two or more persons, so is it possible, and is it legal to waive obligations by one party?

Thus, according to clause 3 of article 401 of the Civil Code of the Republic of Kazakhstan: "The contract is considered amended or terminated in the event of a unilateral refusal to fulfil the contract."

According to article 404 of the Civil Code of the Republic of Kazakhstan:

  1. Unilateral refusal to fulfil the contract (refusal from the contract) is allowed in cases stipulated by this Code, other legislative acts, or agreement of the parties.
  2. Unilateral refusal to fulfil the contract is allowed in cases where the contract is concluded without specifying a period unless otherwise provided by legislative acts or agreement of the parties.
  3. In case of unilateral refusal to fulfil the contract, the party shall notify the other party thereof by a month in advance, unless otherwise provided by this Code, other legislative acts, or agreement of the parties. "

Based on the above, a unilateral withdrawal from the contract is not prohibited by law, as it is not forbidden to include this condition in the contract. Moreover, the conditions under which the party has the right to withdraw from the agreement are legally indicated.

Let's move from general to particular. According to clause 3 of Article 656 of the Civil Code of the Republic of Kazakhstan:

"In cases of discovered impossibility to use without deterioration of the quality of the works performed, materials (parts, structures) or equipment provided by the employer, the contractor have to ask their replacement by the employer within a reasonable period, and in case of failure to comply with this requirement, the contractor shall have the right to refuse the contract and claim the employer to pay the contract price in proportion to the part of the works performed, as well as compensation for losses not covered by this amount."

Thus, the construction contract indicates the possibility of the contractor's unilateral refusal of the agreement. Which also shows the legality of a unilateral withdrawal from the contract.

Also, according to clause 1 of Article 382 of the Civil Code of the Republic of Kazakhstan:

"The terms of the contract are determined at the discretion of the parties, except where the content of the relevant condition is prescribed by law."

It means that the parties have the right to freely and independently determine the terms of the contract, including unilateral refusal of the agreement if such terms do not contradict the law. From the examples above, it follows that there are no such prohibitions.

Regarding the issue of inadmissibility of unilateral termination of a civil law contract on the basis that the contract is an agreement of two or more persons.

With the dishonesty of one of the parties in fulfilling their obligations and the inevitability of termination of the contract through the courts, the process of refusal of the contract by one of the parties in some regard simplifies the inevitable. It is only important to identify the order and grounds by which this is possible. It can also help avoid abuse of one party's rights and help the other side defend its rights early on.