What to do, if the supplier doesn’t meet its obligations under a contract?

Sometimes there is a situation, when for some reason the supplier, which concluded the contract, violates its terms, motivating it by increase of the prices on materials, which are necessary for his work. The current legislation will help to understand such collisions.

Thus, the 19 part of 34 article of the Federal Law № 44 – FZ "On the contract system in state and municipal procurement of goods, works and services" as of 05.04.2013 includes the right of the supplier to accept the decision of the customer about the unilateral refusal to perform the contract, if such right of the customer was provided in the contract.

In most cases the ability of unilateral contract refuse by the supplier or contractor is caused by the existence of agreement violation by the customer.

On the other hand, it should be taken into account, that according to the 2 part of 34 article of the Law № 44 – FZ, as a general rule, the price of the contract is fixed and is determined for a whole period of its execution. Thereby your contractor does not have the right to make a decision about unilateral refusal to perform the contract because of increased prices on materials, which are necessary for work. In such case the supplier can only ask the customer to cancel a contract by agreement between the parties.

Besides, if meeting the criteria, which are provided by the 2 paragraph of 451 article of The Civil Code of the Russian Federation, the contract can be canceled by court decision in connection with a substantial change of circumstances, in case of numerous violation of delivery terms and also if the contractor doesn’t start the performance of the contract in due time or does the job so slowly that to finish it by the deadline becomes clearly impossible. In such instance the customer has the right to cancel a contact.

In case of contract rescission by court decision or unilateral refusal to perform the contract due to essential violation of contract terms by the contractor, the necessary information should be directed by the customer to The Federal Antimonopoly Service of the Russian Federation to include it in the register of unfair suppliers.