Russian Contract Law Distinctions

Russian and Western approaches to entering into and execution of contracts are different.  

We have different legal culture, which naturally has its impact. Unfortunately, in some cases transactions fall through, sometimes because a European entrepreneur does not understand the requirements put forward by the Russian colleague. 

Russian legislation specifies explicitly: transactions that are made between legal entities and with individuals must be executed as a written contract (Article 161 of the Civil Code of the Russian Federation). This applies directly to international (foreign economic) contracts made with foreign partners.

Only in this case, the written contract, which sets forth the subject matter of the arrangements, rights, obligations and liability of the parties, is not only a legal guarantee, but also an "authorization" document for completing formalities related to the performance of a foreign economic contract. 

For example, a bank acting as an agent of currency control requires submission of a written contract to perform currency transactions, which include, in particular, cash settlements between Russian (resident) and foreign (non-resident) parties. A foreign economic contract is also required for the customs clearance of the goods crossing the Russian border.