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The Civil Code of the Russian Federation

(with the Additions and Amendments of February 20, August 12, 1996,
October 24, 1997, July 8, December 17, 1999, April 16, May 15,
November 26, 2001, March 21, November 14, 26, 2002,
January 10, March 26, November 11, December 23, 2003)

Part I
Section III
Subsection 1
Chapter 23
Providing for the Discharge of Obligations
_ 1.
The General Provisions
_ 2.
The Forfeit
_ 3.
The Pledge
_ 4.
The Retention
_ 5.
The Surety
_ 6.
The Bank Guarantee
_ 7.
The Advance

Chapter 23. Providing for the Discharge of Obligations

_ 1. The General Provisions


Article 329. The Ways of Providing for the Discharge of Obligations


1. The discharge of obligations may be provided for by the forfeit, the pledge, the retention of the debtor's property, the surety, the bank guarantee, the advance and also in the other ways, stipulated by the law or by the agreement.
2. The invalidity of the agreement on providing for the discharge of the obligation shall not entail the invalidity of this obligation (the principal obligation).
3. The invalidity of the principal obligation shall entail the invalidity of the obligation, providing for it, unless otherwise established by the law.

_ 2. The Forfeit


Article 330. The Concept of the Forfeit


1. The forfeit (the fine, the penalty) shall be recognized as the sum of money, defined by the law or by the agreement, which the debtor is obliged to pay to the creditor in case of his non-discharge, or an improper discharge, of the obligation, in particular, in the case of the delay of the discharge. By the claim for the payment of the forfeit, the creditor shall not be obliged to prove that the losses have actually been inflicted upon him.
2. The creditor shall not have the right to claim the payment of the forfeit, if the debtor is not responsible for the non-discharge or an improper discharge of the obligation.

Article 331. The Form of the Agreement on the Forfeit


The agreement on the forfeit shall be made out in written form, irrespective of the form of the principal obligation.
The non-observance of the written form shall entail the invalidity of the agreement on the forfeit.

Article 332. The Legal Forfeit


1. The creditor shall have the right to claim the payment of the forfeit, defined by the law (the legal forfeit), irrespective of whether the obligation for its payment has been stipulated by the agreement between the parties.
2. The amount of the legal forfeit may be increased by the agreement between the parties, unless it is prohibited by the law.

Article 333. The Reduction of the Forfeit


If the forfeit, liable to the payment, is obviously out of proportion compared with the consequences of the violation of the obligation, the court shall have the right to reduce the forfeit.
The rules of the present Article shall not infringe upon the debtor's right to the reduction of the volume of his liability on the ground of Article 404 of the present Code and upon the creditor's right to the compensation of the losses in the cases, stipulated by Article 394 of the present Code.

_ 3. The Pledge


Article 334. The Concept and the Grounds for the Pledge to Arise


1. By force of the law, the creditor by the obligation, guaranteed against by the pledge (the pledgee), shall have the right of priority before the other creditors of the person, to whom this property belongs (the pledger), in the case of the debtor's non-discharge of this obligation, to be satisfied from the cost of the pledged property after the deductions, established by the law. The pledgee shall have the right to receive, on the same principle, satisfaction from the insurance compensation for the loss or for the damage of the pledged property, regardless of the fact, in whose favour it has been insured, unless the loss or the damage has taken place for the reasons, for which the pledgee shall be answerable.
2. The pledge of the land plots, the enterprises, the buildings, the structures, the flats and of the other immovable property (the mortgage) shall be regulated by the Law on the Mortgage. The general rules on the pledge, contained in the present Code, shall be applied to the mortgage in the cases, for which no other rules have been laid down by the present Code or by the Law on the Mortgage.
3. The pledge shall arise by force of an agreement. It shall also arise on the ground of the law in the case, when the circumstances, indicated in it, occur, if the law has stipulated, what kind of the property and for securing against the discharge of what kind of obligation shall be recognized as that in pledge. The rules of the present Code on the pledge, arising by force of an agreement, shall be correspondingly applied to the pledge, arising on the ground of the law, unless otherwise stipulated by the law.

Article 335. The Pledger


1. Both the debtor himself and the third person may come out in the capacity of the pledger.
2. The pledger of the thing may be its owner or the person, having with respect to it the right of economic management. The person, to whom the thing belongs by the right of economic management, shall have the right to pawn it without the consent of the owner in the cases, stipulated by Item 2 of Article 295 of the present Code.
3. The pledger of the right may be the person, to whom the pledged right belongs. The pledge of the right of lease or of the other right to the other person's thing shall not be admitted without the consent of its owner or of the person, to whom the right of its economic management belongs, if by the law or by the agreement the alienation of this right without the consent of the said persons has been prohibited.

Article 336. The Object of Pledge


1. The object of pledge shall be any property, including the things and the property rights (the claims), with the exception of the property, withdrawn from the circulation, of the claims, inseparably linked with the creditor's personality, in particular, the claims for the alimony, for the compensation for the harm, inflicted to the life or to the health, and of the other rights, whose ceding to the other persons is prohibited by the law.
2. The pledge of the individual kinds of property, in particular, of the property of the citizens, onto which no penalty shall be turned, may be prohibited or restricted by the law.

Article 337. The Claim, Secured Against by the Pledge


Unless otherwise stipulated by the agreement, the pledge shall secure the claim in the volume, which it possesses by the moment of its satisfaction, in particular, the interest, the forfeit, the compensation of the losses, caused by the delay in the discharge, and also the compensation of the necessary outlays, made by the pledgee for keeping the pledged thing, as well as the expenses, involved in the exaction.

Article 338. The Pledge Without and With the Transfer of the Pledged Property to the Pledgee


1. The pledged property shall remain in the custody of the pledger, unless otherwise stipulated by the agreement. The property, on which the mortgage has been imposed, and also the pawned commodities, which are in circulation, shall not be transferred to the pledgee.
2. The object of pledge may be left with the pledger under the lock and seal of the pledgee. The object of pledge may be left with the pledger with putting upon it the signs, testifying to the pledge (the firm pledge).
3. The object of pledge, transferred by the pledger into a temporary possession or use to the third person, shall be regarded as left with the pledger.
4. In the pledge of the property right, certified by the security, the latter shall be transferred to the pledgee or given into the notary's deposit, unless otherwise stipulated by the agreement.

Article 339. The Contract on the Pledge, Its Form and Registration


1. Indicated in the contract on the pledge shall be the object of pledge and its estimate, substance and amount, and the term of discharging the obligation, secured against by the pledge. It shall also contain the indication, in the custody of which party the pledged property is.
2. The agreement on the pledge shall be made out in written form. The agreement on the mortgage, as well as the contract on the pledge of the movable property or of the rights to this property as the security against the obligations by the contract, which shall be notarially certified, shall be subject to the notary's certification.
3. The agreement on the mortgage shall be registered in conformity with the procedure, laid down for the registration of the deals with the corresponding property.
4. The non-observance of the rules, contained in Items 2 and 3 of the present Article, shall entail the invalidity of the agreement on the pledge.

Article 340. The Property, to Which the Pledgee's Rights Shall Be Extended


1. The rights of the pledgee (the right of pledge) to the thing, which is the object of pledge, shall be extended to its accessories, unless otherwise stipulated by the agreement. To the fruits, products and incomes, obtained as a result of the use of the pledged property, the right of pledge shall be extended in the law-stipulated cases.
2. In the mortgage of an enterprise or of another property complex as a whole, the right of pledge shall be extended to all the property, included into its composition, both movable and immovable, including the right of claim and the exclusive rights, among them those that have been acquired during the period of the mortgage, unless otherwise stipulated by the law or by the agreement.
3. The mortgage of a building or of a structure shall be admitted only with the simultaneous mortgage by the same contract of the land plot, on which this building or this structure stands, or of the part of this land plot, functionally providing for the mortgaged object, or of the right of the lease of this land plot or of the corresponding part thereof, belonging to the pledger.
4. In the mortgage of the land plot, the right of mortgage shall not be extended to the buildings and the structures, which have been, or are being constructed on the given land plot by the mortgager, unless otherwise stipulated by the contract. In the absence of the relevant term in the contract, in case the penalty is turned onto the mortgaged land plot, the mortgager shall retain the right to a limited use (the servitude) of that part of the plot, which is necessary for the use of the building or of the structure in conformity with their intended purpose. The terms for the use of this part of the land plot shall be defined by the agreement, concluded between the mortgager and the mortgagee, and in case a dispute arises - by the court.
5. If the mortgage has been established over the land plot, where the buildings or the structures are situated, which belong not to the mortgager, but to another person, in case the mortgagee turns the penalty onto this plot and it is sold at an open auction, the rights and duties, possessed with respect to this person by the mortgager, shall pass to the acquirer of the land plot.
6. The contract on the pledge, and with respect to the pledge, arising on the ground of the law - the law, may stipulate the pledge of the things and of the property rights, which the pledger will acquire in the future.

Article 341. Arising of the Right of Pledge


1. The right of pledge shall arise from the moment of concluding the contract of pledge, and with respect to the pledge of the property, subject to the transfer to the pledgee - from the moment of the transfer of this property, unless otherwise stipulated by the contract of pledge.
2. The right of pledge for the commodities in circulation shall arise in conformity with the rules of Item 2 of Article 357 of the present Code.

Article 342. The Subsequent Pledge


1. If the property in pledge becomes the object of yet another pledge as a security against other claims (the subsequent pledge), the claims of the subsequent pledgee shall be satisfied from the cost of this property after the claims of the previous pledgees.
2. The subsequent pledge shall be admitted, unless it is prohibited by the previous contracts of pledge.
3. The pledger shall be obliged to supply information on all the existing pledges of the given property, stipulated by Item 1 of Article 339 of the present Code, to every one of the subsequent pledgees, and shall be answerable for the losses, caused to the pledgees by his non-discharge of this obligation.

Article 343. The Content and the Security of the Pledged Property


1. The pledger or the pledgee, depending on in whose custody the pledged property is (Article 338), shall be obliged, unless otherwise stipulated by the law or by the contract: 1) to insure at the expense of the pledger the pledged property in its full cost against the risks of the loss and damage, and if the full cost of the property exceeds the amount of the claim, secured against by the pledge - for the amount not less than that of the claim;
2) to take measures, necessary to guarantee the security of the pledged property, including those involved in its protection against the encroachments and claims on the part of the third persons;
3) to immediately notify the other party about the arising of a threat of the loss or the damage of the pledged property.
2. The pledgee and the pledger shall both have the right to check by the documents and by the fact upon the existence, the quantity, the state and the storage conditions of the pledged property, which is in the custody of the other party.
3. In case of a crude violation by the pledgee of the obligations, indicated in Item 1 of the present Article, which creates a threat of the loss or the damage of the pledged property, the pledger shall have the right to demand that the pledge be terminated in advance.

Article 344. The Consequences of the Loss or the Damage of the Pledged Property


1. The pledger shall take the risks of an accidental perish or an accidental damage of the pledged property, unless otherwise stipulated by the contract of pledge.
2. The pledgee shall be answerable for the full or the partial loss or damage of the object of pledge, transferred to him, unless he proves that he may be relieved of the responsibility in conformity with Article 401 of the present Code. The pledgee shall be answerable for the loss of the object of pledge in the amount of its actual cost, and for its damage - in the amount of the sum, by which this cost has been reduced, regardless of the sum, by which the object of pledge was estimated at the moment of its transfer to the pledgee.
If as a result of the damage of the object of pledge it has changed so much that it cannot be any more used for its intended purpose, the pledger shall have the right to reject it and to claim the compensation for its loss.
The contract may also stipulate the pledgee's obligation to recompense to the pledger the other losses, inflicted upon him by the loss or the damage of the object of pledge.
The pledger, who is the debtor by the obligation, secured against by the pledge, shall have the right to offset his claim against the pledgee for the compensation of the losses, caused to him by the loss or by the damage of the object of pledge, when discharging the obligation, secured against by the pledge.

Article 345. The Replacement and Restoration of the Object of Pledge


1. The replacement of the object of pledge shall be admitted with the consent of the pledgee, unless otherwise stipulated by the law or by the contract.
2. If the object of pledge has perished or has been damaged, or if the right of ownership to it or the right of its economic management has been terminated on the grounds, established by the law, the pledger shall have the right to restore the object of pledge or to replace it with the other property of an equal value within a reasonable term, unless otherwise stipulated by the contract.

Article 346. The Use and Disposal of the Object of Pledge


1. The pledger shall have the right, unless otherwise stipulated by the contract or following from the substance of the pledge, to use the object of pledge in conformity with its intended purpose, including deriving from it the fruits and incomes.
2. Unless otherwise stipulated by the law or by the contract or following from the substance of the pledge, the pledger shall have the right to alienate the object of pledge, to give it in rent or into a gratuitous use to another person, or to dispose of it in any other way with the pledgee's consent. An agreement, restricting the pledger's right to bequeath the pledged property, shall be insignificant.
3. The pledgee shall have the right to use the object of pledge, put into his custody, only in the cases, stipulated by the contract, and shall regularly present a report on its use to the pledger. By the contract, upon the pledgee may be imposed the duty to derive the fruits and incomes from the object of pledge for the purpose of discharging the principal obligation or in the interest of the pledger.

Article 347. The Pledgee's Protection of His Rights to the Object of Pledge


1. The pledgee, in whose custody the pledged property is or should have been, shall have the right to claim it from the other person's illegal possession, including from that of the pledger (Articles 301, 302 and 305).
2. In the cases, when by the terms of the contract the pledgee has been granted the right to use the object of pledge, transferred to him, he may demand from the other persons, including from the pledger, that all violations of his right be removed, even though these violations have not been connected with the deprivation of the possession (Articles 304 and 305).

Article 348. The Grounds for Turning the Penalty onto the Pledged Property


1. The penalty may be turned onto the pledged property in order to satisfy the pledgee's (the creditor's) claims in case of the non-discharge or of an improper discharge by the debtor of the obligation, secured against by the pledge, because of the circumstances, for which he is answerable.
2. The claim for turning the penalty onto the pledged property may be rejected, if the violation, committed by the debtor with respect to the obligation, secured against by the pledge, is utterly insignificant, and for this reason, the amount of the pledger's claims is obviously out of all proportion with the cost of the pledged property.

Article 349. Procedure for Turning the Penalty onto the Pledged Property


1. The pledgee's (the creditor's) claims shall be satisfied from the cost of the pledged immovable property by the court decision. The satisfaction of the pledgee's claim at the expense of the pledged immovable property without turning to the court shall be admitted on the grounds of a notarially certified agreement of the pledgee with the pledger, concluded between them after the arising of the grounds for turning the penalty onto the object of pledge. This agreement may be recognized by the court as invalid upon the claim of the person, whose rights have been violated by such an agreement.
2. The pledgee's rights shall be satisfied at the expense of the pledged movable property by the court decision, unless otherwise stipulated by the agreement of the pledger with the pledgee. However, the penalty shall be turned onto the object of pledge, transferred to the pledgee, in conformity with the procedure, established by the contract of pledge, unless the law has laid down a different procedure.
3. The penalty shall be turned onto the object of pledge only by the court decision in the cases, when: 1) the consent or the permit of the other person or of the other body has been required for the conclusion of the contract;
2) the object of pledge is the property, presenting a considerable historical, artistic or another kind of cultural value for society;
3) the pledger is absent and it is impossible to identify the place of his stay.

Article 350. Realization of the Pledged Property


1. The realization (the sale) of the pledged property, onto which, in conformity with Article 349 of the present Code, the penalty has been turned, shall be effected by way of selling it at an open auction in the order, established by the procedural legislation, unless otherwise laid down by the law.
2. Upon the request of the pledger, the court shall have the right, in its decision on turning the penalty onto the pledged property, to postpone its sale at an open auction for a term of up to one year. The delay shall not concern the parties' rights and duties by the obligation, secured against by the pledge of this property, and shall not absolve the debtor from recompensing the creditor's losses and the forfeit, both of which have mounted over the period of delay.
3. The initial selling price of the pledged property, from which the bidding starts, shall be fixed by the court decision in the cases, when the penalty has been turned onto the property through the court, or by an agreement, concluded between the pledgee and the pledger - in the rest of cases. The pledged property shall be sold to the person, who offers the highest price at the auction.
4. In case the auction is declared as having failed, the pledgee shall have the right, by an agreement with the pledger, to acquire the pledged property and to offset the selling price by the amount of his claims, secured against by the pledge. To such an agreement, the rules of the purchase and sale shall be applied. In case the repeatedly held auction is declared as having failed, too, the pledgee shall have the right to keep the object of pledge to himself, while appraising its cost at an amount, which is not over 10 per cent lower than its initial selling price at the repeatedly held auction.
If the pledgee has not availed himself of the right to keep the object of pledge to himself within one month from the day of declaring the repeated auction as having failed, the contract of pledge shall be terminated.
5. If the amount, derived from the realization of the pledged property, proves to be insufficient to cover the pledgee's claim, he shall have the right, in the absence of any other instruction in the law or in the contract, to obtain the underderived amount from the other property of the debtor, while not enjoying the right of priority, based on the pledge.
6. If the amount, derived from the realization of the pledged property, exceeds the size of the pledgee's claim, secured against by the pledge, the difference shall be returned to the pledger.
7. The debtor and the pledger, who is the third person, shall have the right, at any time before the sale of the object of pledge, to terminate the turning onto it of the penalty and its realization by discharging the obligation, secured against by the pledge, or that part thereof, whose discharge has been delayed. An agreement, restricting this right, shall be regarded as insignificant.

Article 351. Advanced Discharge of the Obligation, Secured Against by the Pledge and Turning of the Obligation onto the Pledged Property


1. The pledgee shall have the right to demand an advanced discharge of the obligation, secured against by the pledge, in the following cases: 1) if the object of pledge has been withdrawn from the custody of the pledger, with whom it has been left, other than in conformity with the terms of the contract of pledge;
2) if the pledger has violated the rules on the replacement of the object of pledge (Article 345);
3) if the object of pledge has been lost because of the circumstances, for which the pledger is not answerable in case the pledger has not availed himself of the right, stipulated by Item 2, Article 345 of the present Code.
2. The pledgee shall have the right to claim an advanced discharge of the pledge, secured against by the pledge, and if his claim is not satisfied, to turn the penalty onto the object of pledge in the following cases: 1) if the pledger has violated the rules on the subsequent pledge (Article 342);
2) if the pledger has not discharged the duties, stipulated by Subitems 1 and 2 of Item 1 and by Item 2, Article 343 of the present Code;
3) if the pledger has violated the rules on the disposal of the pledged property (Item 2 of Article 346).

Article 352. Termination of the Pledge


1. The pledge shall be terminated: 1) with the termination of the obligation, secured against by the pledge;
2) upon the demand of the pledger in the presence of the circumstances, stipulated by Item 3, Article 343 of the present Code;
3) in case of the perish of the pledged thing or of the termination of the pledged right, unless the pledger has availed himself of the right, stipulated by Item 2, Article 345 of the present Code;
4) in case of the sale of the pledged property at an open auction, and also in case of its realization proving to be impossible (Item 4 of Article 350).
2. About the termination of the mortgage, a note shall be made in the register, into which the mortgage contract has been entered.
3. Upon the termination of the pledge as a result of the discharge of the obligation, secured against by the pledge, or upon the pledger's claim (Item 3 of Article 343), the pledgee, in whose custody the pledged property has been kept, shall immediately return it to the pledger.

Article 353. Maintaining the Pledge in Force When the Right to the Pledged Property Is Transferred to Another Person


1. If the right of ownership to the pledged property, or the right of the economic management of this property is transferred from the pledger to another person as a result of a pecuniary or gratuitous alienation of this property or by way of the universal legal succession, the right of pledge shall be maintained in force. The legal successor of the pledger shall occupy the place of the pledger and shall discharge all his duties, unless otherwise stipulated by the agreement with the pledgee.
2. If the property of the pledger, which is the object of pledge, has passed, by way of the legal succession, to several persons, each one of the legal successors (acquirers of the property) shall bear the consequences, following from the non-discharge of the obligation, secured against by the pledge, in proportion to that part of the said property, which has passed to him. However, in case the object of pledge is indivisible or remains in the common ownership of the legal successors, they shall become joint pledgers.

Article 354. The Consequences of the Forcible Withdrawal of the Pledged Property


1. If the pledger's right of ownership to the property, which is the object of pledge, is terminated on the grounds and in the way, established by the law, as a result of the withdrawal (redemption) for the state or for the municipal needs, of the requisition or of the nationalization, and if the pledger is given the other property or the corresponding compensation, the right of pledge shall be extended to the new property, given instead of the old property, or the pledgee shall correspondingly acquire the right of priority in the satisfaction of his claim from the amount of the compensation due to the pledger. The pledgee shall also have the right to claim an advanced discharge of the obligation, secured against by the pledge.
2. In the cases, when the property, which is the object of pledge, is withdrawn from the pledger in conformity with the law-established order on the ground that another person is in actual fact the owner of this property (Article 301), or as a sanction for committing a crime or for another violation of the law (Article 243), the pledge with respect to this property shall be terminated. In these cases, the pledger shall have the right to claim an advanced discharge of the obligation, secured against by the pledge.

Article 355. The Cession of the Rights by the Contract of Pledge


The pledgee shall have the right to transfer his rights by the contract of pledge to another person, while observing the rules on the transfer of rights by the cession of the claim (Articles 382-390).
The cession by the pledgee of his rights by the contract of pledge to another person shall be valid, if the rights of claim against the debtor by the principal obligation, secured against by the pledge, have also been ceded to the same person.
Unless otherwise proved, the cession of the rights by the contract of mortgage shall also imply the cession of the rights by the obligation, secured against by the mortgage.

Article 356. Transfer of the Debt by the Obligation, Secured Against by the Pledge


In case of the transfer of the obligation, secured against by the pledge, to another person, the pledge shall be terminated, if the pledger has not given his consent to the creditor to be answerable for the new debtor.

Article 357. The Pledge of Commodities in Circulation


1. The pledge of commodities in circulation shall be recognized as the pledge of commodities with leaving them in the pledger's custody and with granting the latter the right to modify the composition and the natural form of the pledged property (the commodity stocks, the raw and other materials, the semi-finished and finished products, etc.), provided that their total cost does not become less than that indicated in the contract of pledge. The reduction of the cost of the pledged commodities in circulation shall be admitted in proportion to the discharged share of the obligation, secured against by the pledge, unless otherwise stipulated by the contract.
2. The commodities in circulation, alienated by the pledger, shall cease to be the object of pledge from the moment of their passing into the ownership or into the economic or the operation management of the acquirer, while the commodities, acquired by the pledger, which have been indicated in the contract of pledge, shall become the object of pledge from the moment, when the right of their ownership or of their economic management arises with the pledger.
3. The pledger of the commodities in circulation shall be obliged to keep a register for entering the pledges, into which he shall make entries on the terms of the pledge of the commodities and on all the operations, entailing the change of the composition or of the natural form of the pledged commodities, including their processing, by the date of the last operation.
4. In case the pledger violates the terms of the pledge of commodities in circulation, the pledgee shall have the right to hold up the operations with them by way of putting upon them his signs and seals until the elimination of the violation.

Article 358. Pawning of Things at the Pawn-Shop


1. The movable property, intended for personal use, may be accepted as a security against a short-term credit by way of the business activity of specialized organizations - the pawn-shops.
2. The contract on pawning things at the pawn-shop shall be legalized by issuing by the pawn-shop of a pawn-ticket.
3. The pawned things shall be passed to the pawn-shop. The pawn-shop shall be obliged to insure the things in favour of the pawner at its own expense in the full amount of their estimated cost, made in conformity with the prices of things of the same category and standard, usually fixed in trade by the moment of their being accepted in pawn.
The pawn-shop shall not have the right to use and to dispose of the things in pawn.
4. The pawn-shop shall bear responsibility for the loss and the damage of the pawned things, unless it proves that the loss and the damage have occurred because of a force-majeure.
5. In case the credit, secured against by the pawn of things at the pawn-shop, has not been repaid within the fixed term, the pawn-shop shall have the right, on the ground of the notary's executive endorsement, and after the expiry of one month's extra term, to sell this property in the order, laid down for the realization of the pledged property (Items 3, 4, 6 and 7 of Article 350). After this, the claims of the pawn- shop against the pawner (the debtor) shall be regarded as satisfied, even if the amount, derived from the realization of the pawned property, is insufficient to cover them in full.
6. The rules for the citizens' crediting by the pawn-shops under the pledge of things, belonging to the citizens, shall be laid down by the law and by the present Code.
7. The terms of the contract on the pawn of things at the pawn-shop, restricting the rights of the pledger as compared with the rights, granted to him by the present Code and by the other laws, shall be insignificant. Instead of such terms, the corresponding provisions of the law shall be applied.

_ 4. The Retention


Article 359. The Grounds for the Retention


1. The creditor, in whose custody is the thing, subject to the transfer to the debtor or to the person, named by the debtor, shall have the right, in case the debtor fails to discharge in time the obligation on the payment for this thing or on the compensation to the creditor of the expenses and of the other losses he has borne in connection with it, to retain it until the corresponding obligation is discharged. By way of the thing's retention may also be secured the claims, which, while not being connected with the payment for the thing or with the compensation of the expenses and of the other losses, have nevertheless arisen from the obligation, whose parties are acting as businessmen.
2. The creditor may retain the thing in his custody, despite the fact that after this thing has passed into the creditor's possession, the rights to it have been acquired by the third person.
3. The rules of the present Article shall be applied, unless otherwise stipulated by the contract.

Article 360. Satisfaction of Claims at the Expense of the Retained Property


The claims of the creditor, who is retaining the thing, shall be satisfied from its cost in the volume and in the order, stipulated for the satisfaction of the claims, secured against by the pledge.

_ 5. The Surety


Article 361. The Contract of Surety


By the contract of surety, the surety shall be obliged to the creditor of the other person to be answerable for the latter's discharge of his obligation in full or in part.
The contract of surety may also be concluded to provide security for an obligation, which will arise in the future.

Article 362. The Form of the Contract of Surety


The contract of surety shall be legalized in written form. The non-observance of the written form shall entail the invalidity of the contract of surety.

Article 363. Responsibility of the Surety


1. In case of the failure to discharge, or of an improper discharge by the debtor, of the obligation, secured by the surety, the surety and the debtor shall be jointly answerable to the creditor, unless the surety's subsidiary liability is stipulated by the law or by the contract of surety.
2. The surety shall be answerable to the creditor in the same volume as the debtor, including the payment of the interest, the compensation of the court expenses, involved in the exaction of the debt and of the other losses, borne by the creditor, which have been caused by the debtor's non-discharge or improper discharge of the obligation, unless otherwise stipulated by the contract of surety.
3. The persons, who have provided a joint surety, shall be jointly answerable to the creditor, unless otherwise stipulated by the contract of surety.

Article 364. The Right of the Surety to Object to the Creditor's Claim


The surety shall have the right to put forward against the creditor's claim the objections, which could have been put forward by the debtor, unless otherwise following from the contract of surety. The surety shall not lose the right to these objections even in case the debtor has renounced them or has recognized his debt.

Article 365. The Rights of the Surety, Who Has Discharged the Obligation


1. To the surety, who has discharged the obligation, shall pass the creditor's rights by this obligation and also the rights, which have belonged to the creditor as the pledgee, in the volume, in which the surety has satisfied the creditor's claim. The surety shall also have the right to claim that the debtor pay the interest on the amount of money, paid up to the creditor, and recompense the other losses, which he has borne in connection with the liability for the debtor.
2. After the surety has discharged the obligation, the creditor shall be obliged to pass to the surety the documents, certifying the claim against the debtor, and to transfer to him the rights, securing this claim.
3. The rules, established by the present Article, shall be applied, unless otherwise stipulated by the law, by the other legal acts or by the contract, concluded by the surety with the debtor, or unless otherwise following from the relationships between them.

Article 366. Notification of the Surety on the Debtor's Discharge of the Obligation


The debtor, who has discharged the obligation, secured against by the surety, shall immediately notify about it the surety. Otherwise, the surety, who in his turn has discharged the obligation, shall have the right to exact from the creditor what he has groundlessly obtained, or to file the claim of regress against the debtor. In the latter case, the debtor shall have the right to exact from the creditor only what has been groundlessly obtained.

Article 367. Termination of the Obligation


1. The surety shall be terminated with the termination of the secured obligation, and also in case of the amendment of this obligation, entailing an increase of the liability, or the other unfavourable consequences for the surety without the latter's consent.
2. The surety shall be terminated as a result of the transfer to another person of the debt by the obligation, secured by the surety, unless the surety has given his consent to the creditor to be answerable for the new debtor.
3. The surety shall be terminated, if the creditor has refused to accept the proper discharge, offered by the debtor or by the surety.
4. The surety shall be terminated after the expiry of the term, indicated in the contract of surety, for which it has been issued. In case such term has not been stipulated, the surety shall be terminated, if the creditor does not file the claim against the debtor in the course of one year from the date of the expiry of the term, fixed for the discharge of the secured obligation. If the term of the discharge of the principal obligation has not been stipulated and cannot be defined, or if it has been defined by the moment of the demand, the surety shall be terminated, unless the creditor files the claim against the surety in the course of two years from the date, when the contract of surety was concluded.

_ 6. The Bank Guarantee


Article 368. The Concept of the Bank Guarantee


By force of the bank guarantee, the bank, the other credit institution or the insurance company (the guarantor) shall issue, upon the request of the other person (the principal) a written obligation to pay to the creditor (the beneficiary), in conformity with the terms of the obligation, given by the guarantor, a certain amount of money upon the beneficiary's presenting the written claim on its payment.

Article 369. Security by the Bank Guarantee of the Principal's Obligation


1. The bank guarantee shall provide for the proper discharge by the principal of his obligation to the beneficiary (the principal obligation).
2. The principal shall pay out to the guarantor a reward for the issue of the bank guarantee.

Article 370. Independence of the Bank Guarantee from the Principal Obligation


The obligation of the guarantor to the beneficiary, stipulated by the bank guarantee, shall not depend in the relationships between them upon that principal obligation, to provide for whose discharge it has been issued, even if the guarantee contains a reference to this obligation.

Article 371. Irrevocability of the Bank Guarantee


The bank guarantee shall not be revoked by the guarantor, unless otherwise stipulated in it.

Article 372. Untransferability of the Rights by the Bank Guarantee


The right of claim against the guarantor, possessed by the beneficiary by the bank guarantee, shall not be transferred to the other person, unless otherwise stipulated in the guarantee.

Article 373. The Coming of the Bank Guarantee in Force


The bank guarantee shall come in force from the date of its issue, unless otherwise stipulated in it.

Article 374. Presentation of the Claim by the Bank Guarantee


1. The beneficiary's claim for the payment of the sum of money by the bank guarantee shall be presented to the guarantor in written form, with the documents, indicated in the guarantee, enclosed to it. The beneficiary shall point out, either in the claim itself or in the enclosed documents, in what consists the principal's violation of the principal obligation, to secure which the guarantee was issued.
2. The beneficiary's claim shall be presented to the guarantor before the expiry of the term, defined in the guarantee, for which it has been issued.

Article 375. The Guarantor's Obligations in Considering the Beneficiary's Claim


1. On receiving the beneficiary's claim, the guarantor shall without delay notify about it the principal and shall pass to him the copies of the claim with all the related documents.
2. The guarantor shall be obliged to examine the beneficiary's claim and the enclosed documents within a reasonable term, displaying a reasonable solicitude in order to establish, whether or not the claim and the enclosed documents correspond to the terms of the guarantee.

Article 376. The Guarantor's Refusal to Satisfy the Beneficiary's Claim


1. The guarantor shall refuse to satisfy the beneficiary's claim, if this claim or the documents enclosed to it do not correspond to the terms of the guarantee or if they are presented to the guarantor after the expiry of the term, fixed in the guarantee. The guarantor shall be obliged to immediately notify the beneficiary about the refusal to satisfy his claim.
2. If the guarantor has learned before the satisfaction of the beneficiary's claim that the principal obligation, secured against by the bank guarantee, has already been discharged in full or in the corresponding part, that it has been terminated on the other grounds or has been invalidated, he shall be obliged to immediately notify about this the beneficiary and the principal. The repeated beneficiary's claim, received by the guarantor after such a notification, shall be liable to satisfaction by the guarantor.

Article 377. The Limits of the Guarantor's Obligation


1. The guarantor's obligation to the beneficiary, stipulated by the bank guarantee, shall be limited by the payment of the sum of money, for which the guarantee was issued.
2. The guarantor's responsibility to the beneficiary for his non-discharge or improper discharge of the obligation by the guarantee shall not be limited to the sum of money, for which the guarantee was issued, unless otherwise stipulated in the guarantee.

Article 378. Termination of the Bank Guarantee


1. The guarantor's obligation to the beneficiary by the guarantee shall be terminated: 1) by the payment to the beneficiary of the sum of money, for which the guarantee was issued;
2) after the expiry of the term, fixed in the guarantee, for which it was issued;
3) as a result of the beneficiary's renouncement of his rights by the guarantee and his return of the guarantee to the guarantor;
4) as a result of the beneficiary's renouncement of his rights by the guarantee by way of his handing in of a written application on relieving the guarantor of his obligations.
The termination of the guarantor's obligation on the grounds, pointed out in Subitems 1, 2 and 4 of the present Item, shall not depend on whether or not the guarantee has been returned to him.
2. The guarantor, who has learned about the termination of the guarantee, shall be obliged to immediately notify about it the principal.

Article 379. The Guarantor's Claims of Regress to the Principal


1. The guarantor's right to claim by way of regress that the principal recompense the sums of money, paid to the beneficiary by the bank guarantee, shall be defined by the agreement, concluded between the guarantor and the principal, for the discharge of which the guarantee was issued.
2. The guarantor shall not have the right to claim that the principal return the sums of money, paid to the beneficiary other than in correspondence with the terms of the guarantee, or for the violation of the guarantor's obligation to the beneficiary, unless otherwise stipulated by the agreement, concluded between the guarantor and the principal.

_ 7. The Advance


Article 380. The Concept of the Advance. The Form of an Agreement on the Advance


1. The advance shall be recognized as the sum of money, issued by one of the contracting parties to offset the payments to the other party due from it, as a proof that the contract has been concluded and that its discharge has been secured against.
2. The agreement on the advance, regardless of the sum of money involved, shall be effected in written form.
3. In case of the doubt about whether the sum of money, paid to offset the payments, due from the party by the contract, is the advance, in particular, as a result of the non-abidance by the rule, laid down by Item 2 of the present Article, this sum of money shall be regarded as paid up by way of an advance, unless proved otherwise.

Article 381. The Consequences of the Termination and of the Non-Discharge of the Obligation, Secured Against by the Advance


1. If the obligation is terminated before the start of its discharge by an agreement between the parties or as a result of its discharge being impossible (Article 416), the advance shall be returned.
2. If the responsibility for the non-performance of the contract lies with the party, which has given the advance, it shall be left with the other party. If the responsibility for the non-performance of the contract lies with the party, which has received the advance, it shall be obliged to pay to the other party the double amount of the advance. In addition, the party, responsible for the non-execution of the contract, shall be obliged to recompense to the other party the losses, offsetting the amount of the advance, unless otherwise stipulated by the contract.

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