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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 II
Section IV
Chapter 51
Commission

Chapter 51. Commission

Article 990. The Contract of Commission


1. Under the contract of commission one party (commission agent) shall undertake to perform one or several transaction on its behalf on the instruction of the other party (principal) for remuneration at the expense of the principal. In a transaction conducted by the commission agent with a third person the commission agent shall acquire and become to be bound, although the principal was named in the transaction or entered in direct relations with the third person in the performance of the transaction.
2. A contract of commission may be concluded for an indefinite period or without reference of its validity term with reference or without reference of the territory of its execution, with the obligation of the principal not to give to third persons the right of making in his interests and at his expense transactions, the conduct of which has been entrusted to the commission agent, or without such obligation, with conditions or without them for the assortment of goods which are the subject of commission.
3. The law and other legal acts may provide for specificity of the contract of commission of particular kinds.

Article 991. Commission Fee


1. The principal shall be obliged to pay a commission fee to the commission agent and when the commission agent has stood the surety for the execution of the transaction by a third person (del credere) the principal shall also pay an additional fee in the amount and in the order fixed in the contract of commission. If the contract does not provide for the amount of the fee or the procedure for its payment and the amount of the fee cannot be determined on the basis of the contract, the fee shall be paid after the execution of the contract of commission in the amount, defined in conformity with Item 3 of Article 424 of this Code.
2. If a contract of commission has not been executed for the reasons depending on the principal, the commission agent shall retain the right of a commission fee, and also to compensation for the incurred expenses.

Article 992. The Execution of a Commission Order


The order assumed by the commission agent the latter shall be obliged to perform on the conditions most favorable for the principal in accordance with the instructions of the principal, and in the absence if such instructions of the principal, and in the absence of such instructions in the contract of commission the commission agent shall be obliged to perform the order in keeping with the business turnover customs or other usual requirements.
In case where the commission agent has performed a transaction on the conditions more favourable than those which have been indicated by the principal, the additional benefit shall be divided between the principal and the commission agent, unless otherwise stipulated by the agreement of the parties.

Article 993. Liability for the Non-execution of the Transaction Concluded for the Principal


1. The commission agent shall not be liable to the principal for the non-execution by a third person of the transaction concluded with him at the expense of the principal, except for the cases where the commission agent has not displayed the necessary circumspection in the choice of this person or has stood surety for the performance of the transaction (del credere).
2. If a third person does not fulfil the transaction concluded with him by the commission agent, the latter shall be obliged to inform at once the principal about this, gather necessary evidence, and also to transfer to him the rights in this transaction on the demand of the principal and with the observance of the rules for the assignment of a claim (Articles 382-386, 388 and 389).
3. The cession of rights to the principal in a transaction on the basis of Item 2 of this Article shall be allowed, regardless of the agreement of the commission agent with a third person, which bans or restricts such cession. This shall not release the commission agent from liability to a third person in connection with the cession of the right in violation of the agreement on its ban or restriction.

Article 994. Subcommission


1. Unless otherwise stipulated by the contract of commission, the commission agent shall have the right to conclude a contract of subcommission with another person for the purpose of executing this contract, remaining to be liable for the actions of the sub-commissioner to the principal. Under the contract of subcommission the commission agent shall acquire the rights and obligations of the principal in respect of the subcommissioner.
2. Until the termination of the contract of commission the principal shall not have the right to enter into relations with the subcommissioner without the consent of the commission agent, unless otherwise stipulated by the contract of commission.

Article 995. Departures from the Principal's Instructions


1. The commission agent shall have the right to depart from the principal's instructions, if this is necessary under the present circumstances of the case in the interests of the principal and the commission agent could not acquire the principal in advance or did not receive an answer to his inquiry within a reasonable period of time. The commission agent shall be obliged to notify the principal about the departures made as soon as the notification has become possible. The commission agent who acts as a businessman may be given by the principal the right to depart from his instructions without a preliminary inquiry. In this case the commission agent shall be obliged to notify the principal about the departures made within a reasonable period of time, unless otherwise stipulated by the contract of commission.
2. The commission agent who has sold property at the price below that agreed upon with the principal, shall be obliged to compensate to the latter for the difference, unless he proves that he had no possibility of selling property at the agreed price and the sale at a lower price prevented still greater losses. In case where the commission agent has obliged to inquire the principal in advance, the commissioner shall also prove that he had no possibility of receiving the preliminary consent of the principal with a departure from his instructions.
3. If the commission agent has bought property at the price higher than that agreed with the principal, the latter, if he does not wish to accept such purchase, shall be obliged to state about this to the commission agent within a reasonable period of time upon the receipt from him the notification about the conclusion of the transaction with a third person. Otherwise the purchase shall be recognized as accepted by the principal. If the commission agent stated hat he accepts the difference in prices at its expense, the principal shall not have the right to waive the transaction concluded for him.

Article 996. The Rights to the Things Which Are the Subject of Commission


1. Things which the commission agent received from the principal or brought at the expense of the principal shall be the property of the latter.
2. In accordance with Article 359 of this Code the commissioner shall have the right to withhold the things which he has and which are subject to the transfer to the principal or the person indicated by the principal in security for his claims under the contract of commission. In the event of declaring a principal insolvent (bankrupt) the said right of the commissioner shall be ceased and his claims to the principal within the cost of things which he has retained shall be satisfied in keeping with Article 360 of this Code on a par with the claims secured with pledge.

Article 997. The Satisfaction of the Claims of the Commission Agent from the Sums of Money Due to the Principal


The commission agent shall have the right, in accordance with Article 410 of this Code, to withhold all the sums of money due to him under the contract of commission, received by him from the principal. However, the principal's creditors who enjoy advantage with regard to the pledgees in respect of the sequence of satisfying their claims from the sums of money withheld by the commission agent.

Article 998. The Liability of the Commission Agent for the Loss and Shortage of, or Damage to, the Principal's Property


1. The commission agent shall be liable to the principal for the loss and shortage of, or damage to, the principal's property held by him.
2. If in this property there are damages or shortages during the acceptance by the commission agent of property, forwarded, by the principal or received by the commission agent for the principal, the damages and shortages being noticed in case of an outward inspection, and also has been inflicted by anybody on the principal's property held by the commission agent, the commission agent shall be obliged to take measures protecting the rights of the principal, to gather necessary evidence and to inform the principal about this without delay.
3. The commission agent who has not insured the principal's property held by him shall be liable for his only in cases where the principal has prescribed him to insure property at the expense of the principal or where the insurance of this property by the commission agent is provided for by the contract of commission or by the business turnover customs.

Article 999. The Report by the Commission Agent


Upon the execution of the instruction the commission agent shall be obliged to submit to the principal his report and to give him all that he has received under the contract of commission. The principal who has objections to the report shall be obliged to inform the commission agent during 30 days since the receipt of the report, unless the agreement between the parties has fixed a different period of time. Otherwise the report shall be deemed to be accepted in the absence of a different agreement.

Article 1000. The Acceptance by the Principal of Everything Performed Under the Contract of Commission


The principal shall be obliged:
to accept from the commission agent everything performed under the contract of commission;
to inspect the property acquired by the commission agent for him and to inform the latter without delay about the defects discovered in this property;
to release the commission agent from the obligation assumed to a third person in the execution of the commission order.

Article 1001. Compensation for the Expenses to Be Incurred in the Execution of a Commission Order


The principal shall be obliged to compensate for the sums of money, spent by the commission agent to execute the commission order in addition to the payment of a commission fee and in requisite cases also an additional fee for del credere.
The commission agent shall have no right to recompense the expenses on the storage of the principal's property held by him, unless otherwise stipulated by the law or the contract of commission.

Article 1002. The Termination of the Contract of Commission


The contract of commission shall be terminated in consequence of:
the refusal of the principal to execute the contract;
the refusal of the commission agent to execute the contract;
the refusal of the principal to execute the contract in cases provided for by the law or the contract;
the death of the commission agent, the recognition of him as legally unfit, specially incapable or missing;
the recognition of an individual businessman, who is a commission agent, as insolvent (bankrupt).
In case of declaring that the commission agent is insolvent (bankrupt), his rights and obligations in transactions, committed by him for the principal in pursuance of the instructions of the latter, shall pass to the principal.

Article 1003. The Revocation of a Commission Note by the Principal


1. The principal shall have the right to refuse at any time to execute the contract of commission by revoking the note given to the commission agent. The commission agent shall have the right to demand the compensation for the losses caused by the revocation of the order.
2. In case where a contract of commission has been concluded without an indication of its validity term the principal shall be obliged to notify the commission agent about the termination of the contract within 30 days, unless the property provides for a longer period of notification. In this case the principal shall be obliged to pay to the commission agent a charge for the deals made by him before the termination of the contract, and also to reimburse to the commission agent the expenses, incurred by him before the cessation of the contract.
3. In case of revocation of the note the principal shall be obliged, within the period fixed by the contract of commission agent, and if such period is not fixed, also to discharge at once of his property held by the commission agent. If the principal fails to discharge this obligation, the commission agent shall have the right to put the property in storage at the expense of the principal or to sell it at the price most remunerative for the principal.

Article 1004. The Refusal of the Commission Agent to Execute the Contract of Commission


1. The commission agent shall have no right, unless otherwise stipulated by the contract of commission, to refuse to execute it, with the exception of the case where the contract was concluded without an indication of its validity term. In this case the commission agent shall notify the principal about the termination of the contract within 30 days, unless the contract provides for a longer period of time. The commission agent shall be obliged to take measures needed for he safety of the principal's property.
2. Unless the contract of commission stipulates a different period of time, the principal shall dispose of his property under the authority of the commission agent within 15 days since the day of the receipt of the notice about the commission agent's refusal to execute the note. If he does not discharge this obligation, the commission agent shall have the right to put the property in storage at the expense of the principal or to sell it at the price most remunerative for the principal.
3. Unless otherwise stipulated by the contract of commission, the commission agent who has refused to perform the note shall retain the right to a commission charge for the deals made by him before the termination of the contract, and also to the compensation for the expenses incurred before this time.

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