Settlement agreement: liability for non-fulfillment

Legislation on settlement agreements

The current legislation contains a number of legal mechanisms that in practice make it possible to achieve the goals of enforcement proceedings. The settlement agreement serves as such a mechanism, since its operation is regulated by legislative acts
:

Federal Law “On Enforcement Proceedings” - on the possibility of concluding an agreement that is approved in court;
Art. 439 of the Code of Civil Procedure of the Russian Federation - on the application of rules when drawing up an agreement between the parties;
Part 1 Art. 173 of the Code of Civil Procedure of the Russian Federation – on recording the terms of the contract in the minutes of the court hearing;
Part 2 Art. 173 – about the consequences of concluding an agreement;
Part 3 Art. 173 – on termination of enforcement proceedings in the case after approval of the transaction by the court;
Part 4 Art. 173 – on actions in the event of a court refusal to approve a document;
Art. 167 of the APC – on the consequences of violating the agreement;
Article 39 of the Code of Civil Procedure – on the legality of the transaction.

Practicing lawyers admit that the legislation has fully developed the mechanism for concluding a peace agreement at the stage of enforcement proceedings, but in reality it is used quite rarely.

The essence of the settlement agreement

The conclusion of a settlement agreement is relevant at the stage of enforcement proceedings.
For its conclusion, the desire of the parties to compromise is sufficient. The agreement is a voluntary agreement between the parties, a way to avoid exacerbating the situation, one of the few options not to return to litigation. The procedure for concluding a contract prohibits coercion. Each conflict situation has its own procedural subtleties, therefore the legislation does not contain provisions containing uniform rules for signing agreements. But there are general rules

which must be followed when completing a transaction:

description of the way to resolve the conflict;
the procedure and deadlines for fulfilling the obligations of the parties;
absence of contradictions to current legislation;
satisfaction of the applicant's demands and release from the defendant's recovery;
execution of the document in writing.

The settlement agreement has civil legal status. The difference from other forms of legal documents is that it takes the legal force of a court order after it is confirmed by the court.

Do the parties want to make peace? Anatoly Sidorov, 2014

Settlement agreement in civil proceedings

Before we understand the procedure for concluding a settlement agreement in civil proceedings, let us once again return to the question: why is this necessary?

In answer to this question, I will give several examples from judicial practice.

Thus, a citizen filed a claim in court to recover unpaid salary allowances in the amount of 500,000 rubles from the employer. The defendant, partially recognizing the claims, proposed to conclude a settlement agreement. The terms of the settlement agreement contained the defendant’s promise to pay the plaintiff 250,000 rubles. The plaintiff refused, hoping that, given the available evidence, the court would decide to collect the unpaid amount in full.

Then the defendant announced that the plaintiff had missed the three-month period provided for in Article 392 of the Labor Code of the Russian Federation to go to court. According to this article, an employee has the right to go to court to resolve an individual labor dispute within three months from the day he learned or should have learned about a violation of his rights.

The court agreed with the defendant's arguments and refused to satisfy the plaintiff's claims on this legal basis. One can imagine how disappointed the citizen was in connection with the unfulfilled hope of getting money earned through honest work.

In another case, the defendant admitted his guilt in committing a traffic accident, as a result of which the plaintiff's car was damaged. However, the defendant partially admitted the claims, disagreeing with the results of an independent assessment of the damage caused to the plaintiff. At the same time, he presented the court with evidence in the case in the form of an alternative assessment of damage, according to which the amount of damage in monetary terms was much lower. He also suggested that the plaintiff end the case with a settlement agreement. The terms of the settlement agreement were that the plaintiff was to purchase for the defendant a vehicle similar to the one damaged.

The plaintiff refused. Then the defendant filed a petition for a forensic examination in civil proceedings, which could establish the true amount of damage caused and evaluate it in monetary terms. The court ordered an examination. However, by that time the plaintiff had already sold the damaged car. Therefore, due to the failure to present the object (car) to the expert, it was not possible to conduct an expert study.

The court assessed this circumstance as the plaintiff’s evasion from participating in the examination (Part 3 of Article 79 of the Code of Civil Procedure of the Russian Federation) and made a decision based on the assessment of damage provided by the insurance company. The size of this assessment turned out to be much lower not only than the one that the plaintiff insisted on, but also the one that the defendant provided to the court as an alternative.

End of introductory fragment.

Contents of the document

A reconciliation agreement is a document designed to radically change the situation that was considered in court and assessed, so the parties need to study in detail the nuances of its preparation
:

the contract should not contain conditions, the text should be clear and understandable, not include compromises and uncertainty;
the wording cannot have a double meaning, they must contain a specific indication of the item or date being described;
monetary matters must be covered without indicating alternative methods of payment or return.

A peace contract cannot be concluded if the content is contrary to the law or the conditions do not relate to the essence of the conflict and go beyond the scope of the issue under consideration.
The content must correspond to the claims that are brought against the defendant. After the trial, the contract cannot be edited. Signing means the termination of enforcement proceedings in the case in the bailiff service. The restrictions imposed upon the initiation of proceedings are lifted from the debtor.

If the defendant refuses to fulfill his obligations enshrined in the agreement, then the restrictive measures are renewed in court.

settlement agreement form in .pdf format (Adobe Reader)

Conditions for signing

The following conditions in the settlement agreement must be met when drawing up the act:

Attend a court hearing in person or submit a written application. In the text of the documentation, indicate a request to consider the issue on its merits in the absence of one of the participants. This right is enshrined in the Decree of the Supreme Arbitration Court of Russia No. 17447/08 of 2009.
If a legal representative acts on behalf of the plaintiff or defendant, then it is necessary to attach a power of attorney confirming the authority (No. 09ФП-24454/2013-ГК from August 13).
After the conclusion of the contract, it is not allowed to make adjustments or corrections to the text. The law does not establish such a possibility, including the elimination of some clause or condition. Accordingly, the judicial authority, when considering the issue on the merits, cannot approve such an appeal. However, participants have the opportunity to submit a request to exclude from the text of the document points, requirements and conditions that contradict laws or violate the rights of citizens (Government of the Supreme Arbitration Court of Russia No. 50 of July 18, 2014).
An obligatory point is to establish the amount of legal costs for each of the participants in the case. Such expenses include state duty, representative expenses, etc.

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Important! The procedural order of judicial proceedings does not establish a strict framework for the formation of the text of the agreement. Thus, the Code of Civil Procedure of Russia contains minimum requirements that cover this issue. However, in Chapter No. 15 of the AIC of Russia there is a complete regulation of such actions.

Consequences of reconciliation

The settlement agreement at the stage of enforcement proceedings must be approved by the court, after which it acquires the status of a legal document. The court's ruling entails consequences in relation to previously made decisions regarding the defendant:

completion of enforcement proceedings in a case in which a certain decision was made;
termination of powers of the bailiff to monitor the execution of the court order;
return of the writ of execution to the court;
removal of restrictions on the defendant previously introduced;
the emergence of new obligations of the parties to the agreement.

Despite the fact that an agreement concluded by mutual consent should suit both parties as much as possible, in practice there are violations of its provisions by the defendant. In this case, problems can only be resolved in court:

the transaction is terminated;
the defendant is subject to lifted restrictions;
a return is made to the previous amounts of payments of penalties, which were reduced at the conclusion of the truce;
Enforcement proceedings are opened to fulfill obligations in full.

All legal costs are paid according to the court order by one of the parties or in equal shares by the plaintiff and the defendant, unless this issue is previously discussed when filing a claim.

If the refusal comes from the bailiff

Bailiffs often violate the law by refusing to open enforcement proceedings. There are several reasons: workload, ignorance of the legislation, including that regulating the activities of the bailiff.

An employee’s refusal to open proceedings is appealed to the head of the department, and then to the department or in court. The second method takes longer - it requires preparing a full-fledged claim, but it is more effective. Judges often agree with the plaintiffs; in addition, bailiffs, having received summonses to court, try to cancel their own illegal decision before the start of the process. And this despite the fact that a citizen or representative of an organization has previously contacted them.

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Advantages and disadvantages of the agreement

An agreement between the parties on the peaceful settlement of disputes is aimed at achieving the possibility of fulfilling the obligations of the defendant to the plaintiff. The applicant makes concessions in the amount of funds collected. At the same time, it is beneficial for him to conclude an agreement for the following reasons:

approval of the document by the court means immediate execution;
it is impossible to appeal it after approval;
due to the fact that after judicial confirmation the document acquires legal force, in case of non-fulfillment the plaintiff has a chance to collect the debt through the bailiff service under a writ of execution.

Having the opportunity to collect the debt from the defendant in any case, the plaintiff can make significant concessions when concluding a transaction.
In addition, civilized relations are maintained between the plaintiff and the defendant, since a peace agreement implies the absence of “winners” and “losers.” It is important to know! How to properly collect debt from individuals and legal entities.

The approval of a peace treaty by a court is almost impossible to appeal - this determination can be not only a positive indicator when concluding a truce.
If new circumstances are discovered in the case that are not in favor of the plaintiff, then it is not possible to change the decision, nor is it possible to apply to the court with a petition to reconsider the case - this is the disadvantage
of the truce procedure.

Thus, in the procedure for concluding a conciliation document during enforcement proceedings, there is a predominance of advantages. This is a clear sign that this practice is necessary when resolving issues related to conflict situations between the parties.