Distinguishing Contract Cancellation and Unilateral Termination: What Types of Contracts are Governed by Law?
What Is the Common Point Between Contract Cancellation and Unilateral Termination of a Contract?
Based on the regulations from Article 423 of the 2015 Civil Code to Article 429 of the 2015 Civil Code, the cancellation of a contract and the unilateral termination of a contract have the following similarities:
- Both are legal acts by one party in the contract to terminate the contract.- Performed by one party.- Must promptly notify the other party of the termination or cancellation; if failure to notify causes damage, compensation must be provided.- No compensation is required if one party violates the contractual obligations.
Distinguish between cancellation and unilateral termination of a contract? What types of contracts are there according to legal regulations?
How Is Contract Cancellation Different From Unilateral Termination of a Contract?
Based on Article 423 of the 2015 Civil Code to Article 428 of the 2015 Civil Code, the cancellation and unilateral termination of a contract are distinguished based on the following criteria:
| Criteria | Contract Cancellation | Unilateral Termination of a Contract || --- | --- | --- || Application Cases | - Due to delay in performance of obligations
- Due to inability to perform
- Due to the property being damaged, broken, or lost
(Articles 424, 425, Article 426 of the 2015 Civil Code) | - When one party seriously violates the obligations in the contract
- By mutual agreement
- As prescribed by law
(Article 428 of the 2015 Civil Code) || Conditions of Application | Violation of the contract required. | No violation of the contract required, can be based on mutual agreement. || Consequences | - The contract is nullified from the time of conclusion, and the parties do not have to fulfill the agreed-upon obligations.
- Return what has been received after deducting expenses.
(Article 427 of the 2015 Civil Code) | - The contract terminates from the time the other party receives the termination notice.
- The parties do not have to continue fulfilling obligations.
(Article 428 of the 2015 Civil Code) |
When Does a Contract Take Effect?
According to Article 401 of the 2015 Civil Code on the validity of contracts:
Validity of the Contract
1. A legally concluded contract takes effect from the time it is concluded, except where there are other agreements or related laws providing otherwise.
2. From the time the contract takes effect, the parties must perform rights and obligations to each other as committed. A contract can only be amended or canceled by agreement of the parties or as prescribed by law.
Thus, a legally concluded contract takes effect from the time of its conclusion. This time is determined as per Article 400 of the 2015 Civil Code, as follows:
Time of Contract Conclusion
1. A contract is concluded at the time the offeror receives the acceptance of the contract conclusion.
2. If the parties agree that silence is an acceptance of the contract conclusion within a certain period, the time of conclusion is the last moment of that period.
3. The time of verbal contract conclusion is the time when the parties agree on the contract's content.
4. The time of written contract conclusion is the time when the last party signs the document or another form of acceptance is shown on the document.
In the case of a verbal contract subsequently documented in writing, the time of the contract's conclusion is determined as per Clause 3 of this Article.
A contract is concluded when the offeror receives acceptance of the contract conclusion.
Simultaneously, the time of verbal contract conclusion is when the parties have agreed on the contract's content.
- The time of written contract conclusion is when the last party signs the document or another form of acceptance is shown on the document.
If a verbal contract is subsequently documented in writing, the time of the contract conclusion is determined as per the verbal contract.
What Types of Contracts Are There According to Legal Regulations?
According to Article 402 of the 2015 Civil Code:
Main Types of Contracts
The main types of contracts are as follows:
1. Bilateral contracts are those where each party has obligations towards the other.
2. Unilateral contracts are those where only one party has obligations.
3. Principal contracts are those whose validity does not depend on subordinate contracts.
4. Subordinate contracts are those whose validity depends on principal contracts.
5. Contracts for the benefit of third parties are those where the parties entering into the contract must perform obligations, and a third party benefits from the performance of these obligations.
6. Conditional contracts are those whose performance depends on the occurrence, modification, or termination of a certain event.
Thus, a legally valid contract according to legal regulations mainly includes the following types:
+ Bilateral contracts
+ Unilateral contracts
+ Principal contracts
+ Subordinate contracts
+ Contracts for the benefit of third parties
+ Conditional contracts.
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