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Business Transaction Invalidity In the Context of the Principle of Legality

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  • Konstantin Yu. Totyev

    () (National Research University Higher School of Economics)

Abstract

This paper explores business transactions in the context of the principle of legality. It will be argued that Article 168 of the Russian Civil Code, as a meta-rule, contains three types of rules: 1) rules dealing with the priority of special rule and exceptions (exclusive rules); 2) rules dealing with the interpretation of general, special and exclusive rules as well as with the requirements of statutes or other legal acts violated by a transaction and established outside Article 168 of the Civil Code; 3) rules dealing with the admissibility of special rule and exceptions, as well as with the conditions of admissibility of these rules. With regard to the first group of the rules, the legislature and commercial courts consider Article 168 of the Civil Code a common base with respect to other grounds in the Civil Code and in certain other statutes for declaring transactions invalid. According to the second group of rules, the subject-matter (object) of legal interpretation consists of two elements: à) the text of Article 168 of the Civil Code; and b) the texts of legal acts, described by the generic term “statute or other legal act.” Article 168 of the Civil Code provides instructions not only for rules as objects of application of the article, but also for the methods of interpreting violated requirements. The rules of admissibility for special rule and exceptions, as well as the conditions of admissibility for these standards, are aimed at the numerous cases in which the legislature, in the Civil Code or in other legal acts, expressly establishes nullity (voidness), voidability and other legal consequences for illegal transactions. The paper also answers questions regarding the impact of recent amendments to the Russian Civil Code on using rules for business transaction invalidity in commercial courts

Suggested Citation

  • Konstantin Yu. Totyev, 2016. "Business Transaction Invalidity In the Context of the Principle of Legality," HSE Working papers WP BRP 63/LAW/2016, National Research University Higher School of Economics.
  • Handle: RePEc:hig:wpaper:63/law/2016
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    File URL: http://www.hse.ru/data/2016/02/05/1137391778/63LAW2016.pdf
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    References listed on IDEAS

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    1. repec:kap:jproda:v:49:y:2018:i:1:d:10.1007_s11123-017-0522-6 is not listed on IDEAS
    2. Massimo Filippini & Thomas Geissmann & William H. Greene, 2018. "Persistent and transient cost efficiency—an application to the Swiss hydropower sector," Journal of Productivity Analysis, Springer, vol. 49(1), pages 65-77, February.
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    More about this item

    Keywords

    business transactions; entrepreneurial activities; general; special and exclusive rules; invalidity (nullity or voidness; voidability) and other legal consequences of illegal transactions; principle of legality; sanctions; statute or other legal act;

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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