Civil law of the Republic of Kazakhstan. General part: educational manual. 9786010420649

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AL-FARABI KAZAKH NATIONAL UNIVERSITY

A. S. Dochshanova

CIVIL LAW OF THE REPUBLIC OF KAZAKHSTAN General part Educational manual

Almaty «Qazaq university» 2016

UDC 347.13 (075.8) LBC 67.41 я 73 D 75

Recommended for publication by the Academic Council of the Faculty of Law and Editorial Publishing Council of the Kazakh National University named after Al-Farabi (Record №4 dated 13.07.2016) Reviewers: doctor of legal sciences, professor S.T. Tynybekov doctor of legal sciences E.A. Buribayev candidate of legal sciences N.V. Kussyapova

D 75

Dochshanova A.S. Civil law of the Republic of Kazakhstan. General part: edu­ cational ma­nual / A.S. Dochshanova. – Al­ma­ty: Qazaq uni­ver­ sity, 2016. – 156 p. ISBN 978-601-04-2064-9 This textbook considers issues of the general part of the Civil Law of the Republic of Kazakhstan. It is created on the basis of the General part of the Civil Code of the Republic of Kazakhstan and other normative legal acts regulating such issues as the introduction to the civil law, corporeal rights and general provisions of the law of obligations and contracts. The textbook is dedicated for students of higher education organizations studying legal disciplines. Educational manual is published in authorial release. В учебном пособии рассматриваются вопросы Общей части Гражданского права Республики Казахстан и иных нормативных правовых актов, регули­рую­ щих такие вопросы, как основные институты гражданского права, вещные права и общие положения обязательственного и контрактного права. Предназначено для студентов высших учебных заведений, изучающих юри­ дические дисциплины. Учебное пособие издается в авторской редакции.

UDC 347.13 (075.8) LBC 67.41 я 73 ISBN 978-601-04-2064-9

© Dochshanova A.S., 2016 © Al-Farabi KazNU, 2016

CONTENT

FOREWORD..........................................................................................4 §1. Civil law. Civil legislation...............................................................5 §2. Civil legal relationship. Terms in civil law...................................13 §3. The implementation and protection of civil rights. Representation and power of attorney...........................................22 §4. Physical persons as subjects of civil law.......................................31 §5. Legal entities as subjects of civil law............................................40 §6. Objects of civil law.......................................................................47 §7. Transaction institute in civil law...................................................56 §8. The right to own and other corporeal rights..................................66 §9. Law of obligations.........................................................................85 §10. Contract law. General provisions..................................................95 LIST OF USED LITERATURE AND NORMATIVE LEGAL ACTS.....................................................................................106 CASES FOR PRACTICAL TASKS...................................................108 TRILINGUAL DICTIONARY OF BASIC TERMS..........................113 SCHEMES AND TABLES.................................................................126 SUPPLEMENT. NORMATIVE LEGAL ACTS (EXTRACTION) ..............................139

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FOREWORD

C

ivil Law of the Republic of Kazakhstan is one of the fundamental disciplines being studied by the students of law faculties in every higher education organization in Kazakhstan. Civil law is one of the most difficult disciplines studied by future lawyers. The difficulty is related to the large volume of the concepts used in civil law, teaching material, the complexity of the issues that require a good knowledge of the theory of law. Students also should have a good understanding of the normative legal acts that is also characterized with complexity associated with a huge volume of legislation. This textbook is written on the basis of the core curriculum for the «Civil Law of the Republic of Kazakhstan. General part» discipline. The textbook consists of ten sections, combining all the questions the core curriculum for the discipline Civil law of the Republic of Kazakhstan General part. The textbook was prepared in the English language, which is especially important for groups with English language training. In addition to the theoretical presentation of the material, which is accompanied by practical examples for the tutorials the textbook includes glossary of key terms of civil law in three languages (Kazakh, Russian, and English), practical exercises – case studies, tables and diagrams, makes it easier to analyze and study the proposed material, as well as excerpts from the basic normative legal acts of the Republic Kazakhstan in the sphere of civil law.

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§1 CIVIL LAW. CIVIL LEGISLATION

Questions. 1. Concept of civil law 2. Subject-matter of civil law 3. Methods of civil law 4. Principles of civil law 5. System of civil law 6. Sources of civil law

1. Concept of civil law. In the theory of law there is a division of all legal relations for two spheres: the sphere of public law and the sphere of private law. Legal relations which are included to the sphere of public law arise between states as subjects of public authority and at the level of international cooperation. The second type of legal relations from the sphere of public law is legal relations which arise between state as subject of public authority and physical persons or legal entities atanother side. The main feature of such relations is that they are based on authorityand obedience of parties. The second sphere, the sphere of private law includes horizontal equal legal relations that may arise between all types of subjects. For example, these relations may arise between physical persons (purchase and sale contract), between physical persons and legal entities (labor contract), and between state and person or legal entity (contract of construction of a building). According to such division of legal relations all of the branches are distributed between two spheres. Civil law is included to the sphere 5

Civil law of the Republic of Kazakhstan

of private law because of its subject-matter, method, principles and sources. Arguments for this position will be given below. As for the concept of civil law as the branch of law, at first civil law is a complex of legal norms, which regulate equal private relations, that’s why we can say that civil law is referred to the sphere of private law. All of the branches of law are divided to following types: independent branches, complex branches, and sub-branches or legal institutes. Civil law is one of the most significant branches of law, independent branch. Independence of civil law in the system of law is argued by its independent subject-matter, its independent methods, principles, system and sources. Civil law is the branch of law regulating property and personal non-property relations, based on equality of participants of civil intercourse and freedom of the contract. 2. Subject-matter of civil law Subject-matter of any branch of law is relations, which are regulated by the legal norms of this branch of law. According to Article 1 of the Civil Code of the Republic of Kazakhstan, «Civil legislation shall regulate commodity-money relations and other property relations based on the equality of the participants, and also personal non-property relations which are associated with property relations. Citizens, legal entities, state, and also administrative-territorial units shall be participants of the relations regulated by civil legislation». Therefore, we can say that the subject-matter of civil lawis commodity-money relations and other property relations based on the equality of the participants, and also personal non-property relations which are associated with property relations. So, we can divide all of the relations regulated by the civil law for two types: property relations and non-property relations. First of all, these are commodity-money relations, because of such relations are the basis of civil intercourse. First group of civil-legal relations are property relations, which are developed over property privileges and rights, such as things, money, 6

§1. Civil law. Civil legislation

including foreign currency, financial instruments, including securities, works, services, and the objectified results of creative intellectual activity, commercial names, trademarks, commercial names and trademarks and any other means of individualization of products, property rights and any other assets. Second group of civil-legal relations are non-property relations, which are divided into two types: non-property relations related to property, non-property relations not related to property. To the first type of non-property relations we can refer such relations ascopyrightlaw relations. Their connection with property relation is in opportunity of the author to get an honorarium or fee from users of his product as object of intellectual property. Personal non-property relations not related to property are the relations which arise in connection with protection of violated personal nonproperty rights, such as life, health, the dignity of a person, honor, good name, business reputation, inviolability of private life, personal and family secrets, the right to name, the right to be an author, the right to inviolability of production and any other intangible privileges and rights. Relations from both of the groups are equal despite of the parties of relations: persons, legal entities or state and are regulated by the norms of civil law. That’s why; civil law has its own independent subject-matter. 3. Methods of civil law In the theory of law there are two main methods of legal regulation: the method of power and subordination (the method of subordination, imperative method) and the method of legale quality of the participants (the method of coordination, dispositive method). The first typeis characteristic ofpublic law, the second one – for private law, includingcivil law. The main features of the dispositive method of civil regulationare: – Legal equality of participants and civil legal relations (none of the participants have the power related to another party); – Autonomy of participants (each participant is free to determine joining in civil mattersor not); 7

Civil law of the Republic of Kazakhstan

– Property in dependence of members of civil relations (each participant has aseparate propertyin the right of ownershipor another proprietary right, which is responsible for their obligations). The meaning of dispositive method may be expressed in the phrase: «Everything is allowedthat is not forbiddenby law». Meaning of the opposite imperative method is: «Allowed only as specified inthe law». 4. Principles of civil law The basic principles of civilrights are enshrined inthe Civil Code of the Republic of Kazakhstan and specified in other laws and regulations. Article 2 of the Civil Code provides that «Civil legislation is based on the recogni­tion of the equality of the participants of the relations regulated thereby, inviolabil­ity of property, freedom of contract, prohibition of arbitrary interference in somebody’s private affairs, indispensability of the free exercise of civil rights, and provi­sion for the restitution of violated rights and their defense in the court». a) the principle ofequality of participants incivil relations. This principle isthe same as one of the hallmarks of the method of civil regulation and means that none of the participants have of power relative to the other party, including the state. b) the principle of the inviolability of property is constitutional. In accordance with the Constitution of the Republic of Kazakhstan, no one can be de­prived of his property except by court order. Under the rules of the Civil Code of the Repub­lic of Kazakhstan compulsory withdrawal of property from owneris not al­lowed, unlesson the grounds provided by law, be madethe foreclosure on the property for the obligations, expropriation, which by law can not belong to the person, etc. c) the principleof freedom of contract means that citizens and legal entities are free to contract. Coercionto a contractis not permit­ ted, except when to contract provided by the Civil Code of the law or voluntary self-commitment. This principle has three aspects: the freedom of entryinto a contract, the freedom of choice of the counter party, the freedom of determining the conditions of the contract. There are some exceptions from 8

§1. Civil law. Civil legislation

this rule, such as conclusion of an agreement on a compulsory base or adherence agreement. d) the principle of inadmissibility of any interference in private affairs. This principleis basedon the provisions of the Constitution, which provides forthe inviolability of private life, personal and familysecrets of citizens. A citizen shall have the right to protect the secrecy of his private life, including the secrecy of letter exchange, telephone conversations, diaries, notes, comments, sex­ual life, adoption, birth, medical secrets, legal secrets, and secrecy of bank invest­ments. The disclosure of the secrets of private life shall only be possible in the cases which are stipulated by legislative acts. The publication of diaries, notes, comments and any other documents shall be permissible only with the permission of their au­thor, and as regards letters, – with the consent of both their author and the addressee. In the case of demise of one of them, said documents may be published with the con­sent of the surviving spouse and the children of the deceased. e) the principle of unhindered implementation of civil rights Citizens and legal entities at their discretion shall exercise civil rights which be­long to them, including the right to their protection. The refusal of citizens and legal entities to exercise their rights shall not entail the cessation of those rights, except for the cases which are provided for by legislative acts. The exercise of civil rights must not violate the rights and the interests of any other subjects under legislation, and it must not do any harm to the environment. Citizens and legal entities must act in good faith, reasonably and fairly when exercising their rights, and comply with the require­ments which are contained in legislation, with the moral principles of the society, while entrepreneurs must also comply with business ethics rules. This obligation may not be excluded or restricted by any agreement. The good faith, reasonableness and fairness of the acts of participants in civil rights relations shall be presumed. Acts of citizens and legal entities which aim to cause harm to any other person, at the abuse of rights in any other form and also at an exercise of a right in contradiction to its inten­tion. 9

Civil law of the Republic of Kazakhstan

f) the principle of protection of civil rights The protection of civil rights shall be exercised by the court, arbitration tribunal or the judgment of third party by way of: recognition of rights; restitution of the posi­tion which existed prior to the violation of the right; putting an end to behaviour which violates the right or create the threat of its violation; awarding the execution of an obligation in kind; compensation of losses; damages; recognition of the transaction as invalid; compensation of moral losses; termination or alteration of legal relations; the recognition as invalid or void of an act which does not comply with legislation of a body of the state administration or of a local representative or executive body; imposi­tion of a fine on the state body or official for impeding a citizen or a legal en­tity to acquire or exercise a right, and also in the other manner as provided for by legisla­tive acts. 5. System of civil law Civil law consists of two parts: general part and special part. General part of civil law includes following civil legal institutes: persons, legal entities, things and other objects of civil law, transactions, representation and power of attorney, the right to own and other corporeal rights, law of obligations. Special part of civil law in­cludes such institutes as contractsfor the transferof propertyownership (sale contract, barter etc.), contractsfor the transferof property for temporarypossession and use (ten­ancy contract), contracts for theprovision of works andpaid services, competitiveobligations, tort obligations, intellectual property law, in heritance law. 6. Sources of civil law Source of law is the form of expression of legal norms. Generally the sources of civil law are divided into three types: normative legal acts (including international acts), customs of business intercourse and civil-law contract. The civil legislation of the Republic of Kazakhstan shall consist of the Civil Code, laws of the Republic of Kazakhstan adopted in accordance with it, other laws of the Republic of Kazakhstan, edicts of the 10

§1. Civil law. Civil legislation

President of the Republic of Kazakhstan having the force of laws, decrees of the Parliament, and decrees of the Senate and Majilis (legislative acts), as well as edicts of the President of the Republic of Kazakh­ stan, decrees of the Government of the Republic of Kazakhstan. Civil legal relations may be regulated by international treaties. When an interna­tional treaty, to which the Republic of Kazakhstan is a signatory, establishes different rules than those contained in the civil legislation of the Republic of Kazakhstan, the rules of the indicated treaty shall apply. The international treaties to which the Repub­lic of Kazakhstan is a signatory, shall apply to civil relations directly, except for the cases where it ensues from a treaty that its application requires the issuing of a domestic act of the Republic. Civil legislation acts shall not have retroactive force and they shall apply to rela­tions which arise after their entering into force. The legal force of a civil legislation act shall apply to relations which arose prior to its enactment in the cases where it is directly provided for by it. Civil relations may be regulated by tradition, including the tradition of business oper­ation (customs of business intercourse), unless those contradict the civil legisla­tion which is effective in the territory of the Republic of Kazakhstan. The example mostly used in different sources is INCOTERMS (International commercial terms). The Incoterms rules are an internationally recognized standard and are used world­wide in international and domestic contracts for the sale of goods. First pub­lished in 1936, Incoterms rules provide internationally accepted definitions and rules of interpretation for most common commercial terms. The rules have been developed and maintained by experts and practitioners brought together by ICC and have become the standard in international business rules setting. Launched in mid-September 2010, Incoterms 2010 came into effect on 1 Janu­ary 2011. They help traders avoid costly misunderstandings by clarifying the tasks, costs and risks involved in the delivery of goods from sellers to buyers. Inco­terms rules are recognized by UNCITRAL as the global standard for the interpreta­tion of the most common terms in foreign trade. 11

Civil law of the Republic of Kazakhstan

In the cases where the civil legal relations are not regulated directly by legisla­tion or an agreement of the parties and tradition applicable to such relations does not exist, those provisions of civil legislation shall apply, which regulate similar relations (analogy of legislation), unless this contradicts their essence. When it is impossible in the indicated cases to use the analogies of law, the rights and obligations of the parties shall be defined on the basis of the general fundamen­tals and the spirit of civil legislation as well as the requirements of good faith, reasonableness and fairness (analogy of law). Questions for self-control 1. What are the main parts of law? 2. What is the meaning of civil law? 3. What relations conclude the subject-matter of civil law? 4. What are the differences between the dispositive and imperative me­ thos? Which one is the method of civil law? 5. What are the main principles of civil law? 6. What is the system of civil law? 7. What are the main sources of civil law? 8. What is the analogy in civil law?

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§2 CIVIL LEGAL RELATIONSHIP. TERMS IN CIVIL LAW

Questions. 1. Concept of civil-law relations 2. Types of civil-law relations 3. Structure of civil-law relations 4. Foundations for the emergence of civil-law relations 5. Calculation of periods 6. Limitation 7. Suspension, interruption and restoration of the period of limitation

1. Concept of civil-law relations Civil-law relations are relations which are regulated by the norms of civil law. According to Article 1 of the Civil Code of the Republic of Kazakhstan, «Civil legis­lation shall regulate commodity-money relations and other property relations based on the equality of the participants, and also personal non-property relations which are associated with property relations. Citizens, legal entities, state, and also administrative and territorial units shall be participants of the relations regulated by civil legislation. Personal non-property relations not associated with property rela­tions, shall be regulated by civil legislation, unless it is otherwise provided for by legisla­tive acts or ensues from the essence of a personal property relation. Civil legisla­tion shall apply to family relations, labor relations and relations associated with the use of natural resources and the protection of the environment, which meet the re­quirements of paragraph 1 of this Article, in the cases where those relations are not regulated respectively by legislation concerning family, labor, and use of the natural resources and protection of the envi13

Civil law of the Republic of Kazakhstan

ronment. Civil legislation shall not apply to prop­erty relations which are based on the administrative or any other power subordination of one party by the other, including tax and other budget relations, except for the cases provided for by legislative acts». Classification of civil-law relations aims not only theoretical but also practical goal in the right clarifying the rights and obligations of the parties, the assignment of legal rules to be applied in the process of formation, implementation and termination of relationship. 2. Types of civil-law relations There are three main classifications of civil-law relations. By the nature of the relationship between authorized and obligated persons rela­tions differ in absolute and relative relationship. By the object relations differ in property and non-property. By way of satisfying the interests of the authorized person relations differ in proprie­tary and obligation relations. Absolute and relative relations. Absolute relationship – are those in which the au­thorized person opposes indefinite number of obligated persons. For example, legal ownership, authorship of a work of science, literature and art, to inventions and indus­trial designs. They empowered the owner (author), and he was opposed to all the other persons are obliged not to violate the proprietary rights (the author). Absolute relations arise from the connection of absolute subjective civil rights and common duties of each person to not violate the laws and principles of morality. However, in absolute relations the authorized person himself is bound by imperative duties. Relative relations are relations in whichthe authorized person (or per­sons) opposesa strictly definedthe authorized person (s). Circle of civil-law relations is very broad. It includes therelationshipof obligation, the legal relations arisingfrom the useof products, inventions, legalmeasuresfor the implementation ofcivilprotection, etc. Relative relations are characterized by its difficult structure. In such relations rights of one part are corresponded by duties of another one. 14

§2. Civil legal relationship. Terms in civil law

For example, the seller’s duty to transfer the thing and the buyer’s right to require transfer of the thing, the seller’s right to demand payment of the purchase price and the buyer’s duty to make it. Distinction between absolute and relative relations is in the case of violation of the absolute right measures of protection and responsibility can be applied to any of­fender, and in violation of the relative rights such measures can only respond to well-defined person required by their actions serve the interests of the authorized person. Property and non-property relations. Property-legal relations have as their ob­ject wealth (property) and reflect property belonging to a person (legal ownership, business authority, operational management, etc.), or transfer of property (in contract, inheritance, compensation for damage, etc.). Legal relations, having as object the moral good: authorship of the work, invention, personal name, trademark; honor and dignity, and the like, are called personal non-property. Distinctions between these relationships is, in particular, in the fact that the viola­tion of the rights and obligations arising from property relations, will be punisha­ble by a material nature, whereas in case of violation of moral rights and du­ties – other commonly used measures of law enforcement activity (eg, recognition of authorship of a particular person, denial of information discrediting the honor, dig­nity, etc.). Proprietary and obligatory relations. Proprietary relationship – relationship, fix­ing static property position of subjects. They reflect the presence of things (property) in the ownership, the business authority, operational management). Obligatoryrelationship-relationshipthat mediatesthe dynamicsof property relationsonthe transfer of property, works and services, in thecreation and use ofartistic production. The practical significance of real distinction and binding relations is as follows. Pro­prietary relationship implemented through the direct action of the authorized per­son, and obligation relationship – in the performance of duty by the debtor. In other words, the carrier of proprietary right can satisfy his interests directly without the assis­tance of ob15

Civil law of the Republic of Kazakhstan

ligated persons, while the authorized person with obligation relations, may satisfy his interests through the actions of the obligated person. This situation is explained by the fact that proprietary relationship – are absolute and obligatory relations are relative. 3. Structure of civil-law relations In its structure civil-law relations consist of three elements: subjects, objects and the content. The subjects ofcivil lawinclude: – Physical persons (citizens of the Republic of Kazakhstan, foreign citizens, personswithout citizenship). – Legal entities (national, foreign, international). – State andadministrative-territorial units, having legalpersonality. Legalpersonality – guaranteed by the state the opportunity of the subject to be a member of civil relations. The components of the civil capacity is traditionally consid­ered the capacity and deed capacity. Civil capacity – the ability of the subject to have civil rights and obligations. Deed capacity – the ability of the subject by its actions to acquire the rights and responsibilities to create for himself. The concept of capacity is also included and delictual capacity – the ability to independently bear civil responsibility for the offense. The property and the personal non-property privileges and rights may be objects of civil-law relations. Objects, money, including foreign currency, financial instruments including securi­ties, work, services, and the objectified results of creative intellectual activity, commercial names, trademarks, commercial names and trademarks and any other means of individualization of products, property rights and any other assets, shall be recognized as property privileges and rights (property). Life, health, the dignity of a person, honor, good name, business reputation, inviola­b ility of private life, personal and family secrets, the right to name, the right to be an author, the right to inviolability of production and any other intangible privi­leges and rights shall be referred to the personal non-property privileges and rights. 16

§2. Civil legal relationship. Terms in civil law

Content of civil-law relations aresubjectivecivil rightsand legalduties of the sub­jects. Subjectivecivil right is measurepermissiblebehavior of the subjectof civil rela­tions. Legal duty is a measureof proper behaviorthe subject of civillegal relations. 4. Foundations for the emergence of civil-law relations Civil-law relations arise from theoccurrence of certain circumstances, called the le­gal facts. Legal facts are divided into two groups: 1) actions – are committed by the will of person: for example concluding the con­tract, fulfillment of obligations, creating a legal entity, acceptance and rejection of the inheritance; 2) events – circumstancesthat occurindependently of the willand desires of the per­son:natural disaster, the birth and death of a person. According to Article 7 of the Civil code of the Republic of Kazakhstan, «Civil-law relations shall arise on the fundamentals which are specified in legislation and also from actions of citizens and legal entities which, although not specified in it, but by virtue of the general fundamentals and the spirit of civil legislation, give rise to civil rights and obligations. In accordance with this, civil rights and obligations shall arise as follows: 1) from the agreements and any other transactions provided by legislation, and also from transactions which although are not specified in it, do not contradict legisla­tion; 2) from the administrative acts which give rise to civil rights consequences by vir­tue of legislation; 3) from court decisions which establish civil rights and obligations; 4) as a result of creating or acquiring assets on the bases which are not prohib­ited by legislative acts; 5) as a result of creating inventions, industrial samples, works of science, litera­ture and art and any other results of intellectual activity; 6) as a result of causing harm to any other person, and equally as a result of the un­fair acquisition or saving of assets at the expense of another person (unfair enrich­ment); 17

Civil law of the Republic of Kazakhstan

7) as a result of any other acts of citizens and legal entities; 8) as a result of events to which legislation conditions the emergence of civil rights. In some cases, the foundations of civil-law relations may be legal compositions as complexes of legal facts. For example, ownership relations to immovable assets arise on the base of legal composition including such legal facts as transaction of trans­fer of property object from one person to another and compulsory registration of this transaction in justice agencies. 5. Calculation of periods The period prescribed by law, agreement, or appointed by the court, is deter­mined by a calendar date or indication of an event that must inevitably occur. The term can also be installed as a period of time, which is calculated in years, months, weeks, days or hours. The period of time begins from the day after the calendar date or occurrence that de­fines its beginning. Period, calculated in years shall expire in the relevant month and the day of the fi­nal year. The period of o half of a year is considered as a period of six months. The period calculated by quarters of the year is under the same rule. So, the quarter is equal to three months and counting quarters has been conducted since the beginning of the year. The time period calculated in months shall expire on the corresponding day of the last month. A term defined in two weeks, is considered as the time period calculated in days, and is considered to be equal to fifteen days. If the end of the period calculated in months, falls in a month in which there is no corresponding date, the period expires on the last day of that month. The period commencing weeks shall expire on the corresponding day of the last week of the term. If the last day of the term falls on a nonworking day, the day of the deadline shall be the next working day. If the period is set for the account of any action it may be made up to twenty-four hours of the last day of the period. 18

§2. Civil legal relationship. Terms in civil law

However, if this action should be done in the organization, the period expires at the time when this organization, according to the rules, ceases the relevant operations. Written statements and notifications submitted by mail, telegraph or other institu­tion due to twenty-four hours of the last day of the period shall be considered made at the time. 6. Limitation Statute of limitations is the period of time during which the claim arising from the violation of a person’s rights or legitimate interestscan be satisfied. The Statute of limitations and the procedure for their calculation provided by law and cannot be changed by agreement of the parties. The General period of limitation shall be three years. For certain types of requirements legislative acts may establish a special limitation period shorter or longer as compared to the total period. The requirement for the protection of violated rights is taken into consideration by the court regardless of the expiration of the limitation period. Statute of limitations applied by the court only upon application of the parties to the dispute made prior to the court’s decision. The expiration of the Statute of limitations to a claim is the basis for the decision about the refusal of the claim. The period of limitation shall begin to run from the date when the person knew or should have known about the violation of rights. 7. Suspension, interruption and restoration of the period of limitation The period of limitation shall be suspended: 1) if the filing of the claim was prevented by extraordinary and unavoidable un­der the given conditionsevent (force majeure); 2) in force of moratoriumannounced by the President of the Republic of Kazakh­stan delaying performance of obligations of this type; 3) if the plaintiff or the defendant is in military units, transfered into military posi­tion; 4) if the incapable person has no legal representative; 19

Civil law of the Republic of Kazakhstan

5) due to the suspension of legislation governing appropriate behaviour. The period of limitation shall be suspended if these circumstances arose or contin­ued to exist in the last six months of the limitation period, and if this period does not exceed six months within the period of limitation. From the date of termination of the circumstances which caused the suspension, the period of limitation continues. Thus the remaining part of the period is extended to six months, and if the limitation period does not exceed six months, until the period of limitation. The period of limitation is interrupted by the filing of a claim in the prescribed man­ner, the conclusion by the parties of the mediation agreement, as well as the lia­ble person committing the action, evidence of the recognition of debt or other obliga­tions. After the break, the period of limitation shall begin to run again; the time elapsed before the break shall not be counted in the new term. In exceptional cases, when the court finds good cause for missing the deadline of the Statute of limitations on the circumstances related to the personality of the plain­tiff (serious illness, helplessness, illiteracy and so on), violated the right of the citizen is under the protection. The reasons for missing the Statute of limitations can be recognized as valid, if they had taken place in the last six months of the limitation period, and if this term is six months or less than six months within the period of limita­tion. Limitation is not applied: 1) to the requirements on the protection of intangible goods and personal non-prop­erty rights; 2) to the claims of depositors to the Bank on the issuance of Bank deposits; 3) to the claims for compensation of harm caused to the life or health of a citi­zen; 4) to the requirements of the owner or other lawful owner about the elimination of any violations of his rights, if these violations were not connected with deprivation of possession; 5) in other cases. It means that this list is not exclusive. 20

§2. Civil legal relationship. Terms in civil law

Questions for self-control 1. What is civil legal relationship? 2. What are the types of civil-law relations? 3. What is the structure of civil legal relationship? 4. What are the foundations for the emergence of civil-law relations? 5. What are the rules for the calculation of periods? 6. What are the rules for limitation? 7. What are the rules for suspension, interruption and restoration of the period of lim­itation? 8. What requirements are not under the limitation?

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§3 THE IMPLEMENTATION AND PROTECTION OF CIVIL RIGHTS. REPRESENTATION AND POWER OF ATTORNEY

Questions: 1. Implementation of civil rights 2. Protection of civil rights 3. Representation 4. The power of attorney

1. Implementation of civil rights Citizens and legal entities at their discretion shall exercise civil rights which be­long to them, including the right to their protection. The refusal of citizens and legal entities to exercise their rights shall not entail the cessation of those rights, except for the cases which are provided for by legislative acts. The exercise of civil rights must not violate the rights and the interests of any other subjects under legislation, and it must not do any harm to the environment. Citizens and legal entities must act in good faith, reasonably and fairly when exercis­ing their rights, and comply with the requirements which are contained in legisla­tion, with the moral principles of the society, while entrepreneurs must also comply with business ethics rules. This obligation may not be excluded or restricted by any agreement. The good faith, reasonableness and fairness of the acts of partici­pants in civil rights relations shall be presumed. Acts of citizens and legal entities which aim to cause harm to any other person, at the abuse of rights in any other form and also at an exercise of a right in contradic­tion to its intention. In the case of a 22

§3. The implementation and protection of civil rights ...

failure to comply with the requirements specified the court may deny a person the protection of his right. 2. Protection of Civil Rights The protection of civil rights shall be exercised by the court, arbitration tribunal or the judgement of third party by way of: recognition of rights; restitution of the posi­tion which existed prior to the violation of the right; putting an end to behaviour which violates the right or create the threat of its violation; awarding the execution of an obligation in kind; compensation of losses; damages; recognition of the transaction as invalid; compensation of moral losses; termination or alteration of legal relations; the recognition as invalid or void of an act which does not comply with legislation of a body of the state administration or of a local representative or executive body; imposi­ tion of a fine on the state body or official for impeding a citizen or a legal en­tity to acquire or exercise a right, and also in the other manner as provided for by legisla­tive acts. The appeal for protection of a violated right to a body of power or administra­tion shall not prevent an appeal to the court with an action to protect a right, unless legislative acts specify otherwise. In the cases which are specifically provided for in legislative acts, the protection of civil rights shall be carried out directly by actual or legal acts of the person whose right is violated (self-defense). The person whose right is violated may require the entire restitution of the losses in­flicted on him, unless legislative acts or the agreement do not stipulate otherwise. The expenditure shall be understood to mean losses, which are incurred or must be incurred by the person whose right is violated, the loss or the damage to his property (real damage) and also lost profit which this person would have received under the normal conditions of the turnover, should his right have not been violated (lost profit). The losses which are inflicted upon a citizen or a legal entity as a result of issu­ing by a governmental body of an act which does not comply with legislation, or by any other state body, and also by acts (failure to act) of the officials of those bodies, shall be subject 23

Civil law of the Republic of Kazakhstan

to compensation by the Republic of Kazakhstan or by the relevant administrative and territorial unit. When emergence of the legal consequences of a violation is related to the guilt of the violator his guilt shall be presumed, except for the cases where legislative acts stipulate otherwise. 3. Representation A transaction which is entered into by one person (representative) on behalf of an­other person (represented) by virtue of the authority based on power of attorney, legislation, a resolution of the court or on an administrative act, shall directly create, alter or terminate the civil rights and obligations of the represented. The authority may also be clear from the situation in which the representative is act­ing (salesman in retail trade, cashier, etc. ). The rights and obligations shall be acquired directly by the repre­ sented in re­spect of the transaction entered into by the representative. A representative may not enter into transactions on behalf of the represented, nei­ther with himself personally, nor with any other person whose representative he is at the same time. The persons who act, although in somebody else’s interest, but in their own name (commercial intermediaries, executors of will in inhe­ ritance etc.) shall not be representatives, nor the persons who are au­ thorised to enter negotiations with regard to transactions which are possible in the future. It shall not be allowed to enter through a representative into trans­ actions which by their nature may be entered into only in person, nor into other transactions in the cases specified in legislative acts. There are two types of representation: legitimate and contractual. Legitimate representation is based on the norms of legislative acts, court deci­sion or administrative act. Contractual representation arises from transactions, usually the power of attorney. Legitimate representation is identified as representation for subjects with limita­tions in their deed capacity. Generally deed capacity of physical person is divided into following types: par­tial deed capacity (under 14 years), non-full (between 24

§3. The implementation and protection of civil rights ...

14 and 18), full (18 years old or emancipated, or getting married), res­ tricted (drug or alcohol addiction), incapable (men­tal diseases). Legitimate representation is expressed as guardianship for partially capable in incapa­bles. Patronage is established for non-fully capable and restricted in deed capac­ity people. Representation Without Authority A transaction which is entered into on behalf of another person by the person who is not authorised to enter into the transaction, or in excess of their powers, shall create, alter or terminate the civil rights and obligations of the represented only in the case of the subsequent approval by him of that transaction. The subsequent approval by the represented shall make the transaction valid from the moment of its commit­ment. There is also such a type of representation as commercial The person who permanently and independently represents en­tre­ preneurs in their concluding agreements (a commercial representative), shall act on the basis of a written agreement which contains indications of the authority of the representative, and in the case where such indications do not exist, – also of the power of attorney. A commercial representative may at the same time represent the interests of vari­ous parties of an agreement which is concluded with his participation. In that re­spect, he shall be obliged to execute the instructions given to him with the diligence of a usual entrepreneur. A commercial representative shall have the right to claim payment of the remunera­tion owed and the expenses incurred by him when executing the instructions of the parties to the agreement in equal shares, unless it is otherwise stipulated in the agreement between them. A commercial representative shall be obliged to keep secret the information which became known to him concerning commercial transactions, also after the imple­mentation of the assignment entrusted to him. Special considerations concerning commercial representation in cer­ tain spheres of entrepreneurial activity shall be established by legislation. 25

Civil law of the Republic of Kazakhstan

4. Power of Attorney A written authorisation by one person (the trustor) for representation on his be­half, which is issued to another person (the trustee) shall be recognised as a power of attorney. The power of attorney for managing assets and entering into trans­ actions which re­quire notarisation, must be notarised, unless otherwise stipulated in legislative acts. There are three types of powers of attorney: – General. – Special. – Single. General power of attorney gives the possibility to the representative of a variety of property and management transactions. For example, the director of the branch of the department store on the basis of general power of attorney carries out all administra­tive and economic, operational and commercial activities of the store, man­ages its affairs, property and funds, in particular, make the necessary actions to carry out their store tasks, contracts, transactions, signs acts, settlement and cash docu­ments in all state institutions, enterprises, in judicial insti­ tutions and bodies of the arbi­tral tribunal case store with all the rights the parties have in the process. Special power of attorney gives the right to carry out uniform action within a speci­fied period of time. For example, such a power of attorney is given to the freight forwarder companies for goods arriving at the railway station to the enterprise; the cashier to receive the money and financial documents with the bank, and so on. Single power of attorney is issued on commission of a certain action (obtaining goods from the warehouse, selling homes, and so on. The following shall be equated to notarised powers of attorney. 1) powers of attorney of military servicemen and of any other persons who are in medical treatment at hospitals, sanatoria and any other military medical institu­tions, attested to by the chiefs, deputy chiefs for medical issues, senior doctors and doctors on duty of those hospitals, sanatoria and other military medical institutions; 26

§3. The implementation and protection of civil rights ...

2) powers of attorney of the military servicemen, and at the points of deploy­ment of military units, institutions and military education organisations where there is no state notary offices, nor any other bodies which execute notary actions, and also the powers of attorney of workers and employees, members of their families and fam­ily members of the military servicemen, which are attested by the commanders (chiefs) of those units, formations, institutions and organisations; 3) powers of attorney of the persons who are in places of deprivation of free­dom, certified by the heads of the places of deprivation of freedom; 4) powers of attorney of capable citizens of full age who are in institutions for the social protection of the population, certified by the head of that institution or of the relevant body for the social protection of the population. The power of attorney to receive correspondence including money and parcels, to receive wages and any other payments from citizens and legal entities, may be certi­fied by the bodies of the local administration of the territory in which the nomina­tor resides, by the organisation at which he works or studies, by the housing maintenance organisation in the place of his residence, by the administration of the stationary medical institution in which he is being medically treated, and also by the commanders of the relevant military units, where the power of attorney is issued to a military serviceman. A power of attorney which is sent by telegraph and by any other types of communications, when the dispatch of the document is carried out by an em­ployee of the communications facility, shall be certified by the bodies of communica­tion. Third parties shall have the right to consider as authentic a power of attorney which is issued for the commission of their acts, which is sent by the trustor to the trustee through facsimile and other method of communication, without use of official bodies of communication. A power of attorney on behalf of a legal entity shall be issued with the signature of its manager or another person who is authorised thereto by the foundation docu­ments, and it shall be attested by the seal of that organisation. 27

Civil law of the Republic of Kazakhstan

A power of attorney on behalf of a state body, or a commercial or non-commer­cial organisation to receive or pay money and any other material assets, must be signed also by the chief (senior) accountant of that organisation. The procedure for issuing and the pro-forma of the power attorney to enter into banking transactions and the power of attorney for entering into transactions in the area of trade may be determined by special-purpose rules. The Term of a Power of Attorney A power attorney may be issued for a term of not longer than three years. Where a longer term is indicated in a power of attorney, it shall be effective within three years, and if the effective period is not indicated therein, then it will be valid within one year from the date of the issue. A power of attorney shall be invalid, if it has not the date of its issue. A trustee must personally enter into the actions to which he is authorised. He may re-assign their commitment to any other person only in the case where he is author­ised thereto by the power of attorney received or is compelled to do that by vir­tue of circumstances for the protection of the interests of the trustor. The term of validity of a power of attorney which is issued for reassignment may not exceed the term of effect of the original power of attorney on the basis of which it was issued. The trustee who re-assigned the powers to any other person must immediately no­tify of that the nominator and to communicate to him the necessary information concerning that person and his place of residence. The failure to comply with this duty shall impose on the trustee the liability for the actions the person to whom he reassigned the powers, as for his own. Cessation of a Power of Attorney The effect of a power of attorney shall cease as a result of the following: 28

§3. The implementation and protection of civil rights ...

1) expiry of the term of the power of attorney; 2) completion of the actions provided for by the power of attorney; 3) annulment of the power of attorney by the person who issued it; 4) the refusal of the person to whom the power of a attorney is issued; 5) the cessation of the legal entity on whose behalf the power of attorney was is­sued; 6) liquidation of the legal entity on whose behalf the power of attorney was is­sued; 7) the demise of the person who issued the power of attorney, or the recognition of him as incapable, of limited capability or missing; 8) the demise of the citizen to whom the power of attorney is issued, or the recogni­tion of him as incapable, of limited capability or missing. The person who issued a power of attorney may at any time annul the power of attor­ney or the re-assignment, and the person to whom the power of attorney is issued may relinquish it. An agreement to wave this right shall be invalid. The trustor shall be obliged to notify about the termination of a power of attorneythe person to whom the power of attorney is issued, and also third parties known to him, for representation to whom the power of attorney was issued. The rights and obligations which arise as a result of the actions of a person to whom the power of attorney is issued prior to the time when this person learned or should have learned of its cessation, shall remain valid for the one who issued the power of attorney and his legal successors with regard to third parties. This rule shall not apply if the third party knew or should have known that the effect of the power of attorney ceased. Upon the cessation of the power of attorney the person to whom it was issued or his legal successor must immediately return the power of attorney. With the cessation of the power of attorney the conveyance of the powers associ­ated with that power of attorney to the other person (reassignment) shall lose force. 29

Civil law of the Republic of Kazakhstan

Questions for self-control

1. What are the features of implementation of civil rights? 2. What are the features of protection of civil rights? 3. What is the role of representation in civil law? 4. What is the power of attorney? 5. What are the types of power of attorney? 6. What are requirements to the Term of a Power of Attorney?

30

§4 PHYSICAL PERSONS AS SUBJECTS OF CIVIL LAW

Questions: 1. The definition of physical person. 2. Legal personality of physical person 3. Termination of legal personality of physical person

1. The definition of physical person The subjects ofcivil lawinclude: – Physical persons (citizens of the Republic of Kazakhstan, foreign citizens, personswithout citizenship). – Legal entities (national, foreign, international). – State andadministrative-territorial units. First group, physical persons, according to Article 12 of the Civil Code of the Repub­lic of Kazakhstan are considered as citizens of the Republic of Kazakhstan, citi­zens of other states, as well as stateless persons. It should be noted, that due to the principle ofequality of participants incivil relations, all provisions of legislation shall apply to any physical persons, unless it is otherwise established in law. Every subject of civil law is characterized by its legal personality. Legalpersonality – guaranteed by the state the opportunity of the subject to be a mem­ber of civil relations. The components of the civil capacity is traditionally consid­ered the capacity and deed capacity. Civil capacity – the ability of the subject to have civil rights and obligations. Deed capacity – the ability of the subject by its actions to acquire the rights and responsibilities to create for himself. The concept of capacity is also included and delictual capacity – the ability to independently bear civil responsibility for the offense. 31

Civil law of the Republic of Kazakhstan

2. Legal personality of physical person The civil capacity of citizens is the capacity to have civil rights and bear obliga­tions and it shall be recognised as equal in all citizens. The legal capacity of a citizen shall arise at the moment of his birth and it shall cease with his demise. As content of civil capacity we may consider rights to have, under his right of owner­ship, properties including foreign currency, both within the boundaries of the Republic of Kazakhstan and beyond its boundaries; inherit and bequest property; move freely in the territory of the Republic and select the place of residence; freely leave the boundaries of the Republic and return to its territory; engage in any activi­ties which are not prohibited by legislative acts; create legal entities independently or with other citizens and legal entities, enter into any transactions which are not prohib­ited by legislative acts and participate in obligations; have the right to intellectual prop­ erty with regard to inventions, works of science, literature and art and any other results of intellectual activity; claim the compensation for financial and moral dam­age; have any other property rights and personal rights. The second part of legal personality is deed capacity. According to article 17 of the Civil Code of the Republic of Kazakhstan the deed capacity is the capacity of a citizen by his deeds to acquire and exercise civil rights, create for himself civil duties and execute them. Deed capacity shall arise in their entire volume when the citizen reaches the age of majority, that is, upon reaching eighteen years of age. There are two exceptions from this rule. First, in the case where legislative acts allow for the entering into marriage prior to reaching eighteen years of age, a citizen who has not reached 18 years of age shall acquire deed capacity in its entire volume from the moment of entering marriage. Second, in accordance witharticle22-1 of the Civil Code of the Republic of Kazakhstana minor whohas attained theage of sixteencan be declaredfully capable, if he works on a labor contractor withthe consent of thelegal representatives of thebusiness activities. 32

§4. Physical persons as subjects of civil law

Announcementminor as fully capable is produced by decision of the guardian­ship authority, with the consent of hislegal representative or, in the absence of such agreement, by the court. Legislator divides deed capacity of minors under 18 years old for two groups: the deed capacity of minors under fourteen years old and the deed capacity of minors from fourteen to eighteenyears old. Deed capacity of minors under 14 years old is considered as partial deed capac­ity. For minors who have not reached 14 years of age, transactions shall be committed by their parents, adopters, or guardians on their behalf, unless otherwise provided for by legislative acts. Minors under the age of fourteen years shall have the right to inde­pendently enter only into small day-to-day transactions which are performed when they are entered into. Deed capacity of minors between 14 and 18 years old is considered as incom­plete. Minors from fourteen to eighteen years old shall enter into transactions with the consent of their parents, adopters or guardians. The form of such consent must be con­sistent with the form which is established by legislation for transactions entered into by minors. Minors from fourteen to eighteen years old shall have the right to independently dis­pose of their wages, grants and any other income and the intellectual property rights associated with the items created by them, and also to enter into small day-to-day transactions. Minors from fourteen to eighteen years of age shall independently bear responsibil­ity with regard to the transactions committed by them, they shall be held responsible for any harm caused by their acts. Legislative acts may establish cases where the commitment of a transaction by a mi­nor and on behalf of a minor shall require prior consent of the guardianship or sponsor­ship authorities. There are some special rules for several types of transactions. For example, mi­nors shall have the right to lodge their savings in banks and to independently dispose of their savings which are lodged by themselves. Savings which are lodged by some­body else on behalf of minors, who have not reached fourteen years of age, shall be managed by their parents or any other legitimate representatives, while minors 33

Civil law of the Republic of Kazakhstan

who have reached fourteen years of age may independently dispose of savings lodged on their behalf by somebody else. The only one type of transactions which is allowed by legislation for minors from both groups is small day-to-day transaction. There is no any definition of small day-to-day transaction in the legislation of the Republic of Kazakhstan. But due to the meaning of such transactions and some legal norms which are concern to them, we can detect following features and then form its definition: 1) transaction should be the age-appropriate; 2) day-to-day character of transaction; 3) minor cost of transaction; 4) performed when they are entered into. So, we can say, that the small day-to-day transaction is the ageappropriate day-to-day transaction with minor cost and performed by persons when they are entered into. As examples, buying bread, taking a bus and etc. According to Article 18 of the Republic of Kazakhstan «No one may be re­stricted in legal capacity and deed capacity otherwise than in the cases and in accord­ance with the procedure provided for by legislative acts». But, there are two cases, in which citizen may be recognized as incapable or his capacity may be restricted. A citizen, who, as a result of psychic disease or mental weakness, cannot under­stand the meaning of his acts or direct them, may be recognized by the court as incapa­ble, and in this connection, guardianship shall be established over him. On behalf of citizens recognized as incapable, the transactions shall be carried out by a guardian. In the case of a recovery or a significant improvement of the health of the incapa­ble person, the court shall recognize him as capable, after which guardianship over him shall be alleviated. A citizen who consequential to the abuse of alcoholic drinks or narcotic sub­stances puts his family into a difficult financial position may be restricted by the court with regard to his deed capacity in accordance with the procedure established by the Civil Procedural Code of the Republic of Kazakhstan. Tutorship shall be estab­lished over him. 34

§4. Physical persons as subjects of civil law

He shall have the right to independently enter into small day-to-day transactions. He may commit any other transactions, receive wages, pensions and any other income, and he may dispose of them [but] only with the consent of the tu­tor. Where a citizen severs the abuse of alcoholic drinks or narcotic substances, the court shall abolish restrictions of his capacity. On the basis of the court decision the tutorship established over the citizen shall be abolished. The main criterion for determining the legal status of individuals is their personal­ity. As a general rule, legal personality in its entirety comes to the age of eight­een. In this connection there is an interest in establishing the characteristics of personality of minors, namely the capacity to act as legal capacity arises at birth. Civil legislation establishes rules on the legal capacity of certain categories of minors. In accordance with the norms of the Civil Code of the Republic of Kazakhstan capac­ity of minors is classified according to age categories: under 14 and from 14 to 18 years. In other words, the partial capacity and non-full capacity. Article 23 of the Civil Code of the Republic of Kazakhstan stipulates that for minors under fourteen years of age (minors), the transaction is made on behalf of the legal representatives, unless otherwise provided by legislative acts. Minors under the age of fourteen (juvenile) only has a right to make appropriate to their age petty domestic transactions executed during the committing them. It is appropriate to the age category of minor petty domestic transactions exe­cuted during the committing them. Obvious are the following features of such transac­tions, the nature of their home, matching the age of the minor and their execu­tion at the commission, that is, such transactions orally. As for the definition of such a transaction as a fine, it is necessary to take into account the fact that this category is directly related to the social position of the minor and his family, his living condi­tions. Accordingly, the establishment of the transaction as a small individually for each specific case. Another point is a part of this above-identified standards «.. trans­ actions make on their behalf by the legal representatives, unless otherwise provided by legislative acts of.. ». Legislative acts, include 35

Civil law of the Republic of Kazakhstan

the possibility of making early childhood small house­hold transactions on their own, and getting in some cases for the transaction guardian­ship authority (Article 24 of the Civil Code of the Republic of Kazakhstan), as well as the provisions of Article 25 of the Civil Code of RK, which reads «Minors have the right to make deposits in banks and to dispose of their contributions». In accordance with the rules laid down in the Rules of opening, maintaining and clos­ing of bank accounts of clients in banks of the Republic of Kazakhstan approved by the Resolution of the Board of the National Bank of the Republic of Kazakhstan on June 2, 2000 to open a bank account to the client – natural person must submit: a docu­ment with the sample signatures; a copy of a document issued by the tax author­ity, confirming that the client statement on the registration account; identity docu­ment. And when you open a savings account in the name of a specific third party cli­ent in addition to the above documents the investor is obliged to submit to the bank: for minors clients who are under sixteen years of age – a birth certificate. These rules and do not confirm nor deny the rights provided for in the Civil Code, which in turn gives rise to certain problems in the implementation of the rules codified normative legal act. In contrast to the juvenile, the content capacity of minors between 14 and 18 years of age is determined as follows. Article 22 of the Civil Code of the Republic of Kazakhstan provides that minors un­der the age of fourteen to eighteen years of age to make transactions with the con­sent of their legal representatives. Minors under the age of fourteen to eighteen years shall have the right to dispose of his earnings, scholarships, other income, and they created the objects of intellectual property rights, as well as make small everyday transac­tions. On the independence of the commission of minor transactions, and suggests the fol­lowing rule «.. minors who have reached the age of fourteen, independently dispose of the contribution made by anyone in their name». Now a few words about the civil law institutions such as the limitation of capac­ity and recognition of an individual incapable. 36

§4. Physical persons as subjects of civil law

As a general rule a citizen who as a result of abuse of alcohol or narcotics puts his family in a difficult financial situation, it may be limited by the court in the capac­ity in accordance with the procedure established by the Civil Procedure Code of the Republic of Kazakhstan. Guardianship is established above them. They are free to make small everyday transactions. To perform other transactions, as well as receive wages, pensions and other income and dispose of it can only with the consent of the trustee. Whether the action of the rule is distributed to minors? On the one hand, the arti­cle says about the citizen, which says nothing about the majority or the minority, but on the other hand, the capacity limitation has implications in limiting the rights within the scope of the relevant legal capacity of minors between 14 and 18 years, and for the young such a restriction would involve expansion of the powers that be illogical. With regard to the recognition of a citizen as incapable, the bases of which are the circumstances under which a citizen who due to mental illness or dementia may not understand the significance of his actions or control them, and the consequences of committing all deals guardian, it can be assumed that the application of Article 26 of the Civil Code applies RK and minors. From the foregoing, it follows that in spite of the features provided by the legisla­tion of the civil capacity of minors, in the implementation of the legislation in connection with the polysemy of interpretation raises a lot of issues that require the need to improve existing legislation. 3. Termination of legal personality of physical person As been shown before, legal capacityshall cease with demise of the citizen. But it will be problem if person is missed and it is not known is he alive or not, for such situations, legislation has special institutes as the recognition of a citizen as missing and the announcement of a citizen as deceased. Pursuant to the application of interested persons a citizen may be recognised by the court as missing, if within one year in the place of his domicile there is no infor­mation on his whereabouts. 37

Civil law of the Republic of Kazakhstan

When it is impossible to establish the date of receipt of the last information concern­ing the missing person, the beginning of the absence shall be deemed to be the first date of the month following the one in which the last information was re­ceived on the absentee, and if it is impossible to establish that month, – it shall be the first of January of the following year. On the basis of a court decision, guardianship shall be established with regard to the property of a person who is recognized as missing. Subsistence shall be paid from that property to the persons whom the missing person was to support, and his debts shall be repaid with regard to taxes and any other liabilities. Pursuant to the application of the interested persons, the guardianship and tutor­ship authority may appoint an administrator to guard and manage the property until the one year expires after the date when last information concerning the location of the missing person was received. In the case of his arrival or the establishment of the locations of a person who is rec­ognized as missing, the court shall abolish its decision to recognize him as missing and to establish guardianship over his property. Pursuant to the application of interested persons, a citizen may be announced by the court as deceased, if there is no information about him in the place of his domicile for three years; and, if he disappeared under circumstances which threatened death or which give grounds to assume his demise in an accident, for six months. A military serviceman, or any other person who is missing in connection with mili­tary actions, may be announced deceased not earlier than upon the expiry of two years from the date of the termination of the military operations. The date of the demise of a person who is announced as deceased shall be deemed to be the day that the decree of the court, which announced him as deceased, enters into legal force. In the cases of announcing persons as deceased, a person who is missing under circumstances which threaten death or which invoke the assumption of his demise in an accident, the court may recognize the date of the assumed demise of this person as the date of his death. 38

§4. Physical persons as subjects of civil law

When the decision of a court announcing a person as deceased enters into legal force, his death shall be entered into the books for the registration of civil status acts. The consequences of such an entry shall be the same as of an entry of actual death. In the case that a person who has been announced as deceased, reappears or his loca­tion is established, the relevant court decision shall be annulled. Irrespective of the time of his re-appearance, the citizen may claim the return of re­maining assets which were free of charge transferred to persons after the announce­ment of the citizen as deceased, from those persons. If the property of a person announced as deceased, was sold by his legal succes­sor to third parties who by the time of re-appearance failed to pay the full purchase price, then the person who reappeared shall have the right to claim the outstanding amount. The persons to whom the property of a citizen who was announced as dead was trans­ferred through commercial transactions, shall be obliged to return to him that prop­erty; and in case they do not have it, they must compensate for its value, if it is proved that at the time of the acquisition of the property they knew that the citizen who was announced deceased, was alive. The alienator of the assets who knew at the moment of the alienation that the per­son announced as dead is alive, shall bear, jointly with the buyer, the responsibil­ity to return or compensate the value of the property. When the property of a person who is announced as deceased was transferred to the State under its right to inherit and was sold, then, after the abolition of the deci­sion to announce the person as deceased, he shall be repaid the amount which is re­ceived from selling his property subject to its market value as on the date of the pay­ment. Questions for self-control 1. What are the features of physical persons as subjects of civil rights? 2. What is legal personality of physical person? 3. What is the content of legal personality? 4. What are the types of deed capacity? 5. What is the order to recognize physical person as missing? 6. What is small day-to-day transaction? 39

§5 LEGAL ENTITIES AS SUBJECTS OF CIVIL LAW

Questions: 1. The definition of legal entity 2. Types and forms of legal entities 3. Legal personality of legal entity 4. The State and Administrative-Territorial Units

1. The definition of legal entity An organization which has under the right of ownership, the right of business author­ity or operational management, its separate assets and which is liable with this property for its obligations, which may, in its name, acquire and exercise property rights and personal nonproperty rights and obligations, and may be the plaintiff or defendant in the court of law, shall be recognized as a legal entity. A legal entity must have its independent balance-sheet or budget. A legal entity shall have a seal with its name. The first historicalattempt ata theoreticalgeneralization of the conceptof a legal entitywas the theory offiction thatwas particularlywidespread in theXIXcentury and is stillpopular inour time. The legal concept of the corporation first a roseinglossators that proceeding from the extended position of the Roman lawyersis that for all that corporations do notbelong to its individual members (quod universitatis est, non est singulorum), concluded that the need to excludefrom the concept corporation any representation about individuals as the corporation it self is an entity, separate an dindividual. Pope Innocent IV put forward the idea that corporations are «fictitious persons». 40

§5. Legal entities as subjects of civil law

The theory of the target property put forward in the development of the theory of fic­tion. It is argued that the rights and obligations may either belong to a person (the subject), and only serve a purpose (object). In the second case, the subject of law is generally not required, because its role is performed by a separate property for this purpose (including responsible for debts incurred for a proper purpose), which accord­ing to tradition, it is endowed with the properties of an entity, when in fact it is not necessary, and therefore do not need the give concept of a legal entity. Another variant of the theory of fiction was the theory of interest, advanced by the largest German legal theorist Rudolf Iering. He believed that the rights and obliga­tions of the entity actually belong to the actual individuals who actually use the common property and its benefits. In his view, the legal entity is a single center for the rights of «designators» artificially created by the legal technique to simplify the situation, a special form of possession of property by many individuals for some com­mon purpose. With the development of different types of legal entities in contrast with fiction theo­ries were put forward theories that recognize the reality of the legal entity as the subject of rights (realistic theory of legal entity). The German and French civil law there is a theory considering a legal entity as a distinct social organism, a «spiritual reality» or «human alliance» with their own will, not reducible to the collective will of its constituent individual persons (G. F. Beseler, O. Girke, R. Salleyl, P. Mishu). There are three main ways of creation of legal entities: 1) regulatory, which is used to create stateenterprise, it means thatdecision to establishsuch legal entityshall take by appropriatestate agencies; 2) permissive, which is used to create banks; 3) recruiting-normative order implies thatconsent to the establishmentof such entitieshas already been givenin the regulations. 2. Types and forms of legal entity There are two types of legal entities: commercial and non-commercial. 41

Civil law of the Republic of Kazakhstan

An organization which pursues the extraction of income as the principal purpose of its activities is commercial organization and which does not have the extraction of income as such a goal and which does not distribute earned net income between its participants is noncommercial organization. A legal entity which is a commercial organization (enterprise) may be created solely in the form of a state-owned enterprise, business partnership, joint-stock com­pany or production cooperative. A legal entity, which is a non-commercial organization, may be created in the form of an institution, public association, joint-stock company, consumer co-opera­tive, public foundation, religions association and any other form which is provided for by legislative acts. A non-commercial organization may engage in entrepreneurial activity only for as long as it is consistent with the objectives of its charter. A legal entity that is a non-commercial organization and maintained at the ex­pense of the state budget may be formed exclusively in the form of a state-owned institu­tion. Legal entity may have civil rights and bear obligations associated with its activ­ity in accordance with the civil legislation. Commercial organizations, except for state-owned enterprises, may have civil rights and bear civil obligations, which are necessary for the exercise of any types activity which are not prohibited by legislative acts or their foundation documents. In the cases stipulated by legislative acts, for legal entities carrying out certain types of activity, a possibility may be excluded or restricted to engage in another activ­ity. A legal entity may engage in certain types of activities, the list of which is defined by legislative acts, only on the basis of a license. The legal capacity of a legal entity shall arise at the moment of its creation and it shall cease at the time of completion of its liquidation. The legal capacity of a legal entity in a sphere of activities which requires a license shall arise from the moment of the procurement of such a license and it shall cease at the moment of its revocation, expiry of the term of its validity, or recognition of it as invalid in accordance with the procedure established by legislative acts. 42

§5. Legal entities as subjects of civil law

3. Legal personality of legal entity Procedure of creation of legal entity includes such categories as foundation par­ties (participants), foundation documents, the name of legal entity, the location of le­gal entity, registration of legal entity. A legal entity may be founded by one or several foundation parties. The owners of the property, or the bodies and persons authorized by them, and in the cases specifically provided by legislative acts, any other legal entities may be foundation parties of a legal entity. In that respect, the legal entities who own the prop­erty under the right to business authority or operational management may be founda­tion parties of other legal entities after the approval of their owner or the body authorized by their owner. A legal entity shall carry out its activities on the basis of its Charter or the Founda­tion Agreement and the Charter, unless it is otherwise provided for by legisla­tive acts. In the cases specified by legislative acts, a legal entity which is not a commer­cial organization may operate on the basis of general regulations concerning the organizations of that type. A legal entity which is a small business may carry out its activities on the basis of the Model Charter the content of which is defined by the Government of the Repub­lic of Kazakhstan. The foundation agreement of a legal entity shall be entered into and its charter shall be approved by its foundation parties. No foundation agreement shall be entered into when a commercial organization is established by one person. The foundation documents of a non-commercial organization and of a state-owned enterprise, must define the objects and aims of the activities of that legal en­tity. Foundation documents of a business partnership, joint-stock company and a produc­tion co-operative may provide for the objects and purposes of their activity. In the foundation agreement parties (foundation parties) undertake to create a le­gal entity, and they define the procedure for their joint activities to create it, the condi­tions for the vesting into its ownership (business authority, operational manage­ment) of their property and for 43

Civil law of the Republic of Kazakhstan

their participation in its activities. The agreement shall also define the terms and procedure for the distribution of net income between the founda­tion parties, management of the business of the legal entity, exit of foundation parties from it, and the agreement shall approve its charter, unless it is otherwise pro­vided for by this Code or legislative acts concerning specific types of legal entities. Any other provisions may be included into a foundation agreement, based on the con­sensus of the foundation parties. Name, location, procedure for the formation and the authority of its bodies, provi­sions concerning the reorganization and termination of its activities shall be pro­vided for by the charter of a legal entity. A legal entity shall have its name, which permits to distinguish it from any other enti­ties. The name of a legal entity shall consist of its name and an indication of its organizational-legal form. It may contain any additional information provided for by legislation. The name of a legal entity shall be indicated in its foundation documents. It shall be prohibited to use in the name of a legal entity, names which contradict the requirements of legislation or the norms of public ethics; the proper names of per­sons, unless they coincide with the names of participants, or where the participants failed to obtain the permission from those persons (their heirs) to use the proper name; The name of a legal entity which is a commercial organization, after the registra­tion of the legal entity, shall be its commercial name. Under their commercial names, legal entities shall be entered into the single state register of legal entities. A legal entity shall have an exclusive right to use its commercial name. A per­son who illicitly uses somebody else’s commercial name must terminate the use of such a name and to compensate the losses caused, pursuant to the requirement of the owner of the right to the business name. The rights and obligations of a legal entity which are associated with the use of a commercial name shall be determined in legislation. For the use by legal entities (except for state-owned enterprises, state institutions and non-commercial organizations) and physical persons of the words «Kazakhstan», «Republic», «National» (in full, as 44

§5. Legal entities as subjects of civil law

well as any derivations from them) in their busi­ness names, services signs, trademarks, they shall pay levy in accordance with the proce­ dure and in amounts established by tax legislation. It shall be prohibited to use in business names, service signs, trademarks of the le­gal entities which are not state authorities of references to official names of the state authorities of the Republic of Kazakhstan as established by legislative acts, acts of the President and Government of the Republic of Kazakhstan. The place where the permanently operating body of a legal entity is situated shall be recognized as the location of that legal entity. The location of a legal entity shall be indicated in its foundation documents with the inscription of its full address. Permanently operating body is executive body of legal entity. The supreme body of legal entity is general meeting of participants. And the competence of these bodies is different. 4. The State and Administrative-Territorial Units The Republic of Kazakhstan shall act in relations which are regulated by the civil legislation on the basis of principles which are equal with any other participants in those relations. The public bodies of the Republic of Kazakhstan with in the bounds of their author­ity may by their actions acquire and exercise property and personal non-prop­erty rights and obligations, may act in the court on behalf of the Republic of Kazakh­stan. An administrative and territorial unit shall also act in the relations regulated by the civil rights legislation on principles equal to those by which any other participants of those relations act. Local representative and executive bodies, within the framework of their author­ity established by legislative acts, regulations or any other acts which determine the status of those bodies, may by their actions acquire and exercise property and per­sonal non-property rights and obligations on behalf of an administrative and territo­rial unit, and represent it in the court. The Republic of Kazakhstan shall be liable for its obligations with the property of the State treasury, while an administrative and territo45

Civil law of the Republic of Kazakhstan

rial unit shall be liable for its obligations with the property of the local treasury. The Republic of Kazakhstan and the administrative and territorial units shall not be liable for the obligations of one another and also for the obligations of citizens and legal entities, while citizens and legal entities shall not be liable for the obligations of the Republic of Kazakhstan and administrative and territorial units. Questions for self-control 1. What is legal entity? 2. What are the theories of legal entities? 3. What are the types of legal entities? 4. What are the forms of legal entities? 5. What is the order of creation of legal entity? 6. What is the order of termination of legal entity?

46

§6 OBJECTS OF CIVIL LAW

Questions: 1. Conception and types of objects of civil law 2. Things as objects of civil law. Classification of things 3. Financial instruments as objects of civil law 4. Personal non-property rights as objects of civil law

1. Conception and types of objects of civil law According to the Article 115 of the Civil Code of the Republic of Kazakh­stan»The property and the personal non-property privileges and rights may be objects of civil rights». Things, money, including foreign currency, securities, work, services, and the objecti­fied results of creative and intellectual activities, commercial names, trade­marks, and any other means of individualization of products, property rights and any other assets, shall be recognized as property privileges and rights (property). Life, health, the dignity of a person, honor, good name, business reputation, inviola­bility of private life, personal and family secrets, the right to name, the right to be an author, the right to inviolability of production and any other intangible privi­leges and rights shall be referred to the personal non-property privileges and rights. 2. Things as objects of civil law. Classification of things The most common type of object of civil law is thing. Things asobjects of civil laware objects of the material world, in solid,liquid, gaseous,or otherphysical condi­tion. Civil legislation of the Republic of Kazakhstan provides certainkinds of things,each of which hasits specificlegal regime. 47

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According to theturnover capacity of the objects of civil rights, things may be classi­fied for three types: 1) freely alienated or transferred from one person to another in the course of the uni­versal legal successorship (inheritance, reorganization of a legal entity) or by any other method; 2) excepted from circulation (types of such things must be directly indicated in legis­lative acts); 3) restricted in their turnover (the types of objects which may belong only to spe­cific participants in circulation, or those, the acquisition and alienation whereof is allowed only upon specialpurpose permission shall be determined by legislation). Next classification of the things: 1) individually defined (two categoriesof things: things the onlyin their exist­ence,for example, a house builton an individual projectin the singular,and thingsselectedfrom amongthemsuch things, for example, a house builtmodel, created by single projectof building housesin the series, located at a certainnumber on theoutsideof aspecificcity; 2) endowed withsimilar signs (generic things) – these are the things, determined with the number, weight, volume, or any other measuring devices, for example money, some kinds of foodstuffs as bread, milk, fruits, vegetables, etc. Property may be divisible and indivisible. Divisible property shall be assets, parts whereof do not lose their designation (func­tion) as result of division. Indivisible property shall be property which may not be divided without chang­ing its economic designation (function), or which is not to be subdivided by virtue of a prescription in a legislative act. Consumable and non-consumable things. This division is basedon the natural qualities of things. Consumable things during their use cease to exist. All other things are non-consumable. Movable and Immovable Assets The real estate (immovable assets, immovables) shall comprise the following: land plots, buildings, structures, perennial plantations, and 48

§6. Objects of civil law

other property, which is firmly associated with land, i. e. items the transportation of which is impossible with­out infliction of unreasonable damage to their designation. Also, air and sea vessels, vessels of domestic water travel, vessels of river and sea sailing, and cosmic facilities, shall be equated to immovable objects which are subject to state registration. Assets which are not recognized as immovables, including money and securities, shall be recognized as movable assets. The right to own and any other rights to immovable items, and restriction of those rights, their emergence, transfer and cessation shall be subject to state registra­tion. Legislation of the Republic of Kazakhstan considers special legal regime of some objects according to classification to movable and immovable assets. For exam­ple Article 119 of the Civil Code of the Republic of Kazakhstan considers legal re­gime of enterprise as object of civil law. An enterprise, as an item in rights, shall be recognized to be a property complex which is used for carrying out entrepreneurial activities. An enterprise in general as a property complex shall be recognized as immovable property. As a property complex, an enterprise shall include all the types of assets which are intended for its operation, including buildings, installations, equipment, tools, raw materials, inventories, the right to a land plot, the right to claim, debts and also the right to designations which individualize its activities (commercial name and trade­marks), and any other exclusive rights, unless otherwise stipulated in legislative acts or in an agreement. The next types of the things are simple and complex things. Article 121. Of the Civil Code of the republic of Kazakhstan provides that,when heterogeneous items form a single unit which permits the use in accordance with its designation, deter­mined by the nature of their combination, they shall be deemed to be one item (com­pound item). The conception of complex things includes four elements: 1) it is composed ofheterogeneous simplethings; 2) these simple things are not physically connected; 49

Civil law of the Republic of Kazakhstan

3) these things are integrated to be used in one common designation; 4) every thingis a part ofa complex thing, can be used independently. Typical examples ofcomplexthings aresuite of furniture, collections, tea-sets, cof­fee-sets, etc. Civil legislation of the Republic of Kazakhstan also provides the following types of things: principal thing and its accessory thing. An accessory, that is, an object which is intended to serve the principal object and which is tied to it by joint economic designations, shall follow the destiny of the principal object, unless legislation or agreement stipulate otherwise. 3. Financial Instruments Financial instruments are such objects asmoney, securities, including derivative secu­rity, derivative financial instruments and other financial instruments in the result of operation with which financial asset arise in one organization and financial obliga­tion or equity instrument in another. Derivative financial instrument is the contract, which cost depends on the value (in­cluding the variation of the value) of underlying asset of the contract, foreseeing the conduction of the calculation on the current contract in the future. There are following derivative financial instruments. The option is the derivative financial instruments, according to which one party (op­tion seller) sells to another party (option buyer) the right to buy or to sell the underly­ing asset on the stipulated price and on the settled terms in the future. The swap is the derivative financial instrument, according to which the parties agree to exchange the payments on the underlying assets or by the underlying assets on the settled terms in the future. The forward is the derivative financial instrument, which buyer (or seller) under­takes an obligation upon the expiry of designated period to buy (or to sell) the underly­ing asset on the settled terms in the future. Forward is occurred in the unor­ganized market. The futures is the derivative financial instrument, tradable only in the organized mar­ket, which buyer (or seller) undertakes an obligation 50

§6. Objects of civil law

to buy (or to sell) the underly­ing asset upon the expiry of designated period, on the standard terms, settled in the organized market. Securities A Security is the set of the appropriate records and other designations, which sat­isfy the property rights. The securities may be debt and share. The debt securities are the securities, which prove the obligation of the emitter (debtor) to pay the principal on the terms issue of the assets. The share security is the security, which proves the right of its owner for the defi­nite interest in estate. The securities due to the form of issuance shall be subdivided in: 1) certified and uncertificated; 2) equity and private; 3) inscribed, bearer and order. Certified securities are the securities, issued in documentary form (on the paper or other material media with the opportunity to read the content of the security with­out using special equipment). Uncertificated securities are the securities, issued in non-documentary form (in the form of the set of electronic records). Equity securities are the securities, which within one issue have similar features and attributes, which are placed and turned on the terms uniform for the current issue. Private securities are the securities, which are not considered as equity securi­ties. Inscribed security is the security, confirming the accessory of the rights, certi­fied by it, to the person mention in it. Bearer security is the security, confirming the accessory of the rights, certified by it, to the bearer of the security. Order security is the security, confirming the accessory of the rights, certified by it, to the person mention in it, and to another person, in the case of transfer of these rights. The legislation also provides some particular types of securities as a debenture, a share, and a bank deposit certificate. 51

Civil law of the Republic of Kazakhstan

The debenture is a security which certifies the right of its holder to receive its nomi­nal value or its other equivalent assets, from the entity which issued that security with in the period established by the terms of that security’s issue. The debentures shall be issued only as inscribed security equity securities. A share is a security which certifies the right of its holder (shareholder) to re­ceive part of net income of a joint stock company in the form of a dividend, to partici­pate in managing the business of the joint stock company, and to part of the prop­erty of the joint stock company, which remains after its liquidation, as well as other rights. Bank deposit certificate is the certified private security, confirming the rights of its holder to receive upon the expiry of circulation period, specified by the terms of issue, or before its expiration, its nominal cost, as well as compensation in the amount, specified by the term of issue. 4. Personal non-property rights as objects of civil law A person whose personal non-property rights are violated, apart from the measures stipulated in Article 9 of this code, shall have the right to compensation of moral damage by the rules of this Code. Protection of personal property rights shall be carried out by the court in accord­ance with the procedure stipulated in civil procedural legislation. Personal non-property rights shall be subject to protection irrespective of the guilt of the person that violated the right, unless it is otherwise stipulated in the pre­sent Code. The person who presented a claim of defense must prove the fact of the violation of his personal non-property right. The person whose non-property right is violated may at his discretion, claim from the violator the elimination of the consequences of the violation or at the ex­pense of the violator to independently undertake the necessary actions, or to delegate their execution to a third party. In the event that personal non-property and property rights are simultaneously vio­lated, the amount of compensation for property damage shall be increased by consider­ing the compensation which is due 52

§6. Objects of civil law

to the victim because of the violation of his personal non-property rights. Through the court a citizen or a legal entity shall have the right to refutation of infor­mation which damages his honor, dignity or business reputation; unless the one who spreads such information proves that the information is true. Where the information that damages the honor, dignity or business reputation of a citizen or a legal entity is spread through the mass media that information must be free of any charge refuted by the same mass media. In the case where said information is contained in a document issued by an organisa­tion, such a document shall be subject to replacement or annulment with the obligatory communication to the addressees of the inconsistency of the information contained in that document. The procedure for refutation in other cases shall be established by the court. A citizen or a legal entity with regard to which the mass media published infor­mation which restricts his rights or legitimate interests, shall have the right to publish their response in the same mass media free of any charge. The claim by a citizen or a legal entity to publish a refutation or response in the mass media shall be considered by the court in a case where the mass media refused such publication, or did not carry out the publication within one month, and also in the case of its liquidation. Where a court decision is not executed, the court shall have the right to impose a fine upon the violator, which shall be taken for the revenue of the budget. The fine shall be imposed in accordance with the procedure and in the amounts which are estab­lished by the civil procedural legislation. The payment of the fine shall not ex­empt the violator from the obligation to execute the action stipulated in the court deci­sion. A citizen or a legal entity with regard to whom information was spread that dam­ages his honour, dignity or business reputation, shall have the right, apart from the refutation of such information, to de53

Civil law of the Republic of Kazakhstan

mand compensation for the damage and the moral harm inflicted by their promulgation. Where it is impossible to identify the person that spreads the information which dam­ages the honour, dignity or business reputation of a citizen or a legal entity, the person with regard to whom such information is spread, shall have the right to appeal to the court with an application to recognise that the promulgated information as not true. A citizen shall have the right to protect the secrecy of his private life, including the secrecy of letter exchange, telephone conversations, diaries, notes, comments, sex­ual life, adoption, birth, medical secrets, legal secrets, and secrecy of bank invest­ments. The disclosure of the secrets of private life shall only be possible in the cases which are stipulated by legislative acts. The publication of diaries, notes, comments and any other documents shall be permis­sible only with the permission of their author, and as regards letters, – with the consent of both their author and the addressee. In the case of demise of one of them, said documents may be published with the consent of the surviving spouse and the children of the deceased. One’s Right to the One’s Own Picture Nobody shall have the right to use the image of a person’s face without his con­sent, and in the case of his demise, – without the consent of his inheritors. The publication, reproduction and distribution of a graphic piece (picture, photo­graph, film etc. ), in which another person is depicted, shall only be permissible with the consent of the depicted, and after his death, – with the consent of his children and surviving spouse. Such consent shall not be required where it is established by legisla­tive acts or the person depicted was posing for a fee. A citizen shall have the right to inviolability of his house, that is, to prevent any at­tempts of intrusion into his house against his will, except for the cases stipulated in legislative acts. Questions for self-control 1. What are the types of objects of civil rights? 2. What are the types of things as objects of civil rights? 54

§6. Objects of civil law

3. What are the differences between movable and immovable property? 4. What is compound thing? 5. What is enterprise as object of civil rights? 6. What are the features of personal non-property rights and privileges as ob­jects of civil rights? 7. What are the types of financial instruments? 8. What are the types of securities?

55

§7 TRANSACTION INSTITUTE IN CIVIL LAW

Questions. 1. Conception and features of transaction 2. The form of transaction 3. Types of transactions 4. Invalidity of transactions

1. Conception and features of transaction The actions of citizens and legal entities which are aimed at establishing, chang­ing or terminating civil rights and duties, shall be recognized as transactions. In the theory of civil law there are basic features of all civil-law transactions: a) the transaction – it is alwaysan act of will, that is, people’s actions, and; b) it islawful actions, and; c) dealspecifically aimed at establishing, changing or terminating civil rights and du­ties, and; d) the transaction gives rise tocivil relations, because the legalconsequences thatoccuras a resultof the transactions are regulated by norms of civil law. Volitional nature of transactionsis determined by twointerrelated factors the subjective and the objective. As a subjective factoris necessary to consider the will of the subject of the transaction, as an objective-expression of the will. Will – the innerintention, the desire of the subject, aimed at achievinga certain legal result. The will is defined as «mental regulation of conduct consisting in the determined 56

§7. Transaction institute in civil law

and motivated by the desire to a chieve the goal,choosing a solution, devising ways and means of application an deffort to implement them». The process of formation of the will the question is very important and interesting for psychologists and for lawyers. For exam­ple, as parts of an act of isolated decision and its execution. 2. The form of transaction Under the form of the transactionis unders tood way of expressing the will of its members. Establishing some form of transaction, the legislator wants to ensu­ re that the will of its members was expressed with sufficient accuracy, and could be perceived correctly. In those cases where the transaction is important in public circulation, their performance is put under state control by establishing for them a notarized form, and sometimes mandatory to log in to the relevant organizations. Parties to the transactionshall keep itin the form requiredby law, as failure todo soentailsnegative consequences. According to the Article 151 of the Civil Code of the Republic of Kazakhstan transactions can be entered into orally or in written form (simple or notary). A transaction for which legislation or the agreement of the parties does not estab­lish a written form (simple or notary), or any other definite form, may be entered into orally, in particular, any transactions which are executed by their commitment. Such a transaction shall be deemed to be entered into also in the case where the will of the person to enter into the transaction is clear from the behavior of the person. A transaction which is confirmed by issuing a ticket, label or any other sign which is generally acceptable for confirmation, shall be deemed to be concluded in oral form, unless otherwise is stipulated in legislation. Silence shall be recognized as the expression of will to enter into a transaction in cases which are stipulated by legislation or the agreement of the parties. Transactions to execute an agreement which is concluded in writing may, by agree­ment of the parties, be entered into orally, provided that does not contradict legisla­tion. 57

Civil law of the Republic of Kazakhstan

The written form of transactions is required to following transactions: 1) those which are carried out in the course of entrepreneurial activities, except for transactions which are fulfilled by their execution itself, unless it is otherwise stipu­lated in legislation for individual types of transactions, nor does it ensue from the customs of the business practice; 2) for the amount of more than one hundred assessment indices, except for the trans­actions which are executed by their commitment itself; 3) in any other cases which are stipulated in legislation or the agreement of the par­ties. A transaction which is executed in writing, must be signed by the parties or their rep­resentatives, unless otherwise ensues from the usual business practice. It shall be allowed, when entering into transactions, to use facsimile copying of sig­natures, unless this contradicts legislation or the requirements of one of the partici­pants. Bilateral transactions may be entered into by way of exchanging documents, each one of them shall be signed by the sending party. The exchange of letters, telegrams, telephonograms, teletypograms, facsimiles or any other documents which identify the entities and the contents as expression of their will shall be equated to the execution of transactions in writing, unless it is other­wise stipulated in legislation or in the agreement of the parties. Legislation and the agreements of parties may establish additional requirements to which the form of the transaction must correspond, in particular, the execution in accordance with a certain type of pro-forma, affixing the seal and stipulation of the consequences of the failure to comply with those requirements. Where a citizen as a result of a physical shortage, disease or illiteracy is not able to personally sign, then upon his request a transaction may be signed by any other citi­zen. The signature of the latter, unless it is otherwise stipulated in legislation, must be witnessed by a notary or any other official who has the right to enter into such no­tary action 58

§7. Transaction institute in civil law

with an indication of the reasons for which the person who entered into the transaction failed to sign it personally. The party that fulfilled a transaction which was executed in writing shall have the right to claim from the other party a document which confirms that fulfillment. The same right shall belong to the party which fulfilled an oral entrepreneurial transac­tion, except for the transactions which are fulfilled by their commitment itself. The Consequences of a Failure to Comply With the Written Form of a Transac­tion A failure to comply with the simple written form of a transaction shall not entail its invalidity, but it shall deprive the parties of the right to confirm its conclusion, con­tents or its execution by witness evidence in the case of a dispute. The parties, how­ever, shall have the right to confirm the execution, contents or the implementa­tion of a transaction by written or any other proofs except for the use of witness’s evi­dence. In the cases which are specifically stipulated in legislative acts or in the agree­ment of the parties, a failure to comply with the simple written form of a transaction shall entail its invalidity. A failure to comply with the simple written form of a for­eign economic transaction shall entail the invalidity of the transaction. In the cases which are stipulated in legislative acts or by the agreement of the par­ties, written transactions shall be deemed to be entered into only upon their notariza­tion. The failure to comply with these requirements shall entail the invalidity of the transaction. Where a transaction which requires notarization is actually fulfilled by the par­ties or by one of the parties, and by its contents does not contradict legislation and does not violate the rights of third parties, the court upon the application of the inter­ested party shall have the right to recognize the transaction as valid. In that case the subsequent notarization of the transaction shall not be required. Transactions which are subject to state registration or other registration, includ­ing transactions which create, change, or terminate the rights to immovable assets shall be considered as concluded after their registration 59

Civil law of the Republic of Kazakhstan

A denial of registration must be formulated in writing, and it may be possible only with a reference to violation of the requirements of legislation. Where a transaction which requires state registration is executed in a proper form, but one of the parties evades its registration, the court shall have the right upon the claim of the counter party to pass the decision to register the transaction. In this case the transaction shall be registered in accordance with the decision of the court. 3. Types of transactions The transactions may be unilateral and bilateral or multilateral (agreements). A transaction, the performance whereof, in accordance with legislation or the agree­ment of the parties, requires the expression of the will of one party and this is sufficient, shall be recognized as a unilateral transaction. In order to enter into an agreement, it shall be necessary to have an expression of the agreed will of two parties (a bilateral transaction) or of three or more parties (multilat­eral transaction). A unilateral transaction shall create obligations for the entity that enters into the transaction. It may create obligations for other persons only in the cases which are stipu­lated in legislative acts or by agreement with those persons. Appropriately, the general provisions concerning obligations and agreements shall apply to unilateral transactions, inasmuch as it does not contradict legislation, or the nature and the essence of the transaction. Transactions Entered into Under Condition A transaction shall be considered to be entered into under a delaying condition, where the parties conditioned the emergence of their rights and obligations upon a circumstance, with regard to which it is not known whether it will occur or not. A transaction shall be deemed to be entered into under an invalidating provision, when the parties conditioned the invalidation of the 60

§7. Transaction institute in civil law

rights and obligations by a circum­stance, with regard to which it is not known whether it will occur or not. When the emergence of a condition is unfairly impeded by a party to which the emer­gence of the condition is non-beneficial, then the condition shall be recognized as having taken place. When the emergence of a condition is unfairly assisted by a party, for whom the emergence of the condition is favorable, and then the condition shall be recognized as not having taken place. Reimbursable is a transaction by which a party provided the other side of the prop­erty, received the property equivalent from the last one. In such transactions, par­ties are bound to each other to make a counter-property services. The examples of such transactions are contracts for the sale, supply, property rental, contractor and oth­ers. Free transaction is a transaction by which allowances received only one side. For example, unpaid transactions are the deed of gift, interest free loans, and free use of property. In our public circulation vast majority of transactions is reimbursable. Some transactions may be either a reimbursable or unpaid. This usu­ally depends on the agreement between the parties. For example, the number of such transactions includes storage agreements. Other transactions can be either just reimbursable, or just free. For example, the legal nature of contracts of sale can be objectively just reim­bursable. On the contrary, the deed of gift – always free. Legislation also provides some specific kinds of transactions. Bourse transactions According to Article 156 of the Civil Code of the Republic of Kazakhstan «Agree­ments concerning mutual conveyance of rights and obligations with regard to goods, securities and other assets which are permitted to be circulated at the bourse (bourse transactions), shall be concluded by the participants of the bourse in accord­ance with the procedure which is established by legislation concerning commodity, stock and other bourses and in the charters of bourses». 61

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Bourse transactions may be documented by broker records, and they shall be sub­ject to registration by the bourse. 4. Invalidity of transactions There are four conditions of validity of transactions: proper participants, proper form, proper contents, and proper expression of the will. When the requirements are violated which are applicable to the form, or con­tents of a transaction and to the participants of a transaction, and also to the freedom of their will expression (vice of form, vice of content, vice of participants and vice of will), the transaction may be recognized as invalid in accordance with an action of the interested parties, authorized state body or the prosecutor. The bases of invalidity of a transaction and also the list of persons, who have the right to demand the recognition thereof as invalid, shall be established by this Code or any other legislative acts. When a transaction is recognized as invalid, each party shall be obliged to return to the to the other party everything that was received in the transaction, and where it is not possible to return it in kind, to return its value in money. When a transaction is aimed at the achievement of a criminal purpose, then, where the intention exists on the part of both parties, everything received by them in the transaction or intended to be received, upon the decision or sentence of the court shall be subject to confiscation. In the case of the execution of such a transaction by one party, everything which is received by it and everything which is due from it in the transaction to the first party shall be subject to confiscation. Where none of the parties proceeded to the implementation, everything which is envisaged by the transac­tion for its implementation shall be subject to confiscation. Where the intention to achieve a criminal purpose exists only with one of the par­ties, everything that is received by it in the transaction shall be subject to return to the other party, and what is received by the latter or due to it in accordance with the transaction, shall be subject to confiscation. Subject to specific circumstances, the court shall have the right not to apply par­tially or in full the consequences which are stipulated in 62

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paragraph 4 and 5 of this Arti­cle, as concerning the confiscation of the assets received or subject to receipt through invalid transactions. In that regard the consequences shall arise which are stipu­lated in paragraph 3 of this Article. Aside from the consequences stipulated in paragraphs 3 – 6 of this Article, the court may exact for the benefit of the other party the losses incurred by the latter, which are associated with the recognition of a transaction as invalid from the party which is guilty of commission of the acts which cause the invalidity of the transac­tion. An invalid transaction shall not entail any legal consequences, except for those which are associated with its invalidity, and it shall be invalid from the moment of its commitment. In recognizing a transaction as invalid, the court shall have the right to take into ac­count the specific circumstances, and restrict itself at the prohibition of its further execution. A transaction, the contents of which do not comply with the requirements of legisla­tion, and which is entered into for a purpose which is deliberately opposite to the fundamentals of the law and order or morals, shall be invalid. A person who deliberately concluded a transaction which violates the require­ments of legislation, the charter of a legal entity or the authority of its bodies, shall not have the right to claim the recognition of the transaction as invalid, provided such a claim is caused by financial interest or the intention to evade responsibility. In the event that one of the participants of a transaction entered into it with an in­tent to evade from the execution of the obligation or from the duty to a third person or the state, and the other participant of the transaction new or should have known of that intention, an interested party (the state) shall have the right to claim to recognize the transaction as invalid. Article 159 of the Civil Code of the Republic of Kazakhstan provides bases for the invalidity of transactions. Invalid is transaction made without the necessary authorization or after the ex­piry of the permit. The invalidity of the transaction, pursuing the goal of unfair competition or vio­late the requirements of business ethics is also provided. 63

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Following foundations are connected with the physical person’s deed capacity. There are the invalidity of a transaction made by a person under the age of four­teen years (a minor), except for the transactions provided for him (small day-to-day transactions; the transaction concluded by a minor who has reached the age of four­teen, without the consent of his legal representatives, except for transactions that it has the right under the law to do on their own, may be deemed by a court to be inva­lid upon the claim of legal representatives. The last one is not applied to the minor who were emancipated or got married. There are also foundations for adults with defects in their deed capacity. Invalid is the transaction entered into by a person declared incapable due to mental illness or dementia. A transaction concluded by a citizen who later was recognized as incapa­ble, may be declared invalid by a court at the suit of his guardian, if it is proved that in the time of the transaction the citizen was in a state of mental disorder. At the request of the trustee, the court may invalidate the transaction made by a per­son in a court of limited capacity. There is also a similar foundation which content is that a transaction made by a citi­zen, although capable, but was in the time of the transaction in such a state that he could not understand the significance of his actions or control them may be declared invalid by a court at the suit of a citizen, but if that citizen is not alive there is an oppor­tunity to present a claim after the death of the citizen. A transaction concluded as a result of misleading, which is essential, can be deemed by a court to be invalid upon the claim of the interested parties, acting under the influence of misleading. Misleading is of considerable importance because of the nature of the transaction, or the identity of such qualities of its item, which signifi­cantly reduces the possibility of using it for its intended purpose. Misconception mo­ tives can serve as grounds for the invalidity of the transaction only if the inclusion of such a motif in its content as a suspensive or resolutive conditions. If confusion was caused by gross negligence or party transactions covered by his en­trepreneurial risk, the court, taking into account the 64

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specific circumstances and the interests of another party has the right to refuse a claim for recognition of the transac­tion as invalid. A transaction made under the influence of fraud, violence, threats, as well as transac­tion which a person was forced to make due to the exceptional circumstances of the extremely unfavorable conditions than the other side took advantage of (bond­age transaction) may be declared invalid by a court on the claim of the victim. A transaction entered into as a result of malicious agreement between the representa­tive of one party with the other party may be deemed by a court to be inva­lid upon the claim of the injured party. Compensation for losses incurred by the in­jured party, in the alternativeorder, may be imposed on unscrupulous representative. A transaction made by a legal entity in contradiction with the objectives of the activi­ties, particularly limited by the Civil Code, other legislative acts or constituent documents, or in violation of the statutory competence of its authority, may be de­clared invalid at the suit of the owner of property of the legal entity or its founder (partici­pant) if it is proved that the other party to the transaction knew or should have known of such violations. There are also two additional types of transactions which presence is important in terms of invalidity of transactions. Invalid an imaginary transaction made only for form, without the intention to cause legal consequences. Another situation is if the transaction is made with a view to cover up another deal (feigned), the rules relating to the transaction which the parties actually had in minds will be applied. Questions for self-control 1. What is the definition of transaction? 2. What are the features of transaction? 3. What are the forms of transaction? 4. What are the types of transactions? 5. What is invalidity of transactions? 6. What are the foundations for recognition of transaction as invalid?

65

§8 THE RIGHT TO OWN AND OTHER CORPOREAL RIGHTS

Questions: 1. Conception of the right to own 2. Forms and types of the right to own 3. Bases for emergence of the right to own 4. Bases for termination of the right to own 5. Protection of the right to own

1. Conception of the right to own The right to own shall be a recognized and protected by legislative acts the right of a person at his discretion to possess, use and dispose of the property which belongs to him. The right of ownership shall be re-assigned to another person with all the encum­brances which existed at the moment of the commission of the transaction. The owner shall have the rights to possess, use and dispose of his assets. – The rights to possess shall represent the legally-enforced capacity to exercise the actual possession of assets. – The right to use shall represent the legally-enforced possibility to extract from the assets their useful natural properties and also to extract benefits out of it. A bene­fit may be in the form of income, gain, fruit and in other forms. – The right to dispose shall represent the legally-enforced capacity to determine the legal destiny of property. The owner shall have the right at his discretion to enter into with regard to the prop­erty which belongs to him, any actions including 66

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the alienation of the property into the freehold of any other persons, or to transfer to them, remaining the owner, his rights associated with ownership, use and disposal of the property, to pledge the prop­ erty and to encumber it by any other methods and dispose of it in any other way. The exercise by the owner of his powers must not violate the rights and legally pro­tected interests of other persons and the state. The violation of the rights and legiti­mate interests may be expressed, aside from any other forms, in the abuse by the owner of his monopoly or any other dominant position. The owner must adopt measures which prevent harm to the health of citizens and to the environment, which may be inflicted in the exercise of his rights. The right to own shall be of indefinite term. The right to own property may be termi­nated by compulsion only upon the bases provided for by this Code. The owner shall bear the burden of maintaining the property which belongs to him, unless it is otherwise stipulated by legislative acts or by an agreement, and he may not in a unilateral procedure transfer such a burden to a third person. If property is legally held by third parties, then the costs incurred by them for the maintenance of somebody else’s property, shall be subject to reimbursement by the owner, unless otherwise is stipulated in the agreement. Expenditures associated with the maintenance of the assets shall not be reim­bursed to the person who owns the item unfairly and illegally. The risk of an occasional destruction or an occasional damage to objects to be alien­ated shall be transferred to the acquirer simultaneously with the emergence of his right to own, unless it is otherwise stipulated in legislative acts or an agreement. Where the alienator guiltily delayed the transfer of objects or the acquirer guilt­ily delayed their acceptance, the risk of occasional destruction or occasional damage shall be borne by the party which caused the delay. 67

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2. Forms and types of the right to own According to the subjects of the right to own there are two mail forms of owner­ship: the right to state property and the right to private property. The state property shall be recognized in the form of the Republic’s property and communal property. The property of the Republic shall consist of the state treasury and the property allo­cated to state-owned Republic’s legal entities in accordance with legislative acts. Funds of the Republic’s budget, gold and currency reserves, and the diamond stock, the items of the state property which are enumerated in Article 193 of this Code, and other state property which is not attached to state-owned legal entities, shall form the State Treasury of the Republic of Kazakhstan. Communal property shall consist of the local treasury and assets which are en­trusted to the communal legal entities in accordance with legislative acts. The resources of the local budget and any other communal properties which are not attached to state-owned legal entities shall constitute the local treasury. The property which is in the state ownership may be entrusted to state legal enti­ties in accordance with the right to business authority or operational management. Special considerations in the legal regime of the state property which is under author­ity of certain state-owned institutions shall be defined by legislative acts. Private property shall be recognized as the property of citizens and of non-state-owned legal entities and their associations. Any property, except for certain types of property which in accordance with legisla­tive acts may not belong to citizens or legal entities, may be in private owner­ship. The quantity and the value of the assets which are in private ownership shall not be restricted. According to the amount of the owners the right of the private ownership is di­vided into two types: the right of personal (separate) property and the right of com­mon property. 68

§8. The right to own and other corporeal rights

The right of personal (separate) property is the right to own of one physical per­son. Property which is in the ownership of two or more persons shall belong to them un­der the right of common ownership. Assets may be in common ownership with the determination of the share of each of the owners in the right to own (shared ownership) or without determining such shares (joint property). Common ownership of any assets shall be shared-ownership, except for the cases where the law stipulates the formation of joint ownership of the property. Common ownership shall emerge when two or several persons receive the prop­erty which may not be divided without changing its designation (indivisible items), or may not be divided by virtue of law. Common ownership of indivisible assets shall emerge in the cases which are stipu­lated in legislative acts or an agreement. By agreement of the participants of common property, and in the case of failure to reach consensus, upon the decision of a court, shared ownership of the entities may be established with regard to the common property. Ownership of real estate may arise in the form of a condominium, whereby cer­tain parts of real estate are in individual (separate) ownership of citizens and (or) le­gal entities, and those parts of real estate which are not in separate ownership, shall belong to the owners of parts of real estate under the right of common shared owner­ship. The share of each owner in the common property shall be inseparable from his sepa­rate ownership of a part of real estate belonging to him. The size of a share of each owner in the common property, and the degree of partici­pation in costs of its maintenance, shall be related to the size of the parts of real estate which are in individual (separate) ownership, unless it is otherwise stipulated in legislative acts or an agreement. When the size of the shares of participants of shared property may not be estab­lished on the basis of legislative acts and is not established by an agreement of all its participants, the shares shall be deemed to be equal. 69

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An agreement of all the participants in a shared property may establish a proce­dure for determining or changing their shares in relation to the contribution of each one of them to the formation and the increase of the common property. A participant in shared property who carries out at his own expense, in compli­ance with the procedure established for the use of common property, its inseparable improvements, shall have the right to proportionate increase of his share in the right to the common property. The separable improvements of common property, unless it is otherwise stipu­lated in an agreement of the participants in common property, shall become the prop­erty of the one of the participants who made them. Disposal of the assets which are in shared property shall be carried out by with the agreement of all its participants. Each participant in the shared property shall have the right at his discretion to sell, transfer as a gift, bequeath, or mortgage his share. Managing and using the assets which are in shared ownership shall be carried out by agreement of all its participants, and where consent is not reached, it shall be established by the court. Each participant in shared ownership shall have the right to be granted, into his own­ership and use a part of the common property commensurate with his share, and where it is impossible, he shall have the right to claim from the other participants who own and use the property corresponding to his the share of payment of the appropri­ate amount or other compensation. The Pre-Emption Right When a share in the right of shared ownership is sold to a stranger, the other partici­pants in the shared ownership shall have a pre-emption right to purchase the share which is being sold, at the price at which it is being sold and on other equal condi­tions, except for the case of selling through a public auction. The seller of a share shall be obliged to notify in writing the other participants in shared ownership concerning his intention to sell his share to an outside party with an indication of the price and any other 70

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conditions on which he is selling it. If the other participants in shared ownership refuse to purchase or fail to acquire the share which is sold in the right to own immovable property during one month, and with regard to any other assets within 10 days from the date of the receipt of the notice, the seller shall have the right to sell his share to any other person. When a share is sold in violation of the pre-emption right, another participant in shared ownership shall have the right within three months to claim in the court a trans­fer to him of the rights and obligations of the buyer. The assignment of the pre-emption right to purchase a share shall not be al­lowed. The property which is in shared ownership may be divided between its partici­pants by an agreement between them. A participant in shared ownership shall have the right to claim the appropriation of his share out of common property. Where participants in shared ownership fail to reach an agreement on the meth­ods and conditions of dividing the common property or appropriation of the share of one of them, a participant in shared ownership shall have the right to claim the appropria­tion of his share out of the common property, in kind. When the appropriation of a share in kind is not allowed by legislative acts or it is impossible without unreasonable damage to the property which is in the common ownership, the owner who is appropriating shall have the right to be paid by the other participants in shared ownership for the value of his share. The disproportion of the property which is appropriated in kind to a participant in the shared ownership on the basis of this Article, to his share in the right of owner­ship shall be eliminated by payment of appropriate amount of money or by other compen­sation. The payment to a participant in shared property by the other owners of compensa­tion instead of appropriating his share in kind, shall be allowed upon his consent. In the cases where the share of certain owner is minor, and it may not be realisti­cally appropriated and he has not any substantial interest in the use of the com­mon assets, the court 71

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may in the case of the absence of consent of that owner, compel the other participants in shared ownership to pay him compensation. With the receipt of compensation, in accordance with paragraphs 3 and 4 of this Arti­cle, the owner shall lose the right to his share in the common property. Where the non-expedience of division of common property or the appropriation of a share out of it, the court shall have the right to adopt the decision to sell the prop­erty through a public auction with the subsequent distribution of the received amount between the participants in common property in proportion to their shares. Joint common property shall exist in the following forms: 1) the common property of spouses; 2) the common property of a peasant (farmer’s) farm; 3) the common property to privatised housing. Legislative acts may stipulate any other types of the joint common property. The joint common ownership shall be established and it shall exist, unless an agree­ment between its participants stipulates otherwise. The participants in joint ownership, unless it is otherwise stipulated in an agree­ment between themselves, shall collectively own and use common property. The disposal of the assets which are in the joint ownership shall be carried out with the consent of all the participants, which is presumed irrespective of which of the participants entered into the property disposal transaction. Each of participants in joint ownership shall have the right to enter into transac­tions disposing of the common property, unless it is otherwise ensues from the agree­ment of all the participants. A transaction which is entered into by one of the partici­pants in joint ownership, and which is connected with the disposal of the common prop­erty, may be recognized as invalid by the claim of the other participants on the motive that the participant who entered into the transaction did not have the requisite powers, only in a case where it is proved that the other party in the transaction knew or should beforehand have known of it. 72

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When entering into the transactions which require the notarization or state registra­tion, the consent of the other participants in joint ownership, to the commit­ment of the transaction must be confirmed in the notarial procedure. The division of common assets between participants in joint ownership, and also the appropriation of the share of one of them, may be carried out under the condition that there has been a prior definition of the share of each of the participants in the right to common property. When dividing common property or appropriating a share out of it, provided it is not stipulated otherwise in legislative acts or agreement of the participants, their shares shall be recognized as equal. Common Property of Spouses Property which is gained by spouses during their marriage shall be the common prop­erty, unless an agreement between themselves stipulates that those assets are shared property of the spouses, or it belongs to one or certain parts of it belong to ei­ther spouse in accordance with the right of ownership. The assets which belonged to spouses prior to entering the marriage, and also those received by them during the marriage, as a gift or in the procedure of inher­itance, shall be the property of either of them. The items of individual use (clothes, footwear etc.), except for jewellery and other items of luxury, although acquired during the marriage at the expense of com­mon funds of the spouses, shall be recognized as the property of that spouse who used them. Property of each of the spouses may be recognized as their joint property, provided it is established that during their marriage investments have been made at the expense of the common property of the spouses, which significantly increased the value of that property (capital repairs, refurbishment, re-equipment, etc.). The Ownership of a Peasant (Farmer) Holding The property of a peasant (farmer) holding shall belong to its members on the right of joint ownership, provided the agreement between them does not stipulate other­wise. 73

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In joint ownership of the members of a peasant (farmer) holding there shall be planta­tions on a land plot, business and any other structures, melioration and any other installations, productive and working cattle, poultry, agricultural and other machin­ery and equipment, transport vehicles, inventories and other assets which are purchased for the farm at the expense of common funds of its members. The fruit, production, and income received as a result of activities of the peasant (farmer) holding, shall be recognized as common property of the members of the peas­ant (farmer) holding and they shall be used by agreement between them. Common Ownership of Privatized Housing Housing which is purchased or acquired free of charge by the tenant in accord­ance with legislation concerning privatization in the buildings of the state housing stock, shall be transferred into the common ownership of the tenant and his family members who reside permanently with him, including minors and those temporarily absent, unless it is otherwise stipulated in an agreement between them. Special considerations with regard to the right of joint ownership of privatized hous­ing shall be determined by legislative acts concerning housing relations. 3. Bases for emergence of the right to own The bases for emergence of the right to own are divided into two types: primary and derivative. The right to own to the object shall arise by derivative bases when the former owner is known. The right to own the property which has an owner may be acquired by any other person on the basis of a purchase and sale agreement, exchange agree­ment, a gift agreement, or any other transaction to alienate that property. In the case of demise of a citizen, the right to own the assets which belong to him shall be trans­ferred by inheritance to other persons in accordance with the will or law. In the case of reorganizing a legal entity, the right to own the assets which belong to it shall be transferred to the legal entities which are legal successors of the reorganized legal en­tity. 74

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When the property which does not have an owner, or the property of which the owner is not known, or the property of which the owner refused it or lost the right to own it for other reasons, a person may acquire the right of ownership of the property by primary bases. The legislation of the Republic of Kazakhstan provides following bases of emer­gence of the right to own: – The Emergence of the Right to Own Newly-CreatedImmovable Assets. – Re-Processing. – Usucapio (acquisitive prescription, usucaption, prescription); – Conversion into Property of the Things Which areCommonly Available for Collection or Extraction. – Ownerless Objects. – Movable Objects Rejected by the Owner. – Finding. – Unattended Animals. – Treasure. The Emergence of the Right to Own Newly-CreatedImmovable Assets The right to own buildings under construction, installations or any other prop­erty complexes, and also any other newly-created immovable assets, shall arise from the moment of the completion of the creation of those assets. Prior to the completion of the creation of immovable assets, and in the appropri­ate cases prior to its state registration, the rules concerning the right of ownership of materials and other assets of which the immovable property is created shall be ap­plied to that property. Re-Processing (Article 237 of CC RK) Unless otherwise stipulated in the agreement, the right of ownership of a new mova­ble asset manufactured by a person by way of processing the materials which do not belong to him, shall be acquired by the owner of the materials. 75

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However, when the cost of processing substantially exceeds the cost of the materi­als, the right to own the new item shall be acquired by the person who, acting in good faith, carried out the processing for himself. Unless it is otherwise stipulated in the agreement, the owner of the materials who acquired the right of ownership of the item manufactured thereof, shall be obliged to compensate the cost of the processing to the person who carried it out, and in the case of the purchase of the right to own the new item by that person, the latter must accordingly compensate to the owner of the materials for their value. The owner of materials who lost them as a result of dishonest actions of the per­son who carried out the processing, shall have the right to claim the transfer of the new item into his ownership and the reimbursement of the losses inflicted upon him. Usucapio (Article 240 of CC RK) A citizen or a legal entity who is not the owner of certain property but who hon­estly, openly and continuously possess as his own the immovable assets for seven years, or any other assets for not less than five years, shall acquire the right to own those assets (usucapio, acquisition by prescription). There are following requirements of usucapio: – honest possession – open possession – continuous possession – proper period of possession A citizen or a legal entity which refer to the length of possession, may add to their possession all the time during which the item was possessed by the person whose legal successors they are. Conversion into Property of the Things Which areCommonly Available for Col­lection or Extraction (Article 241 of CC RK) In the event that, in accordance with legislation, local tradition, or general permis­sion given by the owner, in forests, bodies of water or in any other territories, it is allowed to collect berries, catch fish, 76

§8. The right to own and other corporeal rights

hunt animals, collect or extract any other items, the right to own the relevant items shall be acquired by the person who has col­lected or extracted them. Ownerless Objects (Article 242 of CC RK) Ownerless objects shall be recognized as items which have no owner, or whose owner is unknown, or the item the right to own which is rejected by the owner. Ownerless immovable items shall be registered for accounting by the body which carries out the state registration of immovable assets, in accordance with an application to the local executive body in whose territory they are identified. Upon expiry of a year from the date of registering an ownerless immovable item, the body which is authorized to manage communal property may petition to the court with the claim to recognize that item as the one received by the communal property. An owner­less immovable item which is not recognized by the court decision as received by the communal property may be again taken into possession, use and disposal by the owner who left it, or acquired into ownership through acquisition by prescription. Finding (Article 245 of CC RK) A person who found a lost item must immediately notify the person who lost it about its discovery, or the owner of the item, or anyone of the other persons known to him, who have the right to receive it, and return to him the found item. When an item is found on the premises or in transport, it shall be subject to submis­sion to the person who represents the owner of those premises or transport. In such case the owner shall acquire the rights and bear the responsibilities of the person who found the item. When a person who has the right to receive the found item or his location are un­known, the person who found the item shall be obliged to report on his finding to the militia or the local executive body. The person who found a thing shall have the right to keep it with himself or leave it for the safe custody to the militia, the local executive body or to a person indi­cated by them. A perishable item, or an 77

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item the cost of the custody of which is not commensurate with its value, may be sold by the person who found it with the re­ceipt of written evidence certifying the amount received. The money received from the sale of the found item shall be subject to safe custody or returned to the person who has the right to receive the item, or to transfer into the ownership of other per­sons in accordance with the procedure and on the conditions established for that item itself. The person who found an item shall be liable for its loss or destruction only in the case of his intention or gross neglect, and within the limits of the value of the item. When, upon expiry of six months from the moment of the report on finding to the militia or the local executive body, the person who has the right to receive the lost item is not identified and does not declare his right with respect to the item to the per­son who found it or to militia, or to the local executive body, the person who found the item shall acquire the right to own it. When the person who found an item refuses to acquire the found item into owner­ship, then it shall be transferred to communal ownership. The person who found and returned an item to the person who is authorized to re­ceive it, shall have the right to receive from that person, and in the case of the trans­fer of the item into the communal property, from the relevant local executive body, compensation for the unavoidable expenses, associated with the storage, submission, sale of the item, and the costs of identifying the person authorized to receive it. A person who found an item shall have the right to receive an award from the per­son authorized to receive it, in an amount of thirty per cent of the value of the item. When the found item represents a value only for the person who is authorized to receive it, then the amount of the award shall be determined in accordance with an appraisal carried out by the parties. The right to an award shall not arise if the person who found the item does not exe­cute his obligation to report on the finding, or where he committed other actions in order to conceal the finding. 78

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Unattended Animals (Article 246 of CC RK) A person who detained unattended or stray cattle and other domestic or tame ani­mals shall be obliged to return them to the owner, and if he or his location are un­known, not later than within three days from the moment of such detention, to report on the found animals to the militia or the local executive body which shall adopt measures to find the owner. During the period of the search for the animals’ owner, they may be left by the per­son who detained the animals for his maintenance and use, or turned in by him to another person who has sufficient facilities for their maintenance and use. Upon the request of the person who detained the animals, the local executive body shall find a person who has the required conditions for their maintenance and use, and convey to him the animals. The person who detained animals and the person to whom they are transferred for maintenance and use shall be responsible for the death and damage to the animals only if their guilt exists, and only for the value of those animals. If within six months from the moment of a report on the detention of working and large cattle, and two months for any other domestic animals, their owner is not identified and does not declare his right to them, the right to own those animals shall be transferred to the person with whom they stayed for their maintenance and use. In the case of refusal of that person to accept the ownership of the animals maintained by him, they shall become communal property and shall be used in accordance with the procedure determined by the relevant local executive body. In the case of return of the animals to the owner, the person who detained the ani­mals and the person with whom they stayed for maintenance and use shall have the right to receive from that owner compensation for the expenses associated with the maintenance of the animals, with reckoning the benefits derived from their use. In the event that the former owner of the animals arrives after their transfer into the ownership of any other person, the owner shall have the right, in a case where circum­stances are present which indicate 79

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attachment of the animals to the original owner, or cruel or other improper treatment of them by the new owner, to require their return to him on the conditions to be established by an agreement with the new owner, and if they fail to agree, through the court. Treasure (Article 247 of CC RK) A treasure, which is money or any other valuables hidden in the earth or con­cealed by any other method, the owner of which may not be identified or, by virtue of legislation lost the right to it, shall become the property, in equal shares, of the owner of the land plot or the owner of the immovable asset in which the treasure was hidden and of the person who found the treasure, unless the agreement between them estab­lishes otherwise. In a case of the finding of a treasure by a person who conducts excavations or re­search for valuables without the approval of the user of the land plot or the owner of the immovable property where the treasure was hidden, the treasure-trove shall be subject to transfer to that owner. In the case of finding a treasure which contains items which are memorials of histori­cal or cultural value, they shall be subject to transfer to the ownership of the Republic of Kazakhstan. In that instance, the user of the land plot or the owner of the immovable property in which such treasure has been found, and the person who found the treasure, shall have the right to receive a reward in the amount of fifty per cent of the value of that treasure. 4. Bases for termination of the right to own Bases for termination of the right to own are divided for two groups: volun­tary and forced. According to the Article 249 of the Civil Code of the Republic of Kazakh­stan the right of ownership shall cease after the alienation by the owner of his prop­erty to other persons, the refusal by the owner of the right to own, the death or destruc­tion of property, and the loosing of the right to own the property in any other cases stipulated in legislative acts. These bases for termination are referred to the group of voluntary grounds. 80

§8. The right to own and other corporeal rights

Forced bases for termination provided by legislation are: 1) imposition of a claim upon the assets based on the liability of the owner; 2) compulsory alienation of assets which by virtue of legislative acts may not be­long to that person; 3) requisition; 4) confiscation; 5) alienation of immovable assets in connection with the reservation of a land plot; 6) purchase of ownerless cultural or historic valuables; 7) in any other cases. As separate bases for termination legislator considers the refusal of the right to own. A citizen or a legal entity may waive the right of ownership of the property which belong to them, by announcing this, or by committing other actions which defi­nitely prove their rejection of the ownership, use and disposal of the assets, with­out intention to retain any other rights in respect to those assets. The refusal of the right to own shall not entail the cessation of the rights and obligations of the owner in respect to the relevant property prior to acquisition of the right to own that property by any other person. Imposition of a Claim on the Assets of an Owner (Article 251 of CC RK) The imposition of a claim upon assets based on the liability of the owner shall be carried out in a judicial procedure, unless it is otherwise stipulated in the agree­ment. The owner’s right to own the assets upon which a claim was imposed shall cease from the moment of the emergence of the right to own the confiscated assets by the person to whom the right to own transfers in accordance with the procedure stipu­lated in the legislation. Cessation of the Right to Own of a Person to Who byVirtue of Legislative Acts the Assets May Not Belong (Article 252 of CC RK) If due to reasons allowed by legislative acts a person came into ownerships of the items which may not belong to him by virtue of 81

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legislative acts, that property must be alienated by the owner within one year from the moment of the acquisition of the right of ownership of that property, unless other period is specified in legislative acts. In a case where the assets are not alienated by the owner within the indicated deadlines, they, in accordance with the decision of the court, shall be subject to compul­sory alienation with compensation to the owner for the value of the assets, less the expenditures associated with their alienation. When a citizen or a legal entity owns an item for the acquisition of which spe­cial permission is required, on the bases allowed by the legislative acts, and its issue to the owner is denied, that item shall be subject to alienation in accordance with the procedure which is established for the property which may not belong to that owner. Requisition (Article 253 of CC RK) In cases of natural calamities, accidents, epizootic epidemics, and under any other circumstances which have an extraordinary nature, property may be requisi­tioned in the interests of the society upon the resolution of the state bodies from an owner in accordance with the procedure and on the conditions established by legisla­tive acts, with the payment to him of the value of the property (requisition). The evaluation on the basis of which the owner is reimbursed for the value of the requisitioned property may be challenged by him in a judicial procedure. A person whose assets are requisitioned shall have the right to claim through the court the return to him of the remaining assets, after the cessation of the effect of the circumstances in relation to which the requisition took place. Confiscation (Article 254 of CC RK) In the cases stipulated in legislative acts, property may be confiscated without com­pensation from an owner in a judicial procedure in the form of a sanction for the commitment of a crime or any other violation of law (confiscation). 82

§8. The right to own and other corporeal rights

Cessation of the Right to Own Immovable Property inRelation to the Reserva­tion of Land and Other Natural Resources (Article 255 of CC RK) The termination of the right to own immovable property due to a decision by a state body which is not directly aimed at the confiscation of property from the owner, including by the decision to reserve the land plot upon which a house or any struc­tures, installations or plantations which belong to the owner are located, shall be al­lowed only in cases in accordance with the procedure established by the legislative acts, with the granting to the owner of equally valuable assets and the reimbursement of any other losses incurred, or refunding to him in full volume the losses inflicted by the termination of the right to own. In the case of a disagreement by the owner with a decision which entails the termina­tion of his right of ownership, it may not be effected prior to the settlement of the dispute in a judicial procedure. When a dispute is considered, all the issues associ­ated with the reimbursement of the owner for the inflicted losses shall be also settled. Purchase of Ownerless Cultural and Historic Assets (Article 256 of CC RK) In the cases when an owner of cultural and historic valuables, which in accord­ance with legislation are recognized as especially valuable and protected by the State, carelessly keeps those valuables, and this threatens the loss by them of their signifi­cance, such valuables upon the decision of the court may be confiscated from the owner by the State by way of purchase or sale through a public auction. When cultural valuables are purchased, the owner shall be compensated for their value in an amount established by agreement of the parties, and in the case of a dis­pute, by the court. In selling through an auction, the amount received from the sale shall be transferred to the owner, less the expenditure on the conduct of the auction. 5. Protection of the Right to Own Civil legislation of the Republic of Kazakhstan provides following means to pro­tect the violated right to own: 83

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1) Recognition of the Right to Own – an owner shall have the right to claim recog­nition of his right to own. 2) Replevin or owner’s claim to return property from somebody else’sillegal pos­session – an owner shall have the right to seek the return of his property from some­body else’s illegal possession. 3) Negatory suit or protection of the right of the owner from theviolations which are not related to the deprivation of ownership – an owner may claim the removal of any violation of his right, even though those violations are not related to deprivation of ownership. Questions for self-control: 1. What is conception of the right to own? 2. What are the forms and types of the right to own? 3. What are the bases for emergence of the right to own? 4. What are the bases for termination of the right to own? 5. What are the means ofprotection of the right to own?

84

§9 LAW OF OBLIGATIONS

Questions: 1. Types of obligations 2. Execution of obligations 3. Securing the execution of obligations 4. Termination of obligations 5. General provisions for contractual obligations

Among different classifications of civil legal relations there is a classification of them to proprietary and obligatory. The foundation of emergence of obligatory rela­tions is obligation. According to the Article 268 of the Civil code of the Republic of Kazakhstan «If due to an obligation one person (the debtor) shall be obliged to com­mit for the benefit another person (the creditor) certain actions, e.g. to transfer prop­erty, perform work, pay money etc., or abstain from certain actions, then the creditor shall have the right to claim from the debtor the execution of his obligation. The credi­tor shall be obliged to accept the execution from the debtor». This definition proves that obligatory relations are relative. In obligations one party, an obliged per­son (deb-tor) has to commit an action for the benefit of another person (creditor) or abstain from action. Participants in an obligation shall be the parties (debtor and creditor) and third per­sons. The persons who are bound by obligations or other legal relations with one of the parties of an obligation shall act as third parties. An obligation shall not create duties for third parties. In the cases stipulated by the legislation or agreement of the parties, an obligation may give rise to the rights of third parties in respect of one or both parties to the obligation. 85

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1. Types of obligations According to the Bases for the Emergence of Obligations, obligations shall emerge from an agreement, infliction of damage or on any other bases. Monetary obligations in the territory of the Republic of Kazakhstan must be ex­pressed in the Tenge. Obligation may have several creditors or several debtors (obligation with a num­ber of persons). Number of persons may be active majority (with several debtors), passive majority (with several creditors) and mixed majority (with several creditors and several debtors). There are three types of obligations according to number of persons: shared, joint and subsidiary. – When several creditors or several debtors participate in an obligation (obliga­tion with a number of persons), then either of the creditors shall have the right to claim the execution of the obligation, and each of the debtors shall be obliged to exe­cute the obligation in a share equal to others, unless it otherwise ensues from legisla­tion or the conditions of the obligation (shared obligation). – An obligation with a number of persons, by virtue of which each creditor has the right to claim, and each debtor is obliged to execute the obligation in full, shall be recognized as a joint obligation. In the case of joint obligation of debtors, the credi­tor shall have the right to claim the execution both from all the debtors and from any one of them separately, and in this respect for full repayment and for part of the debt. – The legislative acts or conditions of an obligation between the creditor and the debtor may specify that, in the case of a failure by the principal debtor to satisfy the claim of the creditor to execute the obligation, that claim may be made to the other debtor (a subsidiary debtor) such part of it as is not executed. Regress Claims A debtor who executed an obligation of another person shall have the right of re­turn claim (regress) to that person in the amount of obligation executed. 86

§9. Law of obligations

A debtor who executed a joint obligation shall have the right to a return claim against each of the other debtors in equal shares less the share which is his own share. 2. Execution of obligations According to the Article 272 of the Civil code of the Republic of Kazakhstan «Obli­gations must be fulfilled in a proper manner, in accordance with the conditions of the obligation and requirements of legislation, and if such conditions and require­ments do not exist, then in accordance with the traditions of business practice or any other requirements which are usually applicable». Execution of the obligation as one of the main stages of obligations should be proper. Proper execution is considered in six aspects: – proper creditors: any right (claim) which belongs to the creditor on the basis of an obligation may be transferred by him to another person in a transaction (assign­ment of the claim) or transferred to any other person on the basis of a legislative act. For the conveyance to any other person of the rights of a creditor, the consent of the debtor shall not be required, unless it is otherwise stipulated in legislative acts or the agreement. If a debtor is not notified in writing of the conveyance of the creditor’s rights to an­other person, which took place, the new creditor shall bear the risk of negative conse­quences for him caused by that. In that case, the execution of the obligation to the initial creditor shall be recognized as the execution to the proper creditor. Transfer of the rights to another person, which are inseparably associated with the person of a creditor, in particular, the claims of alimony and of compensation of damage caused to life or health, shall not be permitted. The rules for the conveyance of creditors’ rights to any other persons shall not apply to regress claims. – proper debtors: debt may be transferred to another person. The transfer by a debtor of his debt to another person shall be allowed only with the consent of the credi­tor. A new debtor shall have the right to make objections against the claims of the creditor, which are based on the relations between the creditor and the initial debtor. 87

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– proper object – proper terms: execution or a period of time during which it must be executed, the obligation shall be subject to execution on that date or appropriately at any mo­ment within that period. In the cases where an obligation does not stipulate the date for its execution and does not contain any conditions which allow the identification of that date, it must be executed within a reasonable period after the emergence of the obligation. An obligation which is not executed within a reasonable term, and equally an obligation the term for the execution of which is identified as the moment of the claim, must be executed by the debtor within seven days from the date of the presenta­tion by the creditor of the claim for its execution, unless the duty to execute by any other date ensues from legislation, the conditions of the obligation, traditions of business practice or the essence of the obligation. – proper place: if the place of the execution is not determined by legislation or the conditions of the obligation, and it does not clearly ensue from the essence of the obligation or traditions of business practice, the execution must be carried out as fol­lows: 1) an obligation to transfer immovable property, – in the place where the prop­erty is situated; 2) an obligation to transfer goods or other property with the use of transport, – in the place of transfer of the goods to the first carrier for delivery to the creditor; 3) other obligations of an entrepreneur to transfer goods or other assets, – in the place of the manufacture or storage of the property, provided that place is known to the creditor at the moment of the emergence of the obligation; 4) a monetary obligation – in the place of residence of the creditor at the mo­ment of the emergence of the obligation, and if the creditor is a legal entity, – in the place where it is situated at the moment of the emergence of the obligation; if the credi­tor by the time of the execution of the obligation changed his place of residence or the place of its location and notified the debtor of it, – at the new place of resi­dence or location of the creditor, with the charging of all the costs associated with the change of the place of the execution to his account; 88

§9. Law of obligations

5) with regard to any other obligations, – in the place of residence of the debtor, and if the debtor is a legal entity at the place of its location. – proper means: creditor shall have the right not to accept the execution of an obliga­tion by part, unless it is otherwise provided for by the conditions of the obliga­tion, the legislation, or ensues from the traditions of business practice or the essence of the obligation. 3. Securing the execution of obligations. The execution of an obligation may be secured with forfeit, pledge, suretyship, guar­antee, advance payments, and other methods provided for by legislation or the agreement. – Forfeit shall be recognized as a monetary amount defined by legislation or agree­ment, which must be paid by a debtor to the creditor in the case of failure to exe­cute, or improper execution of an obligation, in particular, in the case of a delay in execution. The agreement on forfeit must be committed in written form. The amount of forfeit shall be determined in a fixed monetary amount (fine) or in a percentage of the amount in default or the amount of the improperly executed obliga­tion (penalty). A creditor shall have the right to claim the payment of forfeit as determined by leg­islation (legal forfeit), irrespective of whether the obligation for its payment is stipu­lated in the agreement of the parties (contractual forfeit). – Pledge shall be recognized as a method of securing the execution of an obliga­tion, by which a creditor (pledge holder) has the right, in the case of failure by the debtor to execute the obligation secured with the pledge, to receive satisfaction from the value of the pledged property, in a priority procedure before the other creditors of the person to whom that property belongs (pledger), with the exceptions established by this Code. Pledge shall arise by virtue of an agreement. Pledge shall arise also on the basis of legislative. Any property including objects and property rights (claims), except for the ob­jects which are excluded from circulation, claims which 89

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are inseparably associated with the person of the creditor, in particular the claims of alimony, compensation for harm caused to life or health, and other rights the assignment of which to any other person is prohibited by legislative acts, may be pledged. Types of Pledge – Mortgage is a type of pledge under which the pledged property remains in the pos­session and use of the pledger or a third person. Enterprises, structures, buildings, installations, apartments in blocks of apart­ments, transport vehicles, cosmic items, goods in circulation and other property which is not excluded from the civil circulation, may be subject to mortgage. – Pawning shall be the type of pledge whereby the pledged property is trans­ferred by the pledger into the possession of the pledge holder. With the consent of the pledge holder the pledged items may be left with the pledger under lock and seal of the pledge holder. The pledged item may be left in the possession of the pledger with the application of the signs which witness the pledge (secure pledge). – Guarantee and Suretyship By virtue of a guarantee the guarantor shall become liable to the creditor of an­other person (debtor) severally in full or in part for the execution of obligations of that person, except for the cases provided for by legislative acts. Persons who jointly issued a guarantee shall be liable to the creditor severally, un­less it is otherwise stipulated in the guarantee agreement. By virtue of a suretyship, the surety assumes the obligation before the creditor of any other person (debtor) to be liable severally for the execution of that person’s obligation in full or in part. A guarantee and a suretyship shall arise on the basis of suretyship or guarantee agreements. Guarantee or suretyship agreements must be made in written form. – A sum of money which is issued by one of the parties to an agreement, at the ex­pense of the payments, which are due by it in accor90

§9. Law of obligations

dance with the agreement, to the other party and in order to secure the conclusion and the execution of the agree­ment, shall be recognized as an advance payment. In terminating an obligation prior to the beginning of its execution, by agree­ment of the parties, or as a consequence of impossibility to execute it, which emerged without their guilt, the advance payment must be returned. When the failure to execute an obligation is the responsibility of a party which is­sued the advance payment, it shall remain with the other party, and if the party which received the advance payment is the guilty party, it shall be obliged to pay to the other party a double amount of the advance payment. Moreover, the party which is responsible for the failure to execute the obligation shall be obliged to compensate to the other party the losses, taking into account the amount of the advance payment, unless it is otherwise stipulated in the agreement. 4. Termination of obligations Obligations shall terminate entirely or in part by the execution, granting of smart money, offset, novation, or forgiving of debt, coincidence of the debtor and the creditor in one person, impossibility to execute, the issue of an act by a state body, demise of the citizen, and liquidation of the legal entity. – Cessation of an Obligation by the Execution Execution which is completed properly shall terminate the obligation. – Smart Money By agreement of the parties, an obligation may be terminated by offering instead of the execution of smart money (payment of money, transfer of assets etc.). The amount, the deadlines and the procedure for presenting the smart money shall be estab­lished by the parties. – Offset An obligation shall be terminated fully or partially by offsetting a similar claim, the deadline for which has arrived, or the deadline 91

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wherefor is not specified or is de­fined as time of the claim. An application of one party shall be sufficient for an off­set. Offset of claims shall not be allowed in the following cases: 1) when pursuant to the application of one party, a claim is subject to statute of limi­tations, and the term of the statute has expired; 2) claims associated with compensation for harm caused to life or health; 3) claims associated with exacting alimony; 4) claims of life-long support; 5) in other cases provided for by legislation or agreement. – Coincidence of the Debtor and Creditor in One Person An obligation shall be terminated by the coincidence of the debtor and creditor in one person. – Novation An obligation shall be terminated by agreement of the parties to replace the ini­tial obligation which existed between them, by any other obligation between the same persons, which provides for another item or method of execution (novation). Novation shall not be allowed with regard to the obligations to compensate dam­age caused to life or health, and to pay alimony. – Forgiving Debt An obligation shall be terminated by the exemption of the debtor by his creditor from the obligations which rest with him, unless this violates the rights of any other persons with regard to the property of the creditor. – Impossibility to Execute An obligation shall be terminated by impossibility to execute it, provided it is caused by a circumstance for which the debtor is not responsible. This rule shall not apply to monetary obligations. – Termination of an Obligation on the Basis of the Act of a State Body 92

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When as a result of the issue of an act by state bodies, including local representa­tive and executive bodies (a public act), the execution of an obligation be­comes entirely or partially impossible, the obligation shall cease fully or in the relevant part. – Demise of the Citizen An obligation shall terminate with demise of the citizen, unless the execution may be carried out without the personal participation of the debtor, or the obligation in any other manner is inseparably connected to the person of the debtor. An obliga­tion shall cease with demise of the creditor, where the execution is intended person­ally for the creditor or the obligation is in any other way inseparably associated with the person of the creditor. – Liquidation of the Legal Entity An obligation shall be terminated by liquidation of the legal entity (debtor or credi­tor), except for the cases where legislation delegates the execution of the obliga­tion of the liquidated legal entity to any other legal entity (in the obligations which arise as a result of causing harm to life and health etc.). 5. General provisions for contractual obligations An arrangement of two or several persons concerning the establishment, amend­ment or cessation of civil rights and duties shall be recognized as agreement. An agreement shall be deemed to be concluded when consensus is reached be­tween the parties in accordance with the required form, on all the material terms of it. The provisions concerning the subject-matter of the agreement, the provisions which are recognized by legislation as material or which are necessary for the agree­ments of that type, and also all the provisions on which according to the application of either party, consensus must be reached, shall be recognized as material terms. A proposal to conclude an agreement, which is made to one or several specific per­sons, provided it is sufficiently definite and expresses 93

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the intent of the person who made the proposal to deem himself bound in case of its adoption (acceptance), shall be recognized as offer. A proposal shall be deemed to be sufficiently definite, if it con­tains the material terms of the agreement and the procedure for their determina­ tion. An offer shall bind the person who sends it from the moment of its receipt by the ad­dressee. Advertisements and other proposals which are addressed to an indefinite circle of persons shall be considered as an invitation to make an offer, unless it is otherwise stipulated in the proposal. A proposal which contains all the substantial terms of the agreement, from which the will of the person who is making the proposal is understandable, to con­clude the agreement on the terms specified in the proposal with anyone who re­sponds, shall be recognized as an offer (public offer). The response of a person to whom the offer is addressed, about accepting it shall be recognized as acceptance. Acceptance must be entire and unconditional. Silence shall not be recognized as acceptance, unless it otherwise ensues from the legislative act, tradition of business practice or previous business relations of the parties. Questions for self-control: 1. What is the definition and types of obligations? 2. What is proper execution of obligations? 3. What are the means of securing the execution of obligations? 4. What are the foundations of termination of obligations? 5. What is the definition and types of contracts? 6. What are the offer and acceptance?

94

§10 CONTRACT LAW. GENERAL PROVISIONS

Questions. 1. The definition of the contract. 2. Conditions of the contract. 3. Offer and acceptance.

1. The definition of the contract The general theory of the contract allows us to consider the contract as a univer­sal structure for the organization of public relations, applied by various branches of law. The number of branches of law that recognize and actively use the institute of communications and contract liability are the labor law, constitutional law, environmen­tal law, administrative law, international law, and many other areas. The degree of binding legal regulation and legal status of subjects in relation to each other in the emerging of different legal relations. The Civil Code of the Republic of Kazakhstan stipulates that the concept of a con­tract is based on the concept of transaction. Thus, according to Article 147 of the Civil Code of RK transactions are actions of citizens and legal persons, aimed at the establishment, modification or termination of civil rights and responsibilities. Article 148 of the Civil Code of Kazakhstan states: «Transactions can be one-sided and two – or multilateral (contracts) ». In accordance with Section 3 of the same article of the Civil Code of Kazakhstan to carry out the contract must be a coherent expression of the will of the two parties (bilateral transaction), or three or more parties (multilateral transaction). Using the provisions of civil law, it is possible to form a notion of the contract. Thus, the contract is a bilateral or multilateral transac95

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tion, which is necessary for the fulfillment of the agreed expression of will of two or three or more sides. Civil-law contract dispositive in its nature. Dispositive character means that such an agreement – always, without exception, based on the equality of the parties. It should be noted that the equality of the parties expressed in the definition of terms of the contract, as well as the ability to enter into contractual relations, and the possibil­ity to get out of them, in general, the possibility of disposal of its rights at its sole discretion, equal for each of the parties. During the action of a civil contract, equal status is kept, and the provisions of the agreement, which in any way deprived of one of the parties the right of action on their own, are invalid. Coordination of the will of the parties – one of the hallmarks of a civil contract, de­scribing the process of achieving a common goal, for which the contract is con­cluded. Thus, the approval or concurrence of wills and retains its value for a contract in which two parties, such as buying and selling, where one person seeks to sell and buy another one and the same thing, and for a multilateral treaty. This feature allows you to distinguish a contract as a bilateral or multilateral deal by unilateral transactions, where there is no such harmonization, as expressed by the will of only one person, which generates rights and obligations for both sides. The result of matching or coincidence will of the parties become parties’ agreement. So It would be right to merge the two so closely related to the characteristic features of a civil contract in another sign. An important feature of the contract, which distinguishes it from a number of le­gal constructions, is that the agreement is not a law, but it regulates the behavior of parties to the treaty by setting them to rights and obligations, as well as the legal conse­quences in case of violation of its provisions. The essence of the contract and the law is one – it is an act aimed at regulating so­cial relations. Matches and techniques to achieve the set goals, if we consider the purpose of the contract and the law in the broad sense, namely to focus on the regula­tion of civil relations. As in another case, means, methods, to achieve the main objec­tives are 96

§10. Contract law. General provisions

the establishment of rights and obligations, the legal consequences of non-compliance with the rules. The concept of civil contract – threefold. The agreement is both a legal fact and the legal relationship between the parties and the legal form in which this kind of relation­ship is clothed. And that contract, acting as a legal fact, has as its content the conditions on which an agreement is reached between the contracting parties. The contractual terms are a way of fixing the mutual rights and obligations. For this reason, when we speak about the content of the agreement in his capacity as the legal relationship, keep in mind the rights and obligations of the contracting parties. In contrast, the content of the agreement, the transaction amount to the contractual terms. Their fixation role allowed for a certain time widely used in law and literature as a synonym for the terms of its contract clauses. 2. Conditions of the contract Contractual stipulations made combined into certain groups. Depending on how im­portant the conditions for the recognition of a valid contract, a legal value they have to determine its content and nature, in jurisprudence there are three kinds of condi­tions a civil contract: 1) essential conditions; 2) usual conditions; 3) random conditions. These three groups of conditions – essential, usual and random – were the most wide­spread. Of these, the legislator uses and thus reveals the meaning of the above is only the first, that is essential, conditions. Those conditions which, on the one hand, the need, on the other hand, and suffi­cient for a contract of a certain type, called essential. They form the basis of the con­tract, without which its validity is subject to serious doubt. The two-way nature of the material terms of a civil contract is expressed as follows: if not agreed upon at least one of the essential terms of the contract, such a contract can not be considered con­cluded; at the same time, if the parties have agreed on all the essential terms of the contract, no longer any need to harmonize any 97

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other conditions, and in their absence, the contract may be considered concluded. From a practical point of view, for the contrac­tors, this means that every essential condition of the contract requires careful thought, negotiation and mandatory inclusion in the text. The sign, which brings together the essential terms of the same group, does not cause much controversy. We are talking about the conditions that form the contract as a whole and their individual types (species) in particular. Based on this essential, admit­tedly, conditions are necessary and sufficient to ensure that a contract is con­cluded, and thus to create rights and obligations from its sides. The legislator establishes a list of issues that are attributable to the significant. Firstly, it is the condition of the subject matter of the contract, that is what the contrac­tors agree. Without matching the subject of the contract can not be concluded any agreement. For this reason, the condition of the subject of the contract is an essen­tial prerequisite. The essential conditions are those that are recognized as such by law, as ex­pressly stated in the law that the conditions required to harmonize the data for this type of contract. The civil legislation of Kazakhstan is based on the principle of freedom of con­tract, so the essential conditions of a little: only for certain types of contracts in the law lists the conditions that are related to significant, but nevertheless, there is often a situation where the law expressly establishes them. In particular, the Civil Code states that the conditions of purchase and sale of commodity contract are considered to be agreed if the contract allows you to specify the name and quantity of the goods. But usually, the law does not list the conditions that are essential conditions for this type of contract. In this case, when the law does not specify which conditions are significant, substantial recognize such conditions as are necessary for this type of con­ tract, that is, express the nature of the treaty such conditions without which a con­tract of this type, in principle, can not exist. For example, examining the nature of the insurance contract, always conclude that the insured event refers to the essential terms. Without listing the circumstances that relate to the insured event, it is 98

§10. Contract law. General provisions

impossi­ble to imagine the conditions of the insurance contract. It is insured against these cases, therefore, without transferring these cases, the insurance contract is not consid­ered to be concluded. Significant also include any conditions for which at the request of one party to be agreed. If at least one of the parties require any matching conditions, they become funda­mental and essential conditions. Usual conditions – those conditions, which are provided by legal acts, laws, regula­tions. They do not need to agree on and included in the contract content automati­cally at the conclusion of this type of contract. Most civil law dispositive norms list the usual terms. These are the most common terms that are «automati­cally» refer to the negotiation and naming of a particular contract. For many centu­ries, the participants of civil turnover, as a rule, have concluded an agreement on such terms. This condition, traditionally concordial counterparties, and the law gave them as the usual conditions of the contract. Parties may change these usual conditions. But if they did not say anything about this condition, so they agreed to the condition, which is enshrined in the law, with the usual condition. Regarding the accidental conditions, such provision is included in the content of the agreement at the sole discretion of the parties. These random conditions or supple­ment conventional conditions, that is, to impose such conditions, which are not stipulated in the law, or modify these conventional conditions which are fixed by law. If the condition is not accidental in the text of the agreement, it does not affect the valid­ity of the contract. Agreement without it is considered concluded. And thus acci­dental condition differs significantly from where, if agreed by at least one of the essen­tial conditions, the contract is not considered to be concluded. And if not agreed for some accidental condition, without a contract can be deemed concluded. Thus, a random condition differs from the essential. Accidental condition acquires legal force and becomes binding on the parties only when you turn the random conditions in the content of the contract, i.e. the text of the treaty, and thus accidental condition is different from the normal conditions, which is not necessarily included in the text of the treaty, it is so acts as enshrined in law. Thus, 99

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a random stipulation that it acts, it is necessary to include in the content of the contract. If any provision is required to agree on one of the sides, let the most random, it im­mediately becomes a significant value and assumes the character of essential condi­tions. But this raises the question: What, then, an essential condition is different from the random conditions? After all, if the random condition is required by at least one of the parties, it becomes essential. What is the difference? But they differ on the legal value of the legal significance are different and this difference is as follows. The lack of random conditions only in the event entails the recognition of the contract not concluded, if the interested party to prove that it is required to agree on a random condi­tion, but on the terms of the agreement has not been reached. If the party con­ cerned does not prove that a contract is concluded, and without this accidental condi­tions. And if not coordinated at least one of the essential conditions, there is nothing to prove to anybody it is not necessary, the agreement is considered not concluded. In contrast to the «essential» conditions for the allocation of «ordinary» and «ran­dom» is carried out only in the literature. Exceptionally doctrinal character of the latter division was one of the reasons for the lack of unity in the idea, what are the signs of normal classification and therefore random conditions and what kind of conse­quences follow from this. 3. Offer and acceptance The contract shall be considered concluded only in the event of agreement be­tween the parties on all essential terms of the contract, which means that a successful conclusion of the contract required to fulfill at least two conditions: made an offer to conclude a contract, and the other side in turn to one of the parties, she said yes on the proposal. These conditions correspond to the steps of writing a contract: 1. Offer. 2. Acceptance. The process of concluding contracts is predetermined by nature itself: if the con­tract is the meaning of the agreement, by the same 100

§10. Contract law. General provisions

token its conclusion involves expres­sion of the will of each party and its coincidence. In accordance with Article 395 of the Civil Code of the Republic of Kazakhstan of­fer must have a set of specific symptoms. Firstly, it must be sufficiently specific and express a clear intention of the person to conclude a contract. Secondly, the necessary completeness, i.e., contain all the essential terms of the con­tract. Third, it should be addressed to one or more specific persons. When an offer is made to an indefinite number of persons (for example, a citizen shall publish in the «Caravan» to advertise the sale of the piano or the stereo), it does not offer, but merely an invitation to make an offer (the call to the offer). Therefore, this proposal does not give rise to the person who gave the announcement to contract. Offer in this case will offer the citizens who responded to the ad. From then the Seller is depend­ent, to accept or reject a particular invitation. The conclusion of contracts is no obligation to any particular side, the offer may send any of them. Article 395 of the Civil Code introduces a concept such as «connectivity offe­ror». This means that the contract yet, but a certain obligation has arisen. There is a moment that the offer reaches the addressee and the time of acceptance or expiration of the period for acceptance. From the concept of «connectivity offeror» follows the concept of «irrevocable of­fer». Before expiry of the period during which the provider is connected an offer he can not withdraw the offer and change its conditions. Violation of this rule may give rise to the obligation to compensate the losses incurred by the other party in connec­tion with the withdrawal of the offer. At the same time, the position of the «irrevocable offer» is dispositive. It may be re­voked if such possibility is stipulated in the offer itself or follows from the nature of the proposal or the environment in which it was made. In paragraphs 4 and 5 of Article 395 of the Civil Code makes a distinction be­tween advertising and public offer. Advertising and other proposals addressed to an indefinite number of persons consid­ered as an invitation to make offers, spruce otherwise 101

Civil law of the Republic of Kazakhstan

expressly stated in the offer [Advertising and other proposals addressed to an indefinite number of persons considered as an invitation to make offers, spruce otherwise expressly stated in the offer [1, P. 4, art. 395]. Contain all the essential terms of the contract offer, which the will of the person making the offer to conclude an agreement on the conditions mentioned in the proposal with anyone who responds, recognized as an offer (public offer) [1, P. 4-5, art. 395]. In the literature attempts to distinguish between «an indefinite number of persons» (paragraph 4 of Article 395 of the Civil Code) and «anyone who will respond» («anyone and everyone») are made. In fact, it is difficult to hold the difference between indefinite number of persons, and anyone and everyone. Offer to an indefinite number of persons is considered as advertising (calling on the offer), unless otherwise expressly stated in the offer. Under the other is meant a direct reference in the proposal, it is an offer. This also falls into the cases provided for in paragraph 5 of Article 395 of the Civil Code. Public offer – it›s the same offer to the public. However, the proposal for the recognition of a public offer, you must have certain characteristics: 1) thereof is to discern the will of the person to enter into a contractual relationship; 2) it must contain all the essential terms of the contract; 3) the will of the person to enter into contractual relations relating to anyone who will respond to this proposal. The public offer is made by such persons or organizations that are engaged in the business are obliged to make an offer to the widest possible range of people. For example, a shop, set in the window or in the self-service product with the price, it is considered by the offeror. Any citizen who has addressed with the offer to buy this product, is the acceptor. Therefore, as long as the item is available, the store is linked its offer and has no right to refuse the sale of goods. In the absence of the goods on the counter of the seller is obligated to sell the last copies to display cases. 102

§10. Contract law. General provisions

Thus, if a store advertises the availability of certain goods, – a call to offer; but if he puts the goods on the shop window, – a public offer. The offer refers to the proposal made by one or more specific persons. The question arises, what are the limits of a few specific individuals? The question is not only of theoretical interest, but also has practical value. In fact, there is not much value is the number of people, how much their certainty. So, a good example is the announcement of the issue and sale of bonds filed by the Company. Holders of bonds may be millions, but the offer can hardly be called public, because the circle of persons makes very specific persons – owners of bonds. Acceptance recognizes the answer the person to whom the offer is addressed, (paragraph 1 of Article 396 of the Civil Code). Acceptance is only recognized by the answer of acceptance of the offer, in which the acceptor expresses the full and unconditional acceptance of the offer. For example, the acceptor signs a draft sent him without reservations and changes. Disclaimer and terms of the contract extension of their conditions and amendment conditions, the uncertainty of acceptance of the agreement is not a contract and does not produce or act as a refusal to sign the agreement, or as an extension of the new offer. The previous legislation allowed the conclusion of a treaty by tacit acceptance, that is, if after a certain period the other party informed of the rejection of the contract, the contract is concluded. Paragraph 2 of Article 396 is based on the reverse Promise: Silence is not acceptance. However, this rule is dispositive. For example, inter-bank agreements, establishing the conduct of payment transactions through correspondent accounts of banks in the form of e-mails, often provides that if within a specified period from the date of receipt of the e-mail correspondent does not express disagreement with the message, the proposal shall be considered adopted. In accordance with paragraph 3 of Article 396 of the Civil Code of the acceptance form can be not only a statement in writing or orally, or silence, but also committing «conclusive action» – shipment of goods, services, works and the like. But these actions must clearly follow the unconditional approval of the offer, and these actions should be made within the period established for its acceptance of the offer. 103

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Just like the offer, the acceptance may be withdrawn without affecting the acceptor to receipt of acceptance the offeror. Upon receipt of the offeror the acceptance of the contract shall be considered concluded and may be terminated on the general grounds. Traditional for the legislator for a long time was the selection of the two cases, the conclusion of contracts with the creation for each of their special mode. The need for a special regime between the contracting missing is seen in the fact that in this case there is a gap in time from the will of one of the parties and to its perception located more or less far possible counterparty. On the contrary, the conclusion of the agreement between the present assumed that this gap in no time, because the parties directly communicate with each other. However, the development of communications technology has led to the fact that in different locations parties were able to communicate without any time interval via phone, fax and other exchanges. Article 397 of the Civil Code of the Republic of Kazakhstan conducts differentiation and other conditions. This refers to the differences in order to enter into contracts, depending on the nature of the offer: whether it contains a term for acceptance or not. So when the offer contains a deadline for acceptance, the contract is concluded when the acceptance is received by a person sent the offer within a specified period in it. When a written offer does not contain a period for acceptance, a contract is concluded if the acceptance is received by the person who sent the offer before the deadline set by law, and if such a term is not set – within the normal required time. However, when an offer has been made orally without specifying the period for acceptance, a contract is concluded, if the other party immediately declared its acceptance. In the case of the expiration of the term set for the response (or the expiration of the time normally required for a response to the proposal), the action is terminated the offer, the offeror is not bound by his offer. Therefore, if you received an offer suddenly decide, after this deadline to accept the offer, he will not be the acceptor and the offeror. 104

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There is a new legal relationship, which is subject to all the aboveconsidered rules of the contract. Questions for self-control 1. What is contract? 2. What are the types on conditions of the contract? 3. What is offer? 4. What are the types of offer? 5. What is acceptance?

LIST OF USED LITERATURE AND NORMATIVE LEGAL ACTS  

1. The Constitution of the Republic of Kazakhstan adopted 30 August 1995 with addi­tions and amendments // adilet.zan.kz 2. The Civil Code of the Republic of Kazakhstan (General part) dated 27 December 1994 with additions and amendments // adilet.zan.kz 3. The Civil Code of the Republic of Kazakhstan (Special part) dated 1 July 1999 with additions and amendments // adilet.zan.kz 4. The Entrepreneurial code of the Republic of Kazakhstan (Special part) dated 29 October 2015 // adilet.zan.kz 5. The Code of Republic of Kazakhstan «On Marriage (Matrimony) and Family dated 26 December 2011 with additions and amendments // adilet.zan.kz 6. Law of the Republic of Kazakhstan «On Joint Stock Companies» dated 13 May 2003 with additions and amendments // adilet.zan.kz 7. Law of the Republic of Kazakhstan «On Business Partnerships» dated 2 May 1995 with additions and amendments // adilet.zan.kz 8. Law of the Republic of Kazakhstan «On Partnerships with limited and Additional Liability» dated 22 April 1998 with additions and amendments // adilet.zan.kz 9. Law of the Republic of Kazakhstan «On Production Co-operatives» dated 5 October 1995 with additions and amendments // adilet.zan.kz 10. Law of the Republic of Kazakhstan «On non-commercial organizations» dated 16 January 2001 with additions and amendments // adilet.zan.kz 11. Law of the Republic of Kazakhstan «On State Property» dated 1 April 2011 with additions and amendments // adilet.zan.kz 12. Law of the Republic of Kazakhstan «On State registration of the rights for immova­ble property» dated 26 July 2007 with additions and amendments // adilet.zan.kz 13. Law of the Republic of Kazakhstan «On State registration of legal entities and rec­ord registration of affiliates and representations» dated 17 April 1995 with additions and amendments // adilet.zan.kz 106

List of used literature and normative legal acts

14. Law of the Republic of Kazakhstan «On Housing relations» dated 16 April 1997 with additions and amendments // adilet.zan.kz 15. Bassin Yu.G., Suleimenov M.K. Comments to the Civil Code of the Republic of Kazakhstan (General part) // http://online.zakon.kz/ Document/?doc_id=1019750 16. Bassin Yu.G., Suleimenov M.K. Civil Law. Part 1 // http://online.zakon.kz/document/?doc_id=30002463#pos=1;-263 17. Sergeyev A.P., Tolstoy Yu.K. Civil Law. Part 1. – M., 2005. – P. 765.

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CASES FOR PRACTICAL TASKS

1. Ivanov and Petrov decided to create a legal entity and put to authorized capi­tal 50000 tenge each other. In what form can legal entity be created under the given conditions? 2. PLL «Star» and PLL «Moon» decided to create legal entity with the name «Earth» and put to authorized capital 500000 tenge each other. In what form can legal entity be created under the given conditions? 3. Akimov and PLL «Astra» decided to create legal entity and put to author­ized capital 150000 tenge each other. In what form can legal entity be created under the given conditions? 4. Citizens Sipatov and Levin, having cash in the amount of 30,000 tenge, de­cided to create a legal entity. In what form can legal entity be created under the given conditions? 5. Bokayev and Klimkina decided to create a legal entity but they haven’t any cash or other property to do this. Can they create legal entity under given cases? If they can, in what form can legal entity be created? 6. Ivanov found a watch in the subway and decided to keep it. His friend Si­monov said that the watch must be sold and the money transferred to the administra­tion of subway. Who is right in this situation? 7. Klimov, picking mushrooms in the forest, found a samovar, brought it home, cleaned up and decided to sell. But his son, a student of law faculty, said he cannot sell it. Who is right in this situation? 8. Semenov bought a land plot to build a house. Digging a hole for the founda­tion of the house, he found a bag of money and decided to give those to police. But his wife said that the money belongs to them and to give them to police is unneces­sary. Who is right in this situation? 9. Petrova, housekeeper, cleaning the balcony of Isanova in one of the bags had found a piece of fabric and decided to sew a dress. A week later Isanova, seeing new dress Petrova, knew her fabric and claimed from Petrova this dress or reimburse the cost of the fabric. Is Isanova right in this situation? 108

Cases for practical tasks

10. Nazarova saw in the shop boots, which she has long been looking for, but she had with her only half of the cost. She left this sum of money to the seller and they had agreed that she would come the next day. When she came the next day, Nazarova found that the boots have been sold. Nazarova asked the seller to return the full cost of boots, but seller refused. Who is right in this situation? 11. Taranov concluded a loan agreement with the bank and to secure the fulfill­ment of the obligation provided a guarantee from Kuzmin. Upon expiration of the contract Taranov did not return the money. Bank claimed directly to Kuzmin. But Kuzmin refused to pay the money. Who is right in this situation? 12. Zvezdin and Solntseva decided to create a legal entity and put to author­ized capital 10000 tenge each other. In what form can legal entity be created under the given conditions? 13. JSC «New» and LP «Old» decided to create legal entity with the name «Mid­dle» and put to authorized capital 1000000 tenge each other. In what form can legal entity be created under the given conditions? 14. Sergeyev and JSC «Rose» decided to create legal entity and put to author­ized capital 250000 tenge each other. In what form can legal entity be created under the given conditions? 15. Zhunisova and Zhanibekov decided to create a legal entity but they ha­ven’t any cash or other property to do this. Can they create legal entity under given cases? If they can, in what form can legal entity be created? 16. Nazarov found a mobile phone in the shop and decided to carry it to po­lice. His wife said that the mobile phone must be sold and the money transferred to the administration of shop. Who is right in this situation? 17. Klimov bought dacha and found a bucket inside and decided to use it. But his son, a student of law faculty, said he cannot use it and have to return it to the seller of the dacha. Who is right in this situation? 18. Ibrayev bought a land plot to build a house. Digging a hole for the founda­tion of the house, he found an ancient helmet and decided to give those to po­lice. But his wife said that the helmet belongs to them and to give them to police is unnecessary. Who is right in this situation? 19. Sidorova, housekeeper, cleaning the refrigerator in the house of Shalabayeva decided to bake a cake for her grandchildren. 109

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When Shalabayeva came home she saw the cake and eat it with her children. Sidorova, seeing that cake was eaten claimed from Shalabayeva to reimburse the cost of the cake. Is Sidorova right in this situation? 20. Kozlov concluded a loan agreement with the bank and to secure the fulfill­ment of the obligation provided a suretyship from Ovodov. Upon expiration of the contract Kozlov did not return the money. Bank claimed directly to Ovodov. But Ovodov refused to pay the money. Who is right in this situation? 21. Sidorov and Mikhailov decided to create a legal entity and put to the author­ized capital 80000 tenge each. What form of legal entity can be created under the given conditions? 22. Degtyaryov and Vassilieva decided to create a legal entity and put to the au­thorized capital 20000 tenge each. What form of legal entity can be created under the given conditions? 23. Bozhko and Klimkin decided to create a legal entity and put to the author­ized capital 150000 tenge each. What form of legal entity can be created under the given conditions? 24. Saveliev and Li decided to create a legal entity and put to the authorized cap­ital 750000 tenge each. What form of legal entity can be created under the given conditions? 25. Chumakov and Kovalchuk decided to create a legal entity and put to the au­thorized capital 5000000 tenge each. What form of legal entity can be created un­der the given conditions? 26. LLP «A» and LLP «B» decided to create a legal entity with the name «C» and put to the authorized capital 50000000 tenge each. What form of legal entity can be created under the given conditions? 27. ALP «A» and LLP «B» decided to create a legal entity with the name «C» and put to the authorized capital 10000 tenge each. What form of legal entity can be created under the given conditions? 28. LLP «A» and LLP «B» decided to create a legal entity with the name «C» and put to the authorized capital 7500000 tenge each. What form of legal entity can be created under the given conditions? 29. LLP «A» and LLP «B» decided to create a legal entity with the name «C» and put to the authorized capital 2500000 tenge each. What form of legal entity can be created under the given conditions? 30. LLP «A» and GP «B» decided to create a legal entity with the name «C» and put to the authorized capital 800000 tenge each. What form of legal entity can be created under the given conditions? 110

Cases for practical tasks

31. Senin and LLP «A» decided to create a legal entity and put to the author­ized capital 15000000 tenge each. What form of legal entity can be created under the given conditions? 32. Sidorov and LLP «A» decided to create a legal entity and put to the author­ized capital 750000 tenge each. What form of legal entity can be created under the given conditions? 33. Nikimenko and LLP «A» decided to create a legal entity and put to the au­thorized capital 15000 tenge each. What form of legal entity can be created under the given conditions? 34. Bokayev and LLP «A» decided to create a legal entity but they don’t have any cash or another property to do it. Can they create the legal entity in this case? If they can, what form is possible? 35. LLP «A» and LLP «B» decided to create a legal entity but they don’t have any cash or another property to do it. Can they create the legal entity in this case? If they can, what form is possible? 36. Ivanovdecided totake the credit inthe second-tierbank.As security forperformance of the obligationsecureddecided to usethe depositin the same bank. Givelegal assessment of the situation. 37. Petrov decided to take the credit in the second-tier bank. As security for per­ formance of an obligation decided to use a car pledge. Give legal assessment of the situation. 38. Sidorovdecided totake the credit inthe second-tierbank.As security forperformance of an obligationdecided to usemortgage ofapartment of his mother. Give legal assessment of the situation. 39. Bykov decided totake out a loaninthe second-tierbank.As security forperformance of an obligationdecided to give as a pledge securities owned byhis mother. Give legal assessment of the situation. 40. Nemiroffdecided totake the credit inthe second-tierbank.As security forperformance of an obligationdecided to usea guaranteeof another bank. Give legal assessment of the situation. 41. Bekenovaenrolled ina higher education institutionon the basis of the state educationalloan.For this purposeitis necessaryto provide a suretyship. Give legal assessment of the situation. 42. Mayorovwon theBolashak scholarship. For this purposeitis necessaryto providetwo suretyships. Give legal assessment of the situation. 43. Barayevwon theBolashak scholarship. For this purposeitis necessaryto providereal estate as a pledge. Give legal assessment of the situation. 44. Ivanovadecided tobuy boots, but she did not havethe required amount of money.She leftpart of the cost to theseller, and promised to come 111

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the next day. Is this amount of money the advance payment or prepayment? 45. Ivanovadecided tobuy boots, but she did not havethe required amount of money.She leftpart of the cost to theseller, and promised to come the next day. Arrivingthe next day she foundthese boots were already sold. Give legal assessment of the situation. 46. Ivanovagreed tobuy boots, but he did not havethe required amount of money. He leftpart of the cost to theseller, and promised to come the next day. But he cameonly three days later anddid not find thoseboots. Give legal assessment of the situation. 47. Petrovadecided to buya fur coat, but she did not havethe required amount to pay.She gave part of the cost to theseller, and promised to come the next day. Comingnext day the coatwas not there. Give legal assessment of the situation. 48. Sidorovdecidedto buy a laptopina commission store, butshe did not havethe required amount to pay.She gavepart of the cost to theseller, and promised to come the next day. Arrivingthe next daythe laptopwas not there. Give legal assess­ment of the situation. 49. Ivanovconcluded aloan agreementof 100,000 tenge on September 29, 2015 for a period of 1 month. The agreementes tablished a penalty of 0.5% of the amount due for eachday of delay. Calculate thetotal amount of the debt, if the money were returned on 31 December 2015. 50. Ivanovconcluded aloan agreementof 100,000tenge on August 4, 2015 for a period of 3 weeks. The agreementes tablished a penalty of 0.5% of the amount due for eachday of delay. Calculate thetotal amount of the debt, if the money were returned on 31 December 2015. 51. Ivanovconcluded aloan agreement of 15000 tenge on 14 July 2015 for a periodof 20 working days.The agreementes tablished a penalty of 0.5% of the amount due for eachday of delay. Calculate thetotal amount of the debt, if the money were re­turned on 31 August 2015. 52. Ivanovconcluded aloan agreement of 2 000 000KZT on 29 September 2014 for a period of 1 year. The agreementes tablished a penalty of 0.5% of the amount due for eachday of delay. Calculate thetotal amount of the debt, if the money were re­turned on 10 November 2015. 53. Ivanovconcluded aloan agreement of 250000 tenge on April 29, 2015 for 2 months.The agreement establisheda penalty of 0.5% of the amount due for eachday of delay. Calculate thetotal amount of the debt, if the money were returned on 31 July 2015.

112

TRILINGUAL DICTIONARY OF BASIC TERMS

ENGLISH

KAZAKH

RUSSIAN

A Absolute rela­tionship Acceptance Accessory thing Action Active majority

Абсолютты катынас Акцепт Қосалқы зат Әрекет Белсенді көптік

Additional liability Қосымша partnership жауапкершілігі бар серіктестік Adherence Қосылу шарты agreement Administrative act Әкімшілік құжат Administrativeterritorial unit

Әкімшілік-аумақтық бөлініс

Adopter Adoption Advance payment Analogy of law Analogy of legislation Author Authorized capital Authorized person

Асырап алушы Асырап алу Кепілдік жарна Құқық аналогиясы Заң аналогиясы Автор Жарғылық капитал Құқығы бар тұлға

113

Абсолютное отношение Акцепт Принадлежность Действие Активная множественность Товарищество с дополнительной ответственностью Договор присоединения Административный акт Административнотерриториальная единица Усыновитель Усыновление Задаток Аналогия права Аналогия закона Автор Уставный капитал Управомоченное лицо

Civil law of the Republic of Kazakhstan

B Balance-sheet Bearer security

Дербес баланс Ұсынбалы бағалы қағаз

Bilateral Bourse transaction Branch of law Business authority Business partnership Business reputation

Екі жақты Биржалық мәмiле Құқық саласы Шаруашылық жүргізу Шаруашылық серіктестік Іскерлік бедел

Баланс Предъявительская ценная бумага Двухсторонний Биржевая сделка Отрасль права Хозяйственное ведение Хозяйственное товарищество Деловая репутация

C Calculation of periods Certified security

Мерзімдерді есептеу

Исчисление сроков

Құжатты бағалы қағаз

Документарная ценная бумага Устав Гражданин Гражданская правоспособность Гражданский кодекс Гражданский оборот Гражданская ответственность Коммерческое юридическое лицо Фирменное наименование Коммерческое представительство Товарно-денежное отношение Общая собственность Коммунальная собственность

Charter Citizen Civil capacity

Жарғы Азамат Азаматтық құқық қабілеттілік Civil Code Азаматтық кодекс Civil intercourse Азаматтық айналым Civil responsibility Азаматтық жауапкершілік Commercial legal Коммерциялық заңды entity тұлға Commercial name Фирмалық атау Commercial representation Commodity-money relation Common property Communal property

Коммерциялық өкілдік Тауар-ақша қатынасы Ортақ меншiк Коммуналдық меншік

114

Trilingual dictionary of basic terms

Competitive obligation Complex branch Complex things Compulsory alienation Compulsory withdrawal Conclusion of an agreement Condominium Confiscation Consumable things Consumer co-operative Contract of construction of a building Contractual forfeit Contractual representation Contribution Corporation Corporeal right Court decision Creative activity Creditor Customs of business intercourse

Конкурстық міндеттеме Кешенді сала Күрделі заттар Мәжбүрлеп иеліктен шығару Мәжбүрлеп иеліктен шығару Шарт жасасу Кондоминиум Конфискациялау Тұтынылатын заттар Тұтынушы кооператив Құрылыс мердігерлік шарты

Конкурсное обязательство Комплексная отрасль Сложные вещи Принудительное отчуждение Принудительное отчуждение Заключение договора Кондоминиум Конфискация Потребляемые вещи Потребительный кооператив Договор строительного подряда

Шарттық айып төлеу Шартты өкілдік

Договорная неустойка Договорное представительство Үлес Вклад Корпорация Корпорация Заттық құқық Вещное право Сот шешімі Судебное решение Шығармашылық қызмет Творческая деятельность Кредитор Кредитор Іскерлік қызмет Обычаи делового өрісіндегі әдеттегі оборота құқықтар D

Debenture Debtor Deed capacity Defendant

Облигация Борышқор Әрекет қабілеттілік Жауапкер 115

Облигация Должник Дееспособность Ответчик

Civil law of the Republic of Kazakhstan

Delaying condition Кейiнге қалдырылатын шарт Delictual capacity Деликтілік қабілеттілік Derivative financial Туынды қаржы құрал instrument Dignity Disclosure Dispositive method Divisible property

Қадір-қасиет Ашу Диспозитивті әдіс Бөлiнетiн мүлiк

Отлагательное условие Деликтоспособность Производный финансовый инструмент Достоинство Обнародование Диспозитивный метод Делимое имущество

E Emancipation Entrepreneur Entrepreneurial activity Endowed with similar signs things Equal Equality of participants Event Excepted form circulation things Executive body Exercise of civil rights Expression of the will

Эмансипациялау Кәсіпкер Кәсіпкерлік қызмет Тектік белгілері бар заттар Тең Қатысушылар теңдігі

Эмансипация Предприниматель Предпринимательская деятельность Вещи, определенные родовыми признаками Равный Равенство участников

Оқиға Айналымнан алынып тасталған заттар Атқарушы орган Азаматтық құқықтарды жүзеге асыру Ерік білдіру

Событие Вещи, изъятые из оборота Исполнительный орган Осуществление гражданских прав Волеизъявление

F Family relations Family secret Fee Financial instrument

Отбасы қатынастар Отбасы құпиясы Төлем Қаржы құрал

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Семейные отношения Семейная тайна Гонорар Финансовый инструмент

Trilingual dictionary of basic terms

Finding Fine Foreclosure Foreign currency

Олжа Айыппұл Өндіріліп алу Шетел валютасы

Құрылатйшылар

Находка Штраф Взыскание Иностранная валюта Неустойка Форвард Учредительный договор Учредительные документы Учредители

Forfeit Forward Foundation agreement Foundation documents Foundation parties Freedom of the contract Free transaction

Айып төлеу Форвард Құрылтайшы шарт

Шарт еркіндігі

Свобода договора

Ақысыз мәміле

Безвозмездная сделка Оборотоспособные вещи Фьючерс

Freely alienated things Futures

Аудармалы

Құрылтайшы құжаттар

Фьючерс G

General meeting General partner General partnership Generic things

Жалпы жиналыс Серіктес Толық серіктестік Тектік заттар

Good name Guarantee Guardianship

Игі атақ Кепiлдiк Қорғаншылық

Общее собрание Товарищ Полное товарищество Вещи, определенные родовыми признаками Доброе имя Гарантия Опека

H Health Honor Honorarium

Денсаулық Абырой Төлем

Здоровье Честь Гонорар 117

Civil law of the Republic of Kazakhstan

I Immovable things

Қозғалмайтын заттар Imperative method Императивті әдіс Implementation of Азаматтық құқықтарды civil rights жүзеге асыру Incapable person Әрекет қабiлеттiлiгi жоқ тұлға Independent branch Негізгі сала

Недвижимые вещи Императивный метод Осуществление гражданских прав Недееспособное лицо

Самостоятельная отрасль Individually Жеке анықталған заттар Индивидуально defined things определенные вещи Indivisible property Бөлiнбейтiн мүлік Неделимое имущество Industrial design Өндірістік үлгі Промышленный образец Inheritance law Мұрагерлік құқық Наследственное право Inscribed security Атаулы бағалы қағаз Именная ценная бумага Institution Мекеме Учреждение Intellectual activity Интеллектуалдық Интеллектуальная қызмет деятельность Intellectual Интеллектуалдық Интеллектуальная property меншік собственность International Халықаралық Международное cooperation ынтымақтастық сотрудничество International treaty Халықаралық шарт Международный договор Invalid Жарамсыз Недействительный Invalidating Күшi жойылатын шарт Отменительное provision условие Invention Өнертабыс Изобретение Investor Салымшы Вкладчик Inviolability of Жеке өмірге қол Неприкосновенность private life сұқпаушылық личной жизни Inviolability of Меншікке қол Неприкосновенность property сұқпаушылық собственности

118

Trilingual dictionary of basic terms

J Joint obligation Joint ownership Joint stock company

Ортақтасқан мiндеттеме Солидарное обязательство Бiрлескен меншiк Совместная собственность Акционерлік қоғам Акционерное общество L

Labor contract Land plot Legal destiny Legal entity Legal fact Legal forfeit Legal institute Legal norm Legal personality Legal relation Legitimate representation Life Limitation Limited liability partnership

Еңбек шарты Жер учаскесі Заң жүзiндегi тағдыры Заңды тұлға Заңды факт Заңды айып төлеу Құқық институты Құқық нормасы Құқықсубъекттілік Құқық қатынас Заңды өкілдік

Трудовой договор Земельный участок Юридическая судьба Юридическое лицо Юридический факт Законная неустойка Правовой институт Правовая норма Правосубъектность Правоотношение Законное представительство Өмір Жизнь Талап қою мерзімі Исковая давность Жауапкершілігі шектеулі Товарищество серіктестік с ограниченной ответственностью Limited partnership Сенім серіктестік Коммандитное товарищество Liquidation Тарату Ликвидация Local treasury Жергiлiктi қазына Местная казна Lost profit Айрылып қалған пайда Упущенная выгода M Means of individualization

Даралану құралдары

119

Средства индивидуализации

Civil law of the Republic of Kazakhstan

Mental disease

Жүйке ауруы

Психическое заболевание Method Әдіс Метод Minor Кәмелет жасқа толмаған Несовершеннолетний Missing person Хабар-ошарсыз кеткен Без вести пропавшее адам лицо Mixed majority Аралас көптік Смешанная множественность Model Charter Типтік жарғы Типовой устав Monetary Ақшала» міндеттеме Денежное obligation обязательство Money Ақша Деньги Monthly calculated Айлық есептiк Месячный расчетный index көрсеткiш показатель Mortgage Ипотека Ипотека Movable things Қозғалатын заттар Движимые вещи Multilateral Көп жақты Многосторонний N Name of legal entity Net income Negatory suit Non-commercial legal entity Non-consumable things Non-full deed capacity Novation

Заңды тұлғаның атауы Таза кіріс Негаторлы талап Коммерциялық емес заңды тұлға Тұтынылмайтын заттар

Наименование юридического лица Чистый доход Негаторный иск Некоммерческое юридическое лицо Непотребляемые вещи

Толық емес әрекет қабілеттілік Новация

Неполная дееспособность Новация

O Objectified result Obligated person Obligation

Объектiге айналған нәтиже Міндетті тұлға Міндеттеме 120

Объективированный результат Обязанное лицо Обязательство

Trilingual dictionary of basic terms

Obligatory relationship Offer Offset Operational management Option Option buyer Option seller Order security Organizational legal form Ownerless thing

Міндеттемелік қарымқатынас Оферта Есепке жатқызу Жедел басқару

Обязательственное отношение Оферта Зачет Оперативное управление Опцион Опцион Опцион сатып алушы Покупатель опциона Опцион сатушы Продавец опциона Ордерлiк бағалы қағаз Ордерная ценная бумага Ұйымдастыру-құқықтық Организационнонысан правовая форма Иесiз зат Бесхозяйная вещь P

Partial deed capacity Passive majority

Ішінара әрекет қабілеттігі Пассивік көптік

Patronage Pawning Peasant farm

Қамқоршылық Кепiлзат Шаруа немесе фермер қожалығы Өсім Мерзім Рұқсаттық тәртіп

Penalty Period Permissive order Personal non-property privileges and rights Personal non-property relation Personal secret Personal (separate) property

Жеке мүліктік емес игіліктер мен құқықтар Жеке мүліктік емес қатынас Жеке құпия Дара (бөлек) меншiк

121

Частичная дееспособность Пассивная множественность Попечительство Заклад Крестьянское хозяйство Пеня Срок Разрешительный порядок Личные неимущественные блага и права Личное неимущественное отношение Личная тайна Личная (раздельная) собственность

Civil law of the Republic of Kazakhstan

Physical person Place of domicile Plaintiff Pledge Pledger Pledge holder Power of attorney Pre-Emption right

Жеке тұлға Тұрғылықты жер Талапкер Кепіл Кепіл беруші Кепіл алушы Сенімхат Басым құқығы

Principal thing Principle Private property Privatised housing

Басты зат Нысан Жеке меншік Приватизациялынған баспана Өндірістік кооператив

Production co-operative Proper content Proper expression of the will Proper form Proper subject Property complex

Тиісті мазмұны Тиісті ерік білдіру Тиісті нысаны Тиісіті субъект Меншік кешені

Property privileges Мүліктік игіліктер мен and rights құқықтар Property relation Мүліктік қатынас Proprietary Protection of civil rights Psychic disease

Заттық Азаматтық құқықтарды қорғау Жүйке ауруы

Public association

Қоғамдық бiрлестiк

Public auction Public authority Public foundation

Қоғамдық аукцион Мемлекеттік билік Қоғамдық қор 122

Физическое лицо Место жительства Истец Залог Залогодатель Залогодержатель Доверенноесть Преимущественное право Главная вещь Принцип Частная собственность Приватизированное жилище Производственный кооператив Надлежащее содержание Надлежащее волеизъявление Надлежащая форма Надлежащий субъект Имущественный комплекс Имущественные блага и права Имущественное отношение Вещный Защита гражданских прав Психическое заболевание Общественное объединение Публичные торги Государственная власть Общественный фонд

Trilingual dictionary of basic terms

Public offer Purchase and sale contract

Жария оферта Сатып алу сату шарты

Публичная оферта Договор купли-продажи

R Real damage Reasonable term Recognition of the right Recruitingnormative order Refusal from the right to own Regress claim Regulatory order Reimbursable transaction Relative relationship Religious association Reorganization Replevin Representation Representative Re-Processing Republican property Requisition Restitution Restricted deed capacity Restricted in turnover things Risk of occasional damage

Нақты нұқсан Реальный ущерб Ақылға қонымды мерзiм Разумный срок Құқықты мойындату Признание права Нормативті тәртіп Меншік құқығынан бас тарту Регрестiк талап Реттеуші тәртіп Ақылы мәміле

Нормативно-явочный порядок Отказ от права собственности Регрессное требование Регулятивный порядок Возмездная сделка

Салыстырмалы қатынас Относительное отношение Діни бірлестік Религиозное объединение Реорганизация Реорганизация Виндикациялық талап Виндикационный иск Өкілдік Представительство Өкіл Представитель Өндеу Переработка Республикалық меншік Республиканская собственность Реквизиция Реквизиция Болған жағдайды Возврат в қалпына келтіру первоначальное положение Шектелген әрекет Ограниченная қабілеттілік дееспособность Айналым қабiлеттiгi Вещи, ограниченные шектеулi заттар в обороте Кездейсоқ бүлiну қаупi Риск случайного повреждения 123

Civil law of the Republic of Kazakhstan

Right of ownership Right to dispose Right to own Right to possess Right to use

Меншік құқығы Билiк ету құқығы Меншік құқығы Иелену құқығы Пайдалану құқығы

Право собственности Право распоряжения Право собственности Право владения Право пользования

S Securities Self-defense Services Share Shareholder Shared obligation Shared ownership Simple things Single state register Small business Small day-to-day transaction Smart money Source Sphere of private law Sphere of public law Spouses State State-owned enterprise State property State treasury Subject-matter Subsidiary obligation

Бағалы қағаздар Өзін-өзі қорғау Қызметтер Акция Акционер Үлестік міндеттеме Үлестік меншік Жай заттар Бірыңғай мемлекеттік регистр

Ценные бумаги Самозащита Услуги Акция Акционер Долевое обязательство Долевая собственность Простые вещи Единый государственный регистр Шағын бизнес Малый бизнес Тұрмыстық ұсақ мәмiле Мелкая бытовая сделка Бас тарту төлемi Қайнар көз Жеке құқық саласы

Отступное Источник Сфера частного права

Жария құқық саласы

Сфера публичного права Супруги Государство Государственное предприятие Государственная собственность Государственная казна Предмет Субсидиарное обязательство

Ерлi-зайыптылар Мемлекет Мемлекеттік кәсіпорын Мемлекеттік меншік Мемлекеттiк қазына Пән Субсидиялық мiндеттеме 124

Trilingual dictionary of basic terms

Supreme body Suretyship Swap

Жоғары орган Кепіл болушылық Своп

Высший орган Поручительство Своп

T Temporary possession Temporary use

Уақытша иелену

Временное владение

Уақытша пайдалану

Thing Third party Trademark Tradition of business operation

Зат Үшінші тұлға Тауар белгісі Іскерлік қызмет өрісіндегі әдеттегі құқықтар Зиян келтірудің салдарынан туындайтын міндеттеме Мәміле Көмбе Өкіл Өкiлдiк берушi Қамқоршылық

Временное пользование Вещь Третье лицо Товарный знак Обычаи делового оборота

Tort obligation Transaction Treasure Trustee Trustor Tutorship

Обязательство из причинения вреда Сделка Клад Поверенный Доверитель Попечительство

U Unattended animal Қараусыз жануар Uncertified security Құжатсыз бағалы қағаз Unilateral Usucapio

Бір жақты Иелену мерзiмi

Безнадзорное животное Бездокументарная ценная бумага Односторонний Приобретательная давность

W Works

Жұмыстар

Работы

125

SCHEMES AND TABLES

Forms of commercial private legal entities Features

General partnership

1 2 Defi- A general nition partnership shall be a partnership, the participants whereof in the case of the insufficiency of the property of the general partnership, shall bear a joint liability upon it obligations with all the property that they have.

Limited partnership 3 A partnership which includes besides one or more participants who bear additional liability for the obligations of the partnership with all their property (general partners) also one or more participants whose liability is limited by the amount of contribution made by them to the assets of the

Limited liability partnership 4 A partnership with limited liability shall be recognised to be a partnership established by one or several persons, the authorised capital whereof is divided into shares of the size which is stipulated in the foundation documents; the participants of a limited liability partnership shall not

126

Partnership with additional liability 5 A partnership with additional liability shall be partnership, the participants whereof shall be liable for its obligations with their contributions to the authorised capital, and in the case those are insufficient, additionally with the assets that belong to them in the amount which is a multiple

Jointstock company 6 A legal entity which issues shares for the purposes of raising funds for the per

Productive Cooperative

7 A voluntary association of citizens on the basis of the membership for joint entrepreneurial activities, which is based on personal forlabour parmance ticipation of its and the coactivities operation by shall be the members recogof their nised as property a joint- contribustock tions, shall combe recogpany. nised as productive cooperatives.

Schemes and tables 1

2

3 partnership (investors) and which do not participate in the partnerships’ entrepreneurial activities, shall be a limited partnership.

Foundation parties

Only physical persons. At least 2

Authorized capital

25 minimum calculated index

4 be liable for its obligations and they shall bear the risk of losses associated with the activities of the partnership within the limits of the value of the contributions made by them. General Physical partners persons – only and legal physical entities. At persons. At least 1 least 1 Investors – physical persons and legal entities. At least 1 50 mini100 mum cal- minimum culated calculated index index

Bodies

The general meeting (meeting of the representatives) of the participants shall be the

The general meeting (meeting of the representatives) of the participants shall be the

The general meeting (meeting of the representatives) of the participants shall be the

127

5 of the contributions made by themselves.

The general meeting (meeting of the representatives) of the participants shall be the

6

7

Physical persons and legal entities. At least 1

Physical Only physipersons cal persons. and legal At least 2 entities, state. At least 1

100 minimum calculated index

50.000 minimum calculated index

Not established

The supreme body of a productive co-operative shall be the general meeting of its members. Executive

Civil law of the Republic of Kazakhstan 1

Liability of paricipants

2 supreme body of a business partnership.

Participants shall bear a joint liability upon it obligations with all the property that they have

3 supreme body of a business partnership. In business partnerships founded by one person, the powers of a general meeting shall belong to its single participant. General partners shall bear a joint liability upon it obligations with all the property that they have. Liability of investors is limited by the amount of contribution made by them to the assets of the partnership

4 supreme body of a business partnership.

5 supreme body of a business partnership.

Participants shall bear the risk of losses associated with the activities of the partnership within the limits of the value of the contributions made by them

Participants shall be liable for its obligations with their contributions to the authorised capital, and in the case those are insufficient, additionally with the assets that belong to them in the amount which is a multiple of the contributions made by themselves

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6

7 bodies of a co-operative shall be the board and (or) its chairman.

Shareholders of a jointstock company shall not be liable for its obligations, and they shall bear the risk of losses associated with the company's business, within the limits of value of the shares they hold

Members of a productive co-operative shall bear a complimentary (subsidiary) liability on the obligations of the co-operative in the amounts in accordance with the procedure stipulated by the law concerning productive cooperatives

Schemes and tables

State enterprises Features

State enterprise on the right of business authority 1 2 Definition Right of business authority is the proprietary right of state-owned enterprises, received the property from the state as owner and exercising within the limits established by the present Code and other legislative acts of the Republic of Kazakhstan, the rights of possession, use and disposition of this property.

Objects

Moment of emergence

Moment of termination

The object of the right of business authority may be any property, unless otherwise stipulated by legislative acts of the Republic of Kazakhstan. Right of business authority of the property in respect of which the owner decided to consolidate his already established state-owned enterprise, arises from this company at the time of fixing property on a separate balance sheet, unless otherwise provided by law or by decision of the owner. The fruits, products and incomes from the use of property in business authority, as well as the property acquired by the company under contracts or otherwise, proceed to the business authority of the enterprise in the manner prescribed by law for the acquisition of property rights. Right of business authority of the property shall be terminated on the grounds and in the manner prescribed by law for the termination of ownership, and also in cases of lawful seizure of property in the company by decision of the owner.

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State enterprise on the right of operational management 3 The right of operational management is a property right institutions, funded by the owner, and state-owned enterprises, which have received the property from the owner and exercising within the limits established by the legislative acts of the Republic of Kazakhstan, in accordance with the purposes of its activity, the job owner and the assignment of property rights of possession, use and disposition of this property. The object of the right of operational management can be any property, unless otherwise stipulated by legislative acts of the Republic of Kazakhstan.

Civil law of the Republic of Kazakhstan 1 2 Rights of The owner of the property located owner in the business authority, in accordance with the legislation addresses the issues of establishment, definition, scope and aims of its activity, reorganization and liquidation, exercises control over the use and safety belonging to the enterprise property. The owner has the right to receive part of the net income from use of property located in the business authority of his enterprise.

3 The owner of the property located in the operational management, in accordance with the legislative acts of the Republic of Kazakhstan decides on establishment of an institution, state enterprise, definition of the scope and aims of its activity, has the right to determine the legal fate of the institutions, state companies, the content of its activities. The owner oversees the efficiency and security of the institution, state-owned enterprise transferred by the property owner. If the institution is created by multiple owners, the relationship between them and the rights of landowners to manage their property are determined by the constituent agreement or similar agreement.

Liability

State-owned enterprise responsible for its obligations in cash at its disposal. When failure in state enterprises of money subsidiary liability for its obligations incurred by the Republic of Kazakhstan or of the administrative-territorial unit by means of the corresponding budget.

State-owned enterprise operating on the right of business authority, unless otherwise provided by legislative acts may not, without the written consent of the owner or the authorized state body: 1) alienate or otherwise dispose of (except as provided in this article), to pass a long-term lease (over three years), to provide temporary free use of its owned buildings, structures, equipment and other fixed assets of the company; 2) to establish branches, offices, set up in conjunction with private entrepreneurs enterprises and joint ventures, to invest in their production and financial capital; 2-1) to dispose of its shares, as well as accounts receivable; 3) to provide loans; 4) to issue surety or guarantee for the obligations of third parties.

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Sphere

2 State-owned enterprise, unless otherwise stipulated by legislative acts of the Republic of Kazakhstan, shall administer assigned to it on the right of business authority of the property, not related to fixed assets. State enterprise on the right of business authority is not entitled to sell and make deals of gift in respect of assets relating to assets of the state enterprise, as well as own shares. 1) life support settlements (electricity, gas, water, heat supply and disposal of municipal waste, the establishment and operation of waste landfills) ; 2) create a forested, green and protective zones of restricted environmental management and afforestation; 3) support implementation of the National Bank of the Republic of Kazakhstan, the office of the President of the Republic of Kazakhstan and its agencies and bodies of diplomatic service of the Republic of Kazakhstan of their functions; 4) maintenance of state highways; 5) health care; higher and postgraduate education; 6) operation of sports and recreational facilities, parks, culture and recreation; 7) scientific research; 8) doing surveying work for the state land cadastre, information databases on subsoil and subsoil use, the state Fund of environmental information and the state cadastres of natural resources of the Republic of Kazakhstan, the state register of normative legal acts of the Republic of Kazakhstan;

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3

1) perform mine rescue and other special activities in emergency and disaster situations, protection from fires, floods and other natural disasters; 2) health; 3) pre-school education and training, further education, technical, vocational, and postsecondary education; 3-1) postgraduate education, if they are educational organizations under the President of the Republic of Kazakhstan; 4) security and labour protection, employment, social protection of the population, except for activities authorized organization in accordance with the Law of the Republic of Of Kazakhstan «On pension provision in the Republic of Kazakhstan, culture and sports; 5) scientific research; 6) ensure the protection, sustainable use, reproduction and artificial breeding of fauna, flora, in order to preserve biological diversity and gene pool, as well as the conservation of nature (Zoological parks, Botanical gardens, dendrological parks), perform the aviation activities on the protection of the forest Fund;

Civil law of the Republic of Kazakhstan 1

2 Government of the Republic of Kazakhstan, as well as the elimination of the consequences of their activities; 22) the provision of public services for individuals and (or) legal entities on the principle of «one window» and their automation. 23) for maintaining the state of the urban cadastre. 9) maintenance, operation, and security of water systems and facilities owned by the state; 10) protection and plant quarantine, phytosanitary examination of regulated products; 11) perform work on scientific research, conservation, restoration, reconstruction, repair and adaptation of monuments of history and culture; 12) the activities of the sea port; 13) the provision of air navigation services in the airspace of the Republic of Kazakhstan; 14) the formation and storage of state material reserves; 15) carry out production and business activities in the sphere of technical regulation and Metrology; 16) the production activity in the field of criminalthe Executive system and the organization of employment of convicts; 18) to implement the functions: the reference function for the diagnosis of animal diseases; epizootic monitoring; maintaining a National collection of the deposited strains of microorganisms; registration tests, testing of veterinary drugs, feed additives, and control series (batch) of drugs in their complaints; state monitoring, references to en

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3 7) production of topographic-geodesic and cartographic works; 8) the provision of social services to persons (families) in difficult situations; 10) classification and technical safety of ships..

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2 sure food security; monitoring the safety of veterinarydrugs, feed and feed additives; carrying out veterinary activities particularly against hazardous, noninfectious and enzootic diseases of animals; identification of agricultural animals; services artificial insemination of farm animals; services transportation (shipping), storage of veterinary drugs against dangerous and enzootic diseases of animals, and transportation (delivery) of goods (assets) and attributes for identification of agricultural animals; the contents of the burial sites (biothermal s), slaughter area (areas for slaughter of farm animals), the construction of which is arranged local Executive bodies of the respective administrative-territorial units; the capture and destruction of stray dogs and cats; the management, performance of veterinary accounting and reporting; issuing veterinary certificates; the maintenance of a database on identification of agricultural animals and an excerpt from it; sampling of biological material and delivering them to the veterinary laboratory; the provision of services on transportation of sick animals on sanitary slaughter; 20-1) liquidation (destruction, recycling, disposal) of weapons, military equipment and other unused military property, passing in rent the defence objects, sales (including exports) and purchases (including imports) of weapons, military equipment, ammunition, spare and

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3

Civil law of the Republic of Kazakhstan 1

2 component parts for him, products, equipment and related dual-use technologies for the Armed Forces, other troops and military formations of the Republic of Kazakhstan; 21) liquidation and conservation of the state of emergency idle mines and coal companies on the list determined by the

3

Invalidity of transactions Unproper form 1

Unproper subjects Unporper expression of the will 2 3 1. A transaction 7. A transaction entered into with- which is entered out obtaining the into by a citizen required license who, although or after the expiry capable, but at of the term of a the moment of its license shall be commitment was invalid. in a state that he could not realize the meaning of his actions or guide them, may be recognized by the court as invalid in accordance with the action of that citizen, but if when alive the citizen did not have an opportunity to file the action, – after the death of the citizen upon the action of any other interested persons. 3. A transaction 8. A transaction which is entered which is entered

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Unproper content 4 2. A transaction which pursues the purposes of unfair competition or which violates the requirements of business ethics shall be invalid.

10. A transaction which is concluded

Schemes and tables 1

2 into by the person who did not reach fourteen years of age, except for the transactions stipulated in the Article 23 of the Civil Code, shall be invalid.

3 into as a result of a significant error may be recognized by the court as invalid upon an action by the party which acted under the influence of misguidance. The misguidance is material where it relates to the nature of a transaction, the identity, or to any other qualities of its subject which significantly reduce the possibility of its intended use. Misguidance in the motives may serve as a basis of invalidity of a transaction only when such motive is included in its contents as a delaying or annulling condition. If the misguidance is a consequence of gross carelessness of the participant in the transaction, or it is covered by his entrepreneurial risk, the court, taking into account the specific circumstances and the interest of the other participant of the transaction, shall have the right to refuse the action to recognize the transaction as invalid.

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4 as a result of a malicious collusion of the representative of one party with the other party may be recognized by the court as invalid upon the action of the victimized party. Compensation for losses which are inflicted upon the victimized party may be imposed upon the unfair representative in the procedure of subsidiary liability.

Civil law of the Republic of Kazakhstan 1

2 4. A transaction which is entered into by a junior which reached fourteen years, without consent of his parents (adopters) or sponsors, except for the transactions which he in accordance with the law has the right to enter into independently, may be recognized by the court as invalid upon the action by the parents (adopters) or the guardian.

3 9. A transaction which is entered into under the influence of fraud, violence, or threat, and also a transaction that the person was compelled to enter into as a result of a combination of difficult circumstances and on conditions extremely unprofitable for himself which was exploited by the other party (shackling agreement), may be recognized by the court as invalid upon the action of the victim.

5. A transaction shall be invalid which is entered into by a person who is recognized as incapable as a result of a mental disease or mental weakness. A transaction which is entered into by a citizen, who afterwards is recognized as incapable, may be recognized by the court as invalid upon the action by his guardian, provided it is proved

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4 11. A transaction performed by a legal entity in contradiction to the objects of the activity expressly restricted by the Civil Code, or other legislative acts, or foundation documents, or in violation of the charter authority of its body, may be recognized as invalid pursuant to a court action of the owner of the property of a given legal entity, provided it is proved that the other party to a given transaction knew, or deliberately must have known about such violations. 13. A fictitious transaction is one which is entered into only for the sake of appearances, without intentions to cause any legal consequences shall be invalid.

Schemes and tables 1

2 that at the moment of the commitment of the transaction that citizen was in the condition of a psychic disorder. 6. Upon the requirement of the guardian the court may recognize as invalid transaction which is entered into by the person whose deed capacity is restricted by the court.

3

4

14. If one transaction is entered into only for the purpose of hiding another transaction (faked), then the rules shall be applied which are applicable to the transaction which the parties actually had in mind.

Objects of civil law Property rights and privileges – Things, – money, including foreign currency, – securities, – work, – services, – and the objectified results of creative and intellectual activities, – commercial names, trademarks and any other means of individualization of products, – property rights – and any other assets

Non-property rights and privileges – Life, – health, – the dignity of a person, – honour, – good name, – business reputation, – inviolability of private life, – personal and family secrets, – the right to name, – the right to be an author, – the right to inviolability of production – and any other intangible privileges and rights

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Civil law of the Republic of Kazakhstan

The right of owner ship right to possess

right to use

right to dispose

The right of owner ship state republican

private

communal

of legal entities

of physical persons

The right of owner ship separate

condominium

common shared

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joint

SUPPLEMENT. NORMATIVE LEGAL ACTS (extraction)

The Civil code of the Republic of Kazakhstan (General part) 27.12.1994 Extraction Article 33. The Definition of a Legal Entity 1. An organization which pursue the recovery of income as the primary purpose of the activity (commercial organization) or doesn’t have gaining income as a goal and doesn’t distribute any net income between the parties (non-profit organization) shall be recognized as the legal entity. 2. A legal entity shall have a seal with its name. Article 147. The Definition of a Transaction The actions of citizens and legal entities which are aimed at establishing, changing or terminating civil rights and obligations, shall be recognized as transactions. Article 152. The Written Form of Transactions 1. The following transaction must be entered into in writing: 1) those which are carried out in the course of entrepreneurial activities, except for transactions which are fulfilled by their execution itself, unless it is otherwise stipulated in legislation for individuals of transactions, nor does it ensue from the customs of the business practice; 2) for the amount of more than one hundred estimated indicators except for the transactions which are executed by their commitment itself; 3) in any other cases which are stipulated in legislation or the agreement of the parties. 2. A transaction which is executed in writing, must be signed by the parties or their representatives, unless otherwise ensues from the usual business practice. 139

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It shall be allowed, when entering into transactions, to use facsimile copying of signatures, unless this contradicts legislation or the requirements of one of the participants. 3. Bilateral transactions may be entered into by way of exchanging documents, each one of them shall be signed by the sending party. The exchange of letters, telegrams, telephonograms, teletypograms, facsimiles or any other documents which identify the entities and the contents as expression of their will, shall be equated to the execution of transactions in writing, unless it is otherwise stipulated in legislation or in the agreement of the parties. Legislation and the agreements of parties may establish additional requirements to which the form of the transaction must correspond, in particular, the execution in accordance with a certain of form, affixing the seal and stipulation of the consequences of the failure to comply with those requirements. Article 188. The Definition and Contents of the Right to Own 1. The right to own shall be a recognized and protected by legislative acts the right of a person at his (her) discretion to own, use and dispose of the property which belongs to him (her). The right of ownership shall be re-assigned to another person with all the encumbrances which existed at the moment of the commission of the transaction. 2. The owner shall have the rights to possess, use and dispose of his assets. The rights to own shall represent the legally-enforced capacity to exercise the actual possession of assets. The right to use shall represent the legally-enforced possibility to extract from the assets their useful natural properties and also to extract benefits out of it. A benefit may be in the form of income, gain, fruit and in other forms. The right to dispose shall represent the legally-enforced capacity to determine the legal destiny of property. 3. The owner shall have the right at his discretion to enter into with regard to the property which belongs to him, any actions including the alienation of the property into the freehold of any other persons, or to transfer to them, remaining the owner, his rights associated with ownership, use and disposal of the property, to pledge the property and to encumber it by any other methods and dispose of it in any other way. 4. The exercise by the owner of his powers must not violate the rights and legally protected interests of other persons and the state. The violation of the rights and legitimate interests may be expressed, aside from any other forms, in the abuse by the owner of his monopoly or any other dominant position. The owner must adopt measures which prevent harm to the health of citizens and to the environment, which may be inflicted in the exercise of his rights. 140

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5. The right to own shall be of indefinite term. The right to own property may be terminated by compulsion only upon the grounds provided for by this Code. 6. In the cases, on the conditions and within the limits provided for by legislative acts, the owner must allow for a restricted use of his property by any other persons. Article 209. The Definition and Grounds for the Emergence of Common Property 1. Property which is in the ownership of two or more persons shall belong to them under the right of common ownership. 2. Assets may be in common ownership with the determination of the share of each of the owners in the right to own (shared ownership) or without determining such shares (joint property). 3. Common ownership of any assets shall be shared-ownership, except for the cases where the law stipulates the formation of joint ownership of the property. 4. Common ownership shall emerge when two or several persons receive the property which may not be divided without changing its designation (indivisible items), or may not be divided by virtue of law. Common ownership of indivisible assets shall emerge in the cases which are stipulated in legislative acts or an agreement. 5. By agreement of the participants of common property, and in the case of failure to reach consensus, upon the decision of a court, shared ownership of the entities may be established with regard to the common property. 6. Ownership of real estate may arise in the form of a condominium, whereby certain parts of real estate are in individual (separate) ownership of citizens and (or) legal entities, and those parts of real estate which are not in separate ownership, shall belong to the owners of parts of real estate under the right of common shared ownership. The share of each owner in the common property shall be inseparable from his separate ownership of a part of real estate belonging to him. The size of a share of each owner in the common property, and the degree of participation in costs of its maintenance, shall be related to the size of the parts of real estate which are in individual (separate) ownership, unless it is otherwise stipulated in legislative acts or an agreement. 7. Special considerations in the legal regime of differents of condominium may be defined in legislative act of the Republic of Kazakhstan concerning the investment funds.

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Article 268. The Definition of an Obligation If due to an obligation one person (the debtor) shall be obliged to commit for the benefit another person (the creditor) certain actions, e.g. to transfer property, perform work, pay money etc., or abstain from certain actions, then the creditor shall have the right to claim from the debtor the execution of his obligation. The creditor shall be obliged to accept the execution from the debtor. Article 292. Methods of Securing the Execution of Obligation 1. The execution of an obligation may be secured with damages, pledge, lien on the debtor’s property, sureties, guarantee, advance payments, and other methods provided for by legislation or the agreement. Methods of securing the execution of obligations concerning the securities shall be established by the legislative acts of the Republic of Kazakhstan, regulating the activity in the security market. 2. The invalidity of an agreement on securing an obligation shall not entail the invalidity of that obligation (the principal obligation). 3. The invalidity of the principal obligation shall entail the invalidity of the obligation which secures it. Article 293. The Definition of Forfeit Damages (fine, penalty) shall be recognized as a monetary amount defined by legislation or agreement, which must be paid by a debtor to the creditor in the case of failure to execute, or improper execution of an obligation, in particular, in the case of a delay in execution. Upon the claim to pay the damages, the creditor shall not be obliged to prove losses caused to him. Article 299. Definition of Pledge 1. Pledge shall be recognized as a method of securing the execution of an obligation, by which a creditor (pledge holder) has the right, in the case of failure by the debtor to execute the obligation secured with the pledge, to receive satisfaction from the value of the pledged property, in a priority procedure before the other creditors of the person to whom that property belongs (pledger), with the exceptions established by this Code. The pledge holder shall have the right to receive on the same principles as satisfaction from the insurance compensation for the loss or damage to the pledged property, irrespective of for whose benefit it is insured, unless the loss or damage took place for reasons outside the control of the pledge holder. 2. The pledge of enterprises, buildings, installations, apartments, rights to land plots and any other immovable property (mortgage) shall be regulated 142

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by the Law of the Republic of Kazakhstan Concerning Mortgage of Immovables. The general rules concerning pledge, which are contained in this Code shall apply to mortgage in the cases where the Law of the Republic of Kazakhstan Concerning Mortgage does not stipulate any other rules. 3. The pledge of the air and sea vessels, vessels of domestic water travel, vessels of river and sea sailing (mortgage of the vessel) which are subject to state registration, shall be regulated by the special legislative acts of the Republic of Kazakhstan. The general rules concerning pledge, which are contained in this Code shall apply to mortgage of the vessel in the cases where the Law of the Republic of Kazakhstan Concerning Mortgage does not stipulate any other rules. The requirements of the part one of this Article shall also extend to the building sea vessels, vessels of domestic water travel, vessels of river and sea sailing. Article 329. Guarantee 1. By virtue of a guarantee the guarantor shall become liable to the creditor of another person (debtor) severally in full or in part for the execution of obligations of that person, except for the cases provided for by legislative acts. 2. Persons who jointly issued a guarantee shall be liable to the creditor severally, unless it is otherwise stipulated in the guarantee agreement. 3. A guarantee agreement may be entered into also in order to secure an obligation which will emerge in the future. Article 330. Surety By virtue of a surety, the holder of the surety assumes the obligation before the creditor of any other person (debtor) to be liable severally for the execution of that person’s obligation in full or in part. Article 337. The Definition of Advanced Payment. The Form of the Advance Payment Agreement 1. A sum of money which is issued by one of the parties to an agreement, at the expense of the payments, which are due by it in accordance with the agreement, to the other party and in order to secure the conclusion and the execution of the agreement, shall be recognized as an advance payment. 2. An advance payment agreement irrespective of the amount of the advance payment must be concluded in writing. This rule shall also apply in the case where the principal obligation must be notarized. The failure to comply with the written form shall entail invalidity of the advance payment agreement. 143

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Article 338-1. General Provision on Withholding 1. On default by the debtor of the obligations in time or of reimbursement of costs connected with it to the creditor, a creditor, who have an object, which is subject to transfer to the debtor or the person, indicated by the debtor, shall have the right to withhold it, until appropriate obligation would not be discharged. The requirements, which are not related to the payment of the object or to the reimbursement of its costs and of other losses, but which are originated from the obligation, which parties act as the entrepreneurs, may be provided by the withholding. 2. A creditor may withhold an object, which is in his possession, whereas after that the object got possession of the creditor that the right to it had been obtained by the third person. 3. The rules of this Article shall be applied, unless otherwise provided by the agreement. Article 338-3. Notion of the Guarantee Fee 1. Sum of money transferring by the payer of the guarantee fee to the recipient of the guarantee fee as a security of satisfaction of the agreement obligations during deal-making process or conducting another obligation, shall be recognized as the guarantee fee. 2. Obligation to pay for the guarantee fee shall arise in the cases provided by the legislative acts. Obligation to pay for the guarantee fee shall also arises by virtue of agreement of the parties. Article 351. Losses and Forfeit 1. When a forfeit is established for a failure to execute, or for improper execution of an obligation, then the losses shall be compensated for the part which is not covered by the forfeit. Legislation or the agreement may stipulate the cases: where it is permitted to claim only forfeit. but not losses; where losses may be levied in full amount in addition to damages; and where at the discretion of the creditor either damages or losses may be claimed. 2. In the cases where for failure to execute or improper execution of an obligation a limited liability is established, the losses which are subject to compensation in the part which is not covered by the forfeit. or in addition to it or instead of it, may be claimed up to the limits established by such limitation. Article 353. The Liability for Unlawful Use of Somebody’s Funds 1. Damages shall be paid for an unlawful use of somebody else’s funds as a result failure to execute of a monetary obligation or a delay in their pay144

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ment, or their undeserved receipt or saving at the expense of any other entity. Amounts of damages shall be assessed on the basis of the official rate of refinancing of the National Bank of the Republic of Kazakhstan as at the date of the execution of the monetary obligation or its relevant part. When exacting debts in a judicial procedure, the court may satisfy claims of the creditor on the basis of the official rate of refinancing of the National Bank of the Republic of Kazakhstan as at the date of filing the action or at the date of passing a decision, or as at the date of actual payment. These rules shall apply where the new amount of damages is not established by legislative acts or an agreement. 2. Damages for using somebody else’s funds shall be assessed including the date of the payment of those funds to the creditor, unless legislation or agreement provide an alternative procedure for the assessment of the forfeit. 3. When losses inflicted upon a creditor by unlawful use of his funds exceed the amount of the forfeit, owing to him on the basis of paragraph 1 of this Article, he shall have the right to claim from the debtor the reimbursement of the losses inasmuch as they exceed that amount. Article 393. Important Terms of an Agreement 1. An agreement shall be deemed to be concluded when consensus is reached between the parties in accordance with the required form, on all the material terms of it. The provisions concerning the subject-matter of the agreement, the provisions which are recognized by legislation as material or which are necessary for the agreements of that, and also all the provisions on which according to the application of either party, consensus must be reached, shall be recognized as material terms. 2. Where in accordance with legislative the conclusion of an agreement requires a transfer of property, the agreement shall be concluded from the moment of the transfer of that property. Article 395. Offer 1. A proposal to conclude an agreement, which is made to one or several specific persons, provided it is sufficiently definite and expresses the intent of the person who made the proposal to deem himself bound in case of its adoption (acceptance), shall be recognized as offer. A proposal shall be deemed to be sufficiently definite, if it contains the material terms of the agreement and the procedure for their determination. 2. An offer shall bind the person who sends it from the moment of its receipt by the addressee. 145

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When the notice of revoking an offer is received earlier than or simultaneously with the offer itself, the offer shall be deemed to be not received. 3. An offer received by the addressee may not be revoked during the period which is established for its acceptance, unless it is otherwise stipulated in the offer itself, or ensues from the essence of the proposal or the situation in which it was made. 4. Advertisements and other proposals which are addressed to an indefinite circle of persons shall be considered as an invitation to make an offer, unless it is otherwise stipulated in the proposal. 5. A proposal which contains all the substantial terms of the agreement, from which the will of the person who is making the proposal is understandable, to conclude the agreement on the terms specified in the proposal with anyone who responds, shall be recognized as an offer (public offer). Article 396. Acceptance 1. The response of a person to whom the offer is addressed, about accepting it shall be recognized as acceptance.Acceptance must be entire and unconditional. 2. Silence shall not be recognized as acceptance, unless it otherwise ensues from the legislative act, tradition of business practice or previous business relations of the parties. 3. The commitment by the person who received an offer, within the period which is established for its acceptance, of the actions to implement the provisions of the agreement which are indicated in it (shipment of goods, rendering of services, performing work, payment of the appropriate amount etc.), shall be recognized as acceptance, unless it is otherwise stipulated in legislation or indicated in the offer. 4. If a notice of revocation of the acceptance is received by the person who sent the offer, earlier or simultaneously with the acceptance itself, the acceptance shall be deemed not received. http://adilet.zan.kz/ Law of the Republic of Kazakhstan on Joint Stock Companies 13.05.2003 Extraction Article 3. Joint stock company 1. Joint stock company (hereinafter – a company) is a legal entity that issues stocks to raise funds for its activity. 146

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A company shall possess the property, separate from the property of its shareholders, and shall not be responsible for their obligations. A company shall be liable for its obligations within the limits of its property. 2. A shareholder of a company shall not be liable for its obligations and shall bear the risks of losses, associated with the company’s activity, within the cost of his shares, except for the cases, stipulated by the legislative acts of the Republic of Kazakhstan. 3. In the cases, provided by the legislation of the Republic of Kazakhstan, non-profit organizations may be established in the legal form of a joint stock company. 4. A company (other than a non-profit organization, established in the legal form of a joint stock company) shall be entitled to issue bonds and other types of securities. 5. The legislative acts of the Republic of Kazakhstan can set obligatoriness of a legal form of a company for the organizations, engaged in certain types of activities. 6. A company shall have a corporate name, that shall indicate the legal form «joint stock company» and its name. Abbreviation of the name of the company and the use of the abbreviation «JSC» before the name of the company shall be allowed. Article 5. Founders of a joint stock company 1. Founders of a joint stock company are the individual and (or) legal entities that decided to establish it. 2. The state bodies of the Republic of Kazakhstan and state institutions may not be founders or shareholders of the company, except for the Government of the Republic of Kazakhstan, local executive bodies, as well as the authorized body, in accordance with the laws of the Republic of Kazakhstan. Upon the resolution of the Government of the Republic of Kazakhstan, a founder of joint stock companies shall be the authorized body for the state property management. Upon the decision of the local executive body, a founder of the joint-stock companies shall be the executive body, funded by local budget, entitled to manage municipal property. The state enterprise shall be entitled to be a founder of a joint stock company and purchase its shares only with the consent of the state body, that performs the function of an owner and a state management body in relation to the enterprise. 147

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3. One person may be the founder of a company. 4. Founders of the company shall have joint liability for payment of expenditures, associated with foundation of the company and arising prior to its registration. The company shall reimburse these expenses to its founders only in case of subsequent approval of these expenditures by the general meeting of the shareholders. Article 13. Types of shares 1. An ordinary share shall give the shareholder the right to participate in the general meeting of the shareholders with the right to vote in all issues, submitted to a vote, the right to receive dividends if the company has net income, as well as a part of the company’s property in case of its liquidation in the order, established by the legislation of the Republic of Kazakhstan. 2. Shareholders – the owners of the preferred shares shall have a priority right to the shareholders – the owners of ordinary shares to receive dividends at a predetermined rate, guaranteed by the company’s charter, and a part of the property in case of liquidation of the company in the order, prescribed by this Law. During the placement, the number of the preference shares shall not exceed twenty-five percent of the total number of the allotted shares. 3. A preference share shall not give the shareholder the right to manage the company, except for the cases, specified in the paragraph 4 of this article. 4. A preference share shall give the shareholder the right to manage the company if: 1) a general meeting of the company’s shareholders shall consider the issue, the decision on which may limit the rights of a shareholder, owning the preferred shares. The decision on such issue shall be taken only under the condition that not less than two-thirds of the total number of the allotted (excluding the purchased) preferred shares voted for the restriction. Among the issues, the decision on which may limit the rights of a shareholder, owning the preferred shares, are the questions on (about): – reduction of the amount or changing of the order of calculation of the amount of dividends, paid on the preferred shares; – changing of the order of payment of dividends on the preferred shares; – exchange of the preferred shares for the ordinary shares of the company; 1-1) a general meeting of the shareholders shall consider approval of amendments to the calculation (approval of the calculation, if it was not approved by a foundation meeting) of the value of the preferred shares at their redemption by the company in the unorganized market in accordance with this Law; 148

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2) a general meeting of the company’s shareholders shall consider the issue on reorganization or liquidation of the company; 3) dividends on the preferred shares are not paid in full within three months from the expiry of the deadline, set for its payment. 4-1. In the case, provided in the subparagraph 3) of paragraph 4 of this article, the right of a shareholder – owner of the preferred shares to participate in the management of the company shall be terminated on the date of payment of the full amount of the dividend on the preferred shares, owned by him. 5. The foundation meeting (the decision of a sole founder) or general meeting of the shareholders may introduce one «golden share» that is not involved in formation of the authorized capital and receipt of dividends. The owner of the «golden share» has the veto right to the decisions of a general meeting of the shareholders, the board of directors and the executive body on the issues, defined by the company’s charter. The veto right, certified by the «golden share» shall not be delegated. http://adilet.zan.kz/ Law of the Republic of Kazakhstan On State Registration of Rights to Immovable Property 26.07.2007 Extraction Article 4. The state registration of rights to immovable property The following rights to immovable property shall subject to the state registration in the legal cadaster: 1) right of property; 2) right of economic management; 3) right of operational management; 4) land use right for the term not later than one year; 5) easement in favor of the dominant land plot or other object of immovable property for the term at least one year. Other rights may be registered at the wish of rights holders. Article 20. Procedure of conducting of the state registrationof rights to immovable property 1. The state registration of right to immovable property shall be conducted in the following procedure: 149

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1) reception of documents, provided by Article 21 if this Law for the state registration; 2) verification of documents, presented for the state registration, including monitoring of legality of made transaction and (or) other legal facts (legal compositions), being the grounds of accrual, change, termination of rights (encumbrances of rights) to immovable property or other objects of the state registration for compliance with the current legislation. The registering body shall receive details on technical and identification characteristics of object of immovable property, necessary for the state registration of rights to immovable property from the relevant state information system; 3) making entries to the registration list on the made registration or refusal or suspension of the state registration in the cases, provided by this Law; 4) making inscription on the right stating document on the conducted state registration; 5) issuance of the right stating document with the mark on the conducted registration, or document on refusal or suspension of the state registration on the grounds, provided by this Law, as well as issuance of certificate on the state registration in the cases, provided by the legislative acts of the Republic of Kazakhstan. 1-1. Electronic registration shall be carried out in the cases, when the rights (encumbrances of rights) are accrued, changed or terminated on the basis of notarially certified transaction. 2. Electronic registration shall be conducted in the following procedure: 1) notary after certification of transaction shall: – direct the electronic copy of right stating document, certified by the electronic digital signature, by unified notarial information system, to the information system of legal cadaster; – inform the acquirer of the immovable property; – on the unique number of right state document, assigned by the unified notarial information system; – on amount of the fee for the state registration of rights to immovable property, subjected to the payment, or on exemption from payment of the fee in accordance with the tax legislation of the Republic of Kazakhstan; – scan the document, approving the right to benefits, in the case of exemption of the acquirer of immovable property from the payment of the fee for the state registration of rights to immovable property; direct to the information system of legal cadaster: e-mail accounts in the Internet of participants of transaction upon their existence; 150

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electronic copy of document, approving exemption of person from the payment of fee for the state registration of rights to immovable property; 2) rightholder or his (her) authorized representative shall pay the fee for the state registration through the payment gateway «electronic government» (hereinafter – PGEG) by any means, provided by the authorized body, carrying out management in the scope of informatization, with compulsory specification of data of payer of the fee for the state registration of rights to immovable property and unique number of right stating document. After making the payment of the fee for the state registration of rights to immovable property, the check details (unique payment code, name of the payee, budget classification code, name of the second-tier bank or organization, carrying out the separate types of banking operations, data of the payer of payment, as well as his (her) identification number, the amount of fee, date and time of payment, unique number of right stating document) shall be stored in the PGEG in the form of electronic check and directed to the information system of legal cadaster; 3) registering body shall: verify existence of electronic check, approving the payment of the fee for the state registration of rights to immovable property, completeness of the paid fee and compliance of the unique number of right stating document, specified in the electronic check and electronic copy of right stating document in the information system of legal cadaster, and if it is necessary in the PGEG; carry out actions, provided by subparagraphs 2) and 3) of paragraph 1 of this Article upon condition of approval in the information system of legal cadaster of the payment of fee for the state registration of rights to immovable property or on exemption from payment of fee; direct notification on conducted registration or on refusal or suspension of the state registration on the grounds provided by this Law to the unified notarial information system, as well as upon availability to the e-mail accounts of participants of transaction; print the right stating document on the paper medium, notification on conducted registration or on refusal or suspension of the state registration and electronic check, approving the payment of the fee for the state registration of rights to immovable property, for storage in the registration file. Article 23. Terms of conducting of the state registration 1. The state registration of rights to immovable property (encumbrances of such rights) shall be conducted during five business days from the date of receipt of application to the registering body, except for the cases, provided by paragraphs 1-1, 2 and 3 of this Article. 151

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1-1. Electronic registration shall be conducted not later than the day following the day of receipt of approval on payment of the fee for the state registration of rights to immovable property or exemption from payment of fee to the information system of legal cadaster. 2. Registration of encumbrances, imposed by the state bodies and other authorized persons, as well as legal claims shall be immediately conducted from the date of receipt of application to the registering body. 3. State registration of rights (encumbrances of rights) to immovable property shall be conducted summarily not later than the day following the day of receipt of application to the registering body, upon condition of payment of the amount of fee, provided by the tax legislation of the Republic of Kazakhstan to the budget. http://adilet.zan.kz/ Law of the Republic of Kazakhstan on State Registration of Legal Entities and Record Registration of Branches and Representatives 17.04.1995 Extraction Article 6. Procedure for state registration of legal entities Application in the form established by the Ministry of Justice of the Republic of Kazakhstan shall be filed to registering body for state registration of legal entities, and documents mentioned in Article 7 of this Law drawn up in Kazakh and Russian languages and presented in three copies shall be enclosed. Charters (provisions) of legal entities related to the subjects of medium and large business, their branches and representatives, with the exception of charters (provisions) of joint stock companies, their branches and representatives shall not be represented upon state registration. State registration of legal entity related to the subject of small business shall be carried out in the manner provided by Article 6-1 of this Law. Application in the form established by the National Bank of the Republic of Kazakhstan (hereinafter – National Bank) shall be filed to registering body for the state registration of legal entity – participant of regional financial centre of the city of Almaty. Details on legal entities – participants of the regional financial centre of the city of Almaty shall be entered into the National register of business identification numbers by bodies of justice on the basis of notifications directed by the National Bank. 152

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In cases provided by the legislation of the Republic of Kazakhstan, the permission of the National Bank for the state registration of legal entity the subject to activity of which is rendering of financial services shall be required additionally. State registration of subjects of market holding dominant or monopoly position at the relevant trade market, as well as of state enterprises, legal entities more than fifty percent of stocks (shares of participation in charter capital) of which belong to the state, and persons affiliated with them that will carry out their activity in the territory of the Republic of Kazakhstan with the exception of cases when such creation directly provided by the Laws of the Republic of Kazakhstan shall be carried out by registering body with preliminary agreement of anti-monopoly body. Anti-monopoly body shall represent register of the subjects of market to registering bodies holding dominant or monopoly position at the relevant trade market, and list of the state enterprises, legal entities, more than fifty percent of stocks (shares of participation in charter capital) of which belong to the state, and persons affiliated with them created with the agreement of anti-monopoly body. Upon state registration of legal entity related to the subject of medium and large business, the application shall be signed and filed to registering body by a founder or one of the founders or person authorized by a founder in cases when one single founder or one of the founders is a foreign person or foreign legal entity, Government of the Republic of Kazakhstan or state bodies or the National Bank, accompanied by notarial certified constitutive documents in cases provided by the legislative acts of the Republic of Kazakhstan. Upon the state registration of legal entity not related to the subject of private enterprise, the application shall be signed and filed to registering body by a founder (founders) or authorized person accompanied by notarially certified constitutive documents in cases provided by the legislative acts of the Republic of Kazakhstan. State registration of legal entities related to the subjects of medium and large business with foreign participation shall be performed in the manner established for the state registration of legal entities of the Republic of Kazakhstan related to the subjects of medium and large business. Unless otherwise established by international treaties ratified by the Republic of Kazakhstan, it shall be represented additionally as follows: legalized abbreviate from the trade register or other legalized document certifying that a founder – foreign legal entity is a legal entity under the legislation of foreign state, with notarial certified translation to Kazakh and Russian languages; 153

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copy of passport or other document certifying identity of a founder-foreigner with notarial certified translation to Kazakh and Russian languages. State registration of public and religious associations shall be carried out in the manner established by this Article in recognition of special aspects provided by the Laws of the Republic of Kazakhstan «On public associations», «On political parties», «On religious activity and religious associations». Receipt or another document certifying payment of registration fee to the budget for state registration of legal entity shall be represented at the same time, with the exception of legal entities related to the subjects of small and medium business. Requirement of any documents and details except for those provided by this Law and other legislative acts of the Republic of Kazakhstan shall be prohibited. State registration of legal entity may be performed on the basis of electronic application filed by the Internet in the manner determined by the Ministry of Justice of the Republic of Kazakhstan. Upon state registration of legal entity related to the subject of private enterprise, the subject shall determine a category on an independent basis in accordance with criteria of the subject of private enterprise established by the legislation of the Republic of Kazakhstan on private enterprise and shall state it in the application. Article 9. Terms of state registration (reregistration) of legal entities, record registration (reregistration) of branches (representatives) and issuance of documents State registration (reregistration) of legal entities related to the subjects of private entrepreneurship, record registration (reregistration) of their branches (representatives), as well as state registration (reregistration) of legal entitiesparticipants of the regional financial centre of the city of Almaty, with the exception of joint stock companies, their branches (representatives) carrying out the activity on the basis of charter that is not of standard type shall be performed no later than one business date next to the date of issuance of application accompanied by necessary documents. State registration of legal entities related to the subjects of small and medium business, with the exception of legal entities-participants of the regional financial centre of the city of Almaty and joint stock companies, their branches (representatives), through the website of «electronic government» shall be carried out within one hour of business date from the date of filing the application. State registration (reregistration), registration of introduced amendments and supplements to the constitutive documents of legal entities not related to 154

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the subjects of private entrepreneurship, as well as joint stock companies carrying out the activity on the basis of the charter that is not of standard type, with the exception of political parties, the record registration (reregistration) of their branches (representatives) shall be performed no later than ten business days next to the date of filing the application accompanied by necessary documents. For legal entities related to the subjects of small business, their branches (representatives) with the exception of joint stock companies carrying out the activity on the basis of charter that is not of standard type, their branches (representatives), the issuance of certificate on state registration (reregistration) of legal entity, certificates on record registration (reregistration) of branch (representative), return of application on state registration (reregistration) of legal entity (in case of carrying out the activity on the basis of standard type charter) shall be performed on the next business date after filing application accompanied by necessary documents. For legal entities not related to the subjects of private enterprise, as well as joint stock companies carrying out the activity on the basis of charter that is not of standard type, with the exception of political parties, their branches (representatives), issuance of certificate on state registration (reregistration) of legal entity, certificate on record registration (reregistration) of the branch (representative), as well as return of charter (provision) shall be performed no later than fourteen business days from the date of filing application accompanied by necessary documents. State registration (reregistration) of political parties and record registration (reregistration) of their branches (representatives) shall be performed no later than one month from the date of filing application accompanied by necessary documents. In case of representing incomplete package of documents, existence of their deficiencies, necessity of receiving opinion of an expert (specialist) on constitutive documents, as well as on other grounds provided by the legislative acts of the Republic of Kazakhstan, the term of state (record) registration (reregistration), registration of termination of activity of legal entities, deregistration of branches (representatives), registration of introduced amendments and supplements to constitutive documents of legal entity not related to the subject of private entrepreneurship, as well as joint stock company, provisions on their branches (representatives) shall be interrupted until elimination of detected deficiencies or receipt of the relevant conclusion (opinion) . http://adilet.zan.kz/ 155

Еducational issue

Dochshanova Assel Serzhanovna CIVIL LAW OF THE REPUBLIC OF KAZAKHSTAN General part Educational manual

Typesetting and cover design G. Kaliyeva Cover design used photos from sites www.Law-Concept-52301635.com

IB No. 9901

Signed for publishing 21.07.2016. Format 60x84 1/16. Offset paper. Digital printing. Volume 9.75 printer’s sheet. 70 copies. Order No. 3404. Publishing house «Qazaq university» Al-Farabi Kazakh National University KazNU, 71 Al-Farabi, 050040, Almaty Printed in the printing office of the «Qazaq university» publishing house.