On the issue of liability for misleading statements about circumstances

Abstract

In the course of a large-scale reform of civil legislation in 2015, the institute of assurances of representations appeared in Russian law. This construction was implemented from the foreign order, which gave rise to a lot of discussion issues in the doctrine and real law enforcement problems. Law enforcement problems are objectively conditioned by the fact that continental ideas about torts, liability, damages do not correspond in everything to common law approaches, on the model of which the norm on assurances was introduced into Russian law. The new norm of the Civil Code of the Russian Federation — Article 431.2 provides a bona fide business entity with a wide arsenal to protect the violated right caused by misrepresentation, regardless of the recognition of the contract as invalid or non-concluded. However, in order for such statements of fact as representations to function successfully and serve as a convenient risk management tool, a number of practical and theoretical issues need to be resolved. In this article the author considers one of the most important law enforcement issues in the light of the new institute of representations — the nature of liability for misleading statements. Analyzing foreign judicial practice and taking into account the original legislative construction of the norm 431.2 of the Civil Code of the Russian Federation, the author concludes that the “positive” methodology of calculating damages is preferable for the stability of business turnover. The article also touches upon the controversial issue of forfeit as a means of creditor’s protection in case of misrepresentation, and practical recommendations are also given.

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