2.) The part three of the Article 15 of the Law of Ukraine “On Financial and Credit
Mechanisms and Management of Housing Construction and Real Estate” put as
following: “The size of the rights in action of the principal is determined by the number
of measurable units of the investment. The principal, who owns the right in action on
the appropriate amount of the measurable units of the object of the investment, has
under the contract of FCF participation the exclusive right to consolidate the rest
measurable units of the investment; the fixation of the remaining measurable units of
the investment after other principals are prohibited.
In case of principal’s refusal from the right on measurable units of the investment
(reserving the rest of measurable units in this facility investment), the manager has the
right to sell these units without the consent of the principal”.
The legislation of Ukraine also allows the possibility of principal’s refusal from
measurable units of the investment, leading to a denial from the rights in action for the
particular investment object. Such a refusal does not terminate participation in FCF.
However, in practice the refusal from contractual rights on the object of the investment
is made in case of inability to perform duties under the contract and simultaneously
with the refusal to participate in the FCF. The refusal from rights on the investment
together with the refusal to participate in the FCF is understood as the unilateral
termination of the contract. The Part 1 of the Article 651 of the Civil Code of Ukraine
[2] stipulates that the modification or termination of the contract is permitted only with
the consent of the parties, unless other is provided by the contract or law. According to
the Part 3 of this Article in case of unilateral renunciation from the contract in whole
or in part, if the right on such refusal by contract or law is established, the contract is
terminated or modified accordingly. However, in case of this rule application, the
following question raises: from what date the contract is considered to be terminated?
The issue of contract termination has been considered by Shevchenko district court of
Kyiv in the case № 2-4774 / 09 [22]. The contract on FCF participation was concluded
between plaintiff as the principal and defendant as the manager of the FCF. According
to that contract the object of the investment was assigned to the plaintiff. After the
improper performance of the contract by the defendant, the plaintiff informed the
defendant about the refusal to participate in the FCF, early termination of the agreement
and costs refund. From that moment, the court considered the agreement on FCF
participation to be terminated.
It appears that in the above situation the monetary right in action arose after the
agreement on the FCF participation termination. In this case, the provision of the Part
7 of the Article 20 of the Law of Ukraine “On Financial and Credit Mechanisms and
Management of Housing Construction and Real Estate” [20] is not applicable (where
it is noted that the amount of the investment should be returned to the trustee in case of
his refusal to participate in the FCF within five days after the sale of the object of the
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