Economic Contract

an agreement between socialist organizations with the status of juridical persons, directed toward an economic end and having a planned nature. An economic contract makes assignments of the national economic plan more specific and detailed. An economic contract may be mandatory or voluntary; that is, it may be concluded on the basis of and in fulfillment of a planned assignment mandatory for both parties, or it may be made at the discretion of the parties if a contract between these particular enterprises is not directly prescribed.

Under the new system of planning and economic incentives introduced in the USSR in the mid-1960’s, the role of the economic contract has greatly increased because several planning functions previously exercised by higher bodies of economic management have been transferred to the enterprises; the enterprises themselves now determine several indexes of their productive economic activity within the framework of their assignments from higher bodies expressed in more general terms. The enterprise plans its activity in coordination with the consumers of its output by concluding economic contracts with them. The Directives of the Twenty-fourth Congress of the CPSU (1971) provide for an increased role for economic contracts and for the systematic development of direct long-range economic relations between enterprises, viewing contracts as elements in improving management and planning in the USSR (Materialy XXIV s”ezda KPSS, 1971, p,297).

There are many types of economic contracts in the USSR: delivery, capital construction, transfer of funds, subcontract work, freight haulage, delivery of agricultural products, forwarding, agency, storage, and waterborne haulage. There are also contracts for design and prospecting work, commissions, and loans.

The procedure for concluding economic contracts, the property responsibility stemming from contracts, the fulfillment schedules, and several other questions are regulated in general by the Fundamentals of Civil Legislation of the USSR and of the Union Republics of 1961, as well as by several special normative acts, such as the Statutes on the Delivery of the Output Aimed for Production and Technological Use and of Consumer Goods of 1969 and the Regulations of Contracts on Subcontract Construction of 1969, which have been confirmed by the Council of Ministers of the USSR. Contracts for the delivery of some special types of goods are regulated by special acts, the so-called Special Terms of Delivery.

The stipulations of economic contracts are determined by law, by the plan, or by agreement between the parties. The plan establishes the basic conditions of the economic activity of enterprises. The order of the execution and formulation of the economic contract depends on its type. Standard contracts (for instance, contracts of delivery of agricultural products) have been drawn up with a view to unifying the stipulations of different types of economic contracts. Standard contracts are normative acts that are binding on the parties. They should be distinguished from model contracts, which are merely examples of different types of contracts and are not binding on the parties. Such standardization of the stipulations of economic contracts is necessary to allow for the legal regulation of the complex and diversified economic relations in the socialist economy.

Economic contracts are drawn up in writing, and the two parties sign the same document or exchange letters. The acceptance for execution by two parties of an itemized schedule (for instance, a document on the planned distribution of output) containing all the necessary delivery stipulations, also has the force of a contract. If no agreement is reached on the content of an economic contract, the dispute is heard by an arbitration commission whose decisions are binding on the two parties. Arbitration of precontract disputes is a characteristic feature of economic contracts.

Soviet law provides for the principle of specific performance of economic contracts. “Specific performance” means the strict observation of contracts; fulfillment in kind cannot be replaced by financial compensation. If an economic contract has not been fulfilled or has been fulfilled inadequately, the party that has broken the contract bears material responsibility, as a rule either in the form of various fines or in the form of compensation of losses.