It is well-known that gift contract provides that on party (grantor) convey or undertakes to convey in future to another party property free of charge (gift). Is such agreement subject to termination?
Main provisions
As any other agreement the gift contract can be terminated. However, taking into account that convey of something as a gift is a unique process the Civil Code of Ukraine (hereinafter – CCU) provides some specifics for gist contract termination. Indeed, the gist contract can be terminated provided that: a) it is dissolved; b) one party unilaterally invalidates the contract.
Contract dissolution
Dissolution of the treaty includes both grounds for dissolution provided by the general rules of the CCU and specific one envisaged by Art. 726 and 727 of the CCU. The grantor has the right to demand the treaty to be dissolved if:
1) the grantee violates the obligation in favor of third party. The grantor can demand the return of the gift, and in case it is not possible – to compensate its value (Art. 727 of the TCU);
2) the grantee poses a risk of irreversible loss of gift which is of great value to the grantor (p. 2, Art. 727 of the TCU);
3) the grantee is neglectful of the thing of cultural value, the thing can be destroyed or substantially damaged (p. 3, Art. 727 of the TCU);
4) the grantee intentionally committed a crime against life, health, property of the grantor, his/her parents, spouse or children. This ground applies only to the gift contract for real estate or other especially valuable property. If the grantee committed intentional murder of the grantor the latter’s heirs can demand the treaty to be dissolved (p.1, Art. 727 of the CCU). In case the gift contract is dissolved the grantee is obliged to return the gist kind (p. 5, Art. 727 of the CCU).
According to p. 4, Art. 727 of the CCU the grantor can request the dissolution of the gift if at the moment of the claim the gift is preserved.
One-year limitation is applied to the claims for dissolution of the gift contracts. This rule is provided for by Art. 728 of the CCU.
Unilateral invalidation of contract
Under general rules the unilateral invalidation of the contract is prohibited unless the treaty or law otherwise provide (Art. 525 of the CCU). The gift contract has some specifics. In particular, the grantor who has transferred a thing to the enterprise, transport organization, communication provider or another person to hand it over to the grantee, has the right to invalidate the gift contract prior to the convey of the thing (p. 2, Art. 722 of the CCU).
The abovementioned is not applied to the gift contract that obliges the grantor to convey the gift in the future. Article 724 of the CCU includes specific rules concerning the unilateral invalidation of such treaty. Indeed, the grantor can refuse to convey the gift in the future if the grantor’s financial situation has worsened significantly after the contract is concluded. At the same time the grantee has the right to invalidate the contract at any moment and without any additional conditions before the acceptance of the gift.
In addition, the gift contract that obliges to convey the gift in the future is terminated if before the due date or deferral circumstance established by the gift contract, the grantor or grantee die. In such case there is no succession.
