Drawing up a contract for the supply of goods with prepayment

General provisions of the contract, types of prepayment (100%, 50%, etc.)

A supply agreement is a type of purchase and sale agreement, although it has significant differences from it, which we will discuss later. The transaction is regulated by § 3 ch. 30 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation), although general rules on purchase and sale also apply to it.

The parties to the contract are the supplier and the buyer, who can be both individuals and legal entities. In this case, the supplier is always a person engaged in entrepreneurial activity (Article 506 of the Civil Code of the Russian Federation), in contrast to a purchase and sale agreement, where the seller can be any entity.

In addition, the goods transferred under the transaction in question are purchased only for business, that is, not for personal purposes (Article 506 of the Civil Code of the Russian Federation), in contrast to ordinary purchase and sale, when an item is purchased for any legal needs.

The prepayment condition means that the buyer transfers money before the goods are transferred. This position is most beneficial to the supplier, because:

preliminary calculation reduces its risks;
he can use the advance payment to purchase the supplied products.

In the case of prepayment, the buyer becomes a less protected party, since the supplier may violate the terms of the contract, which threatens the loss of both time and money. Prepayment makes sense for the acquiring party only if we are talking about a product whose price is unstable and can rise quickly.

If the condition for advance payment is not established, the buyer has the right to pay for the products only after receiving them.

Advance payment happens:

full (100%), when the entire amount under the contract is paid before delivery of the products;
partial or mixed (usually with an advance payment of 50%), when the second part of the payment is transferred after receipt of the goods.

Another option for such a transaction is an agreement with provisions for the sale of goods on credit (Article 823 of the Civil Code of the Russian Federation). Moreover, credit relations concern only that part of the amount that is paid after the transfer of the thing.

What else will change in the rules for advance contracts

The Ministry of Industry and Trade published on the official website a draft resolution in which it fixed a list of machine-tool products, in the procurement of which government customers will be able to set advance payments under 44-FZ in 2021 of at least 80% of their amount, but not more than the limits of budget obligations.

Along with others, this list includes products with the following OKPD2 codes:

25.73.30 - other hand tools;
27.90.31.110 - electrical machines and equipment for soft and hard soldering and welding;
28.41.2 - metal-cutting lathes, boring and milling machines.

Such an advance will be possible if:

for purchased goods, a ban on the admission of foreign goods was established according to Government Decree No. 616 of 04/30/2020;
The government contract was signed in 2021.

The Ministry of Industry and Trade also published on the website of draft regulations a draft federal law that amends Art. 34 44-FZ on contract terms. This project provides for the inclusion in the contract of a condition on the amount of advance payment under 44-FZ in 2021 of at least 50% of the contract price (contract execution stage) mandatory if purchased from an organization of the military-industrial complex included in the consolidated register of defense organizations -industrial complex, Russian radio-electronic products, in relation to which under Art. 14 44-FZ establishes the rules of national treatment (prohibition, restrictions or conditions of admission). The changes were planned to come into force in April 2021, but this did not happen.

To implement the initiative on prepayment under 44-FZ in 2021 for defense industry enterprises in the procurement of radio-electronic products, Art. 72 of the Budget Code. This bill was published by the Ministry of Industry and Trade.

We formulate conditions for prepayment

The settlement period in a supply agreement with prepayment is set either by a specific date or by a time period, but always occurs before the delivery of the goods. If an advance payment is specified in the transaction, but its term is not defined, then:

Payment for products must be made within 7 days from the moment such a demand is made by the supplier (Part 2 of Article 314 of the Civil Code of the Russian Federation).
The penalty for late payment can be calculated only from the date of delivery of the goods (post. FAS Volga District dated November 17, 2011 in case No. A12-2943/2011).
When shipping products before prepayment, the buyer is obliged to pay on the day of delivery or immediately after it (Clause 1, Article 486 of the Civil Code of the Russian Federation). Otherwise, interest will be charged on the amount under Art. 395 of the Civil Code of the Russian Federation, the period is counted from the moment of shipment plus from 2 to 5 business days required for a bank transfer (clause 16 of the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated October 22, 1997 No. 18).

In addition, paragraph 4 of Art. 487 of the Civil Code of the Russian Federation makes it possible to establish in a supply contract with prepayment the seller’s obligation to pay a percentage of the prepayment amount as a fee for using a commercial loan (clause 13 of the post of the Plenum of the Supreme Court of the Russian Federation No. 13, Plenum of the Supreme Arbitration Court of the Russian Federation No. 14 of October 8, 1998). If the transaction does not determine the amount and procedure for paying interest, then the first condition is calculated in accordance with the refinancing rate (clause 2 of Article 823, clause 1 of Article 809 of the Civil Code of the Russian Federation), and interest is transferred monthly (clause 2 of Article 809 of the Civil Code RF).

With a mixed prepayment, it is recommended, in the interests of the buyer, to stipulate in the text of the contract that for the second half of the payment, in accordance with clause 1 of Art. 317.1 of the Civil Code of the Russian Federation, interest is not accrued for using the deferment amount. It is also advisable, when making partial prepayment or supplying goods in batches, to determine what part of the product is paid in advance if the parties to the transaction are VAT payers.

You can enter the agreement using the link below.

Delivery agreement with prepayment - options for conditions, sample

The condition of prepayment under a supply agreement means that the buyer pays for the goods in advance, that is, even before the goods are placed at his disposal.
At the same time, it is important to specify the terms of settlement in detail in the text of the agreement, so that the parties subsequently avoid conflicts and litigation. Let's consider what to pay attention to when composing the text. The first three points - about the fact of prepayment, the amount and time of calculation - relate directly to making an advance payment.

The next two conditions - about the moment of payment and commercial credit - relate to the general procedure for settlements under the agreement. They can be used not only for an advance payment, but also for other payment options.

The moment of payment can be counted on the day the money is debited from the buyer’s account or the amount is credited to the seller’s account. It is of fundamental importance, because when a dispute arises, the court will focus specifically on the contractual wording. If the contract mentions the moment of debiting money from the buyer, then he will be considered to have fulfilled his obligation, even if the money does not arrive in the counterparty’s account. This means that in this case it will not be possible to recover any losses from him and the supplier will have to deal with the bank independently.

Commercial loan - interest on advance payment. They are not calculated automatically; they are set only by agreement of the parties. To set interest, you need to determine its amount and payment period, for example:

0.01% of the advance payment amount for each day before delivery;
lump sum payment within 1–3 business days from the date of signing the delivery certificate.

To protect yourself and completely exclude the possibility of accrual of interest, you can use the following wording in the contract: “The parties have agreed that the condition on a commercial loan for the amount of the prepayment (Article 317.1, clause 4 of Article 487 of the Civil Code of the Russian Federation) applies to relations within the framework of this the agreement does not apply."

You can download a sample supply agreement with prepayment for review on our website.

Responsibility of the parties (suspension of delivery, return of advance payment under the contract)

If the advance is not paid, the supplier has the right:

suspend the transfer of goods (clause 2 of article 487, article 328 of the Civil Code of the Russian Federation);
refuse your obligations completely and demand compensation for losses (clause 2 of article 328 of the Civil Code of the Russian Federation);
deliver the products and demand payment of interest under Art. 395 Civil Code of the Russian Federation;
transfer the goods and demand a penalty, if such a condition is stipulated in the delivery agreement with prepayment.

If the seller does not fulfill his obligations, then the buyer may demand (clause 3 of Article 487 of the Civil Code of the Russian Federation):

transfer of paid products;
refund of prepayment.

In what cases will it not be possible to claim an advance? Judicial practice on this issue contains the following precedents:

If the contract has a special condition that the prepayment is returned after termination of the transaction, then it will be possible to receive an advance only after the early termination of the contract (determination of the Supreme Arbitration Court of the Russian Federation dated September 19, 2013 No. VAS-7332/13 in case No. A56-44434/2011) .
If the buyer has not made the full advance payment stipulated in the delivery agreement with prepayment, then the supplier does not have an obligation to transfer the goods. Moreover, in this case, the buyer will not be able to claim his advance payment on the basis of clause 3 of Art. 487 of the Civil Code of the Russian Federation (resolution of the Federal Antimonopoly Service of the Volga-Vyatka District dated 04/08/2013 in case No. A43-17586/2012).
If the goods have not yet been received and the deadline for its transfer has not yet arrived, and the buyer wishes to return the advance payment, then he cannot demand payment of interest for the use of the advance amount (resolution of the Federal Antimonopoly Service of the Volga-Vyatka District dated June 28, 2011 in case No. A43-12388/2010) .
If the goods are delivered on time, the advance payment is not returned to the buyer (resolution of the Federal Antimonopoly Service of the Volga Region dated February 21, 2011 in case No. A57-7141/2010).

Payment terms in the supply agreement - advance payment of 50 percent and 100 percent

The principle of freedom of contract, recited in paragraph 1 of Art. 1 of the Civil Code of the Russian Federation, allows the parties to the transaction to independently determine the amount of advance payment. Based on paragraph 1 of Art. 487 of the Civil Code, the contract may provide that the buyer pre-pays for the goods in full, i.e. 100 percent, or in part. Moreover, the parties may provide that the amount of advance payment is agreed upon additionally (for example, in the specification for the consignment of goods).

If the need to make an advance payment and its amount are not specified in the contract, the provisions of clauses 1 and 2 of Art. 486 of the Civil Code of the Russian Federation. Based on the meaning of these clauses, in such cases the goods must be paid in full, immediately before or immediately after the transfer of the goods.

Paragraph 3 of Chapter 30 of the Civil Code does not consider the amount of advance payment as an essential condition of the supply agreement. In this regard, on the basis of paragraph 1 of Art. 432 of the Civil Code, the contract is considered concluded, even if this condition is not specified.

When specifying in the contract the need for preliminary 100% or 50% payment under the supply agreement, you must pay attention to the following important points:

If the advance payment is not made on time, the supplier has the right to suspend delivery.
If an advance payment is made, but the goods are not delivered, the buyer has the right to demand a refund of the funds paid in advance.
If an advance payment is made and the goods are not delivered, the buyer has the right to demand payment of interest, the amount of which is calculated according to the rules of Art. 395 of the Civil Code of the Russian Federation.

Results

So, delivery with advance payment comes in two types: with full and partial prepayment.
In this case, payment is always made before delivery of the goods. The legislator regulates the issues of prepayment in insufficient detail, therefore, when drawing up an agreement, it is advisable to provide for the condition of prepayment in as much detail and clearly as possible. You can download a sample contract for the supply of goods with prepayment on our website. Based on it, it will not be difficult to draw up your own version, changing the condition on the amount of the advance payment and indicating the period within which the rest of the funds must be paid. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

If the conditions for prepayment of goods have not been determined

If the conditions mentioned above are not agreed upon, this will not lead to the recognition of the contract as not concluded. The parties will only have to be guided by the general provisions of the law.

In this case, the following rules apply:

If the agreement does not contain an advance payment condition, the buyer pays for the goods no earlier than the delivery date (Article 486 of the Civil Code).
If the advance has been agreed upon, but the amount has not been determined (in whole or in part), you must pay in full (Part 2 of Article 486 of the Civil Code).
If you missed the deadline, you must pay within 7 days after submitting a request for payment (Article 314 of the Civil Code of the Russian Federation). In this case, the date of presentation of the claim can be considered the date of invoice. In any case, payment must be made prior to delivery.
If the moment of payment has not been determined, then if there is a dispute, the date of crediting the money to the supplier’s current account is recognized as such (if the parties have different banks, the date of crediting to his correspondent account). The position is reflected in paragraph 26 of the resolution of the Plenum of the Armed Forces of the Russian Federation dated November 22, 2016 No. 54.
If the parties have not written down a clause on a commercial loan, then interest will not be automatically accrued.

The above agreement for the supply of goods on prepayment will help you remember to write down all the necessary conditions.

Advantages and disadvantages of advances under 44-FZ

Using an advance payment under 44-FZ in 2021 for budgetary institutions has both pros and cons, which are important for the customer to know about when holding a tender.

Prepayment makes it easier for the contractor to pre-order GWS - he spends the funds received on the purchase of consumables, can choose the most suitable subcontractor, and not rely only on his financial capabilities.

True, the approach we are interested in increases the likelihood of losing the contract; more precisely, it all depends on the size of the advance under 44-FZ. After all, the contractor, having received 100% advance payment, may refuse to fulfill the terms of the contract. Let us make a reservation that for such actions the law provides for the imposition of penalties, fines, and the entry of information into the RNP.

Prepayment agreement sample form

Russian legislation allows the use of prepayment when purchasing goods or ordering services.

Typically, an advance payment or advance is a portion of the full payment required to be made by the buyer for goods or services provided. Prepayment is made before goods are transferred or services are provided.

In this article you will receive recommendations on how to draw up a legally correct prepayment or advance payment agreement.

In addition, you can download free samples of prepayment agreements.

Features of the prepayment agreement

Prepayment serves as a guarantee for the seller that the buyer is ready to purchase a product or order a service.

Typically, an advance is used by the seller to cover preliminary expenses in connection with the provision of services or the supply of goods.

By making an advance payment, the buyer assumes the risk, since he is parting with his funds before receiving the goods or services.

Therefore, we recommend that the transfer of the prepayment be made in writing to avoid unpleasant consequences in the event of the seller’s dishonesty.

If the buyer refuses to purchase or the seller is unable to provide the service or product, the seller is obliged to fully return the prepayment to the buyer.

The legislation provides for the possibility of collecting interest for withholding the buyer’s funds if the seller is in no hurry to return the advance amount previously paid.

The difference between an advance and a deposit

An advance should not be confused with the concept of a deposit.

The deposit carries additional responsibility for the parties and is drawn up by a lawyer in the presence of a notary.

An advance payment agreement is a simpler procedure that requires the presence of only the seller and the buyer.

If you want to return the advance payment to yourself if you cancel the purchase or not to pay a fine if you were unable to sell the goods, you should not call the advance payment a deposit.

Since the concept of “deposit” entails completely different legal consequences.

Rules for drawing up a prepayment agreement

There are several basic rules for drawing up a prepayment agreement.

These include the following rules:

The advance agreement is drawn up in writing

The contract must indicate the amount of the advance payment

The procedure for returning the prepayment amount in the event that the transaction does not take place is prescribed.

If the prepayment agreement is drawn up as a separate document and is not part of the purchase and sale or service agreement, its number and name must be indicated in the text.

Below is a standard form and a sample prepayment agreement, a version of which can be downloaded for free.

Advance in the contract system law

Advance payment under 44-FZ is a right, but not an obligation of the customer and is determined by him independently, based on feasibility and budgetary restrictions. There are purchases where the size exceeds 30% of the initial (maximum) contract price (NMCP), and for recipients of federal budget money a maximum value is established depending on the allocated limits of funds.

IMPORTANT!

As of October 1, 2019, the amendment to Art. 42 44-FZ. Clause 12 has been added, which instructs the customer to include information about the advance payment in the notice of purchase. As of July 31, 2019, there is no longer a need to prepare a notice of purchase from a single supplier, therefore prepayment under 44-FZ with a single supplier is not displayed in the Unified Information System.

The amount of security for the performance of the contract is increased to the amount of the advance in cases where the amount of security determined by 44-FZ is lower than the amount of the advance established by the customer.

If the customer has decided to make an advance, he enters this condition into the contract (Part 13, Article 34 44-FZ) and determines the amount of the advance and the period for its payment. Failure to indicate the payment period is considered a violation.

Refund of prepayment

You can return previously issued funds:

if the terms for the provision of services or transfer of property were not met;
if the goods or service received do not meet the required quality, or if other property is provided that is not the subject of the transaction.

You can return not only the deposited funds, but also request (Article 395 of the Civil Code of the Russian Federation):

penalty;
interest on the use of transferred funds (Article 823 of the Civil Code of the Russian Federation);
compensation for damage (material and moral) resulting from a violation of the agreement.

If the document does not state that the penalty is collected for failure to make an advance payment, then the court will refuse to collect the money, in accordance with the provisions of the agreement.