Success

Prologue: What Makes a Court Victory Epic?

For practicing lawyers, every court victory is the result of painstaking work and professional mastery. But there are cases that go beyond the ordinary and become truly epic.

A regular court victory is when a client's rights are clearly violated, all necessary evidence is available, there is a clear legal norm to resolve the dispute, and established case law exists. In such cases, the defendant's position is usually obviously unfounded. Judges "favor" such cases because there is a clear legal norm, established practice, and decisions can be prepared based on existing precedents in the Unified State Register of Court Decisions.

An epic victory, on the other hand, occurs when there is no direct legal norm to satisfy the claim, key evidence is missing and cannot be obtained, and the lawyer has to appeal to general principles of law. Such cases require exceptional creativity in forming a legal position. They force judges to go beyond formal application of norms, deeply analyze the situation, and show courage in making decisions, often creating new judicial practice.

The Case Details: When Numbers Speak for Themselves

In April 2021, a derivative purchase agreement was concluded between an internally displaced person and a developer. The peculiarity of the situation was that the client, as an IDP, planned to buy housing for personal residence—this was not an investment scheme for profit.

The agreement was structured to maximize the developer's interests, but some of its provisions went far beyond reasonable limits. The most problematic was the clause on penalty sanctions—0.5% of the total contract value for each day of delay. It is worth emphasizing the absurdity of this clause: even a debt of just 1 UAH would result in a fine of $142 per day. This is a classic example of unfair contract terms that, unfortunately, are often encountered in real estate.

The Conflict and Its Development

The events unfolded dramatically. Initially, the client diligently fulfilled all obligations under the agreement. However, there came a situation where funds for the next payment were placed in a term deposit, causing a technical delay of 15 days. The developer's representatives initially assured verbally that this would not be an issue. However, just a few days after the delay, automatic penalties began accruing. The particular cynicism of the situation was that, in just 15 days, the amount of penalties exceeded $2,000.

Legal Position and Argumentation

Our legal strategy was based on a comprehensive approach to protecting the client's rights. The main argument was Article 18 of the Law of Ukraine "On Consumer Rights Protection," which prohibits including terms in contracts that create a significant imbalance of rights and obligations to the detriment of the consumer. We also relied on Article 549 of the Civil Code of Ukraine, which establishes the principle of calculating penalties based on the amount of overdue obligation rather than the total contract value.

An essential element of our position was the application of Article 3 of the Civil Code of Ukraine, which enshrines general principles of justice, good faith, and reasonableness. Additional support was provided by Decision No. 7-rp/2013 of the Constitutional Court of Ukraine, emphasizing the need for proportionality of penalties and the inadmissibility of using them as a means of enriching the creditor.

The Court Hearing and Parties' Positions

During the court hearing, the developer insisted on the principle of freedom of contract and the voluntary agreement of all terms by the client. Their position was based on the absence of a direct prohibition of such penalties in the legislation. In contrast, we focused on the obvious unfairness of the contract terms, the violation of consumer rights, and the glaring disproportion between the penalty amount and the nature of the violation.

Significance for Judicial Practice

This decision creates an important precedent in the field of consumer protection in the real estate market. It establishes the boundaries of what is permissible when determining penalties and emphasizes the importance of adhering to the principle of justice in contractual relations. The court demonstrated its readiness to protect consumers' rights even in situations where the contract terms were formally agreed upon by the parties.

Conclusion

This case vividly demonstrates that even in the absence of direct legal norms and established judicial practice, justice can be achieved. It highlights the importance of courage in defending consumer rights and creative legal thinking. The victory in this case is not just the satisfaction of a claim; it is the affirmation of the principle of justice in contractual relations and the creation of an important precedent for future disputes in the real estate sector.