Success

Introduction

In November 2024, the Pechersk District Court of Kyiv satisfied the lawsuit of a U.S. citizen regarding the recovery of funds from a Ukrainian IT company for breach of a contract for the creation of a musical work. The case demonstrates the effectiveness of Ukrainian justice in protecting the rights of foreign nationals and the liability of domestic entrepreneurs for non-performance of contractual obligations.

By court judgment, USD 4,490 (UAH 181,906.96) in principal debt was awarded, as well as UAH 1,890.07 in court fees and UAH 10,000 in legal costs.

Background

On December 29, 2018, an agreement was concluded between the plaintiff and defendant regarding the preparation of a musical work in the form of sample reproduction. The subject matter of the contract was the reproduction of specific elements of an existing audio recording with re-recording of individual instrumental and vocal parts.

On January 2, 2019, the plaintiff fulfilled his obligations by paying USD 4,490 to the personal account of the defendant's director. After approximately six months from the contract conclusion, the musical work had not been prepared.

On July 17, 2019, an email was received from the company's director with apologies for the delay and explanations regarding the specifics of their approach to sample reproduction. The letter stated that each element is analyzed separately and various studios from around the world are used for collaboration, resembling "distributing puzzle pieces." The director promised to complete the project within two weeks or offer partial compensation.

Having not received funds from the counterparty, the client sought legal assistance from the "Disputes" Law Firm.

On March 27, 2024, the attorney sent a demand letter to the defendant regarding contract termination and return of funds. No response to the demand was received. After analyzing the documents, a decision was made to prepare and file a lawsuit.

Filing of Lawsuit and Legal Position

The agreement between the parties was qualified as a contract for work pursuant to Articles 837-838 of the Civil Code of Ukraine. Under a contract for work, the contractor undertakes at his own risk to perform certain work according to the customer's specifications, and the customer undertakes to accept and pay for the completed work.

Legal Grounds

The legal basis for the lawsuit was Articles 849 and 858 of the Civil Code of Ukraine. Article 849 provides the customer with the right to terminate the contract for work in cases where:

• the contractor fails to commence work on time
• the contractor performs work so slowly that completion within the deadline becomes impossible
• during performance of the work, it becomes evident that it will not be performed properly

Article 858 of the Civil Code of Ukraine grants the customer the right to terminate the contract and demand compensation for damages in case of material defects in the work that cannot be remedied.

Unjust Enrichment

After contract termination, the funds paid by the plaintiff acquired the status of unjustly obtained pursuant to Article 1212 of the Civil Code of Ukraine. The defendant was obligated to return these funds since the legal basis for retaining them had ceased to exist.

During lawsuit preparation, it was established that more than three years had passed since the breach of obligations - the general limitation period established by Article 257 of the Civil Code of Ukraine. However, the client decided to take the risk and file the lawsuit in any case.

Court Decision

The case was heard in simplified proceedings with participant summons. The defendant failed to appear at the court hearing despite proper notice and did not file a statement of defense.

On November 15, 2024, the Pechersk District Court of Kyiv rendered a default judgment in the case, fully satisfying the plaintiff's claims.

The court agreed with the legal qualification of the contract as a contract for work and noted that "analyzing the nature of the legal relationship that arose between the parties, the substantive law provisions governing them, the agreement by its content and legal nature is a contract for work."

Key to the reasoning part of the judgment was establishing the fact of the defendant's non-performance of contractual obligations:

The case materials contain no evidence that the defendant commenced performance of the concluded contract terms.

The court found that "the case materials contain no evidence indicating the defendant's performance of the contract for work terms, and the plaintiff's assertions regarding the defendant's non-performance of contract terms have not been refuted by any evidence."

The court supported the legal position regarding unilateral contract termination, stating:

the plaintiff exercised the right of unilateral contract termination (Part 3 of Article 849 of the Civil Code of Ukraine) and notified the defendant thereof, wherefore the company lost the legal basis for retaining the plaintiff's funds, and the funds acquired the status of unjustly obtained.

By court judgment:

• USD 4,490 (UAH 181,906.96) in principal debt was awarded from the company
• Court fees in the amount of UAH 1,890.07 were awarded
• Professional legal assistance costs in the amount of UAH 10,000 were awarded

Conclusions

The examined case demonstrates the importance of active participation in judicial proceedings and proper utilization of procedural opportunities for protecting one's rights and interests.

The judgment became final and was submitted for enforcement.