The Ukrainian legal system is on the verge of tectonic shifts that lawyers have already dubbed the “era of the great recodification.” The central event of this process is not merely an update, but a de facto rebirth of the Civil Code of Ukraine, which in its new edition will be titled the “Code of Private Law.” For businesses, this means much more than a change in the numbering of articles—it represents a fundamental shift in the philosophy of contractual relations and a final farewell to the Soviet legacy of commercial law.

Liability Prior to Signing: Culpa in contrahendo

Traditionally, Ukrainian businesses have viewed negotiations as a zone free of obligations: “until the contract is signed, no one owes anyone anything.” The new Code breaks this stereotype by introducing the concept of pre-contractual liability.

If a party enters into negotiations in bad faith (for example, without a genuine intention to conclude an agreement, but solely to block a competitor or obtain trade secrets) or abruptly terminates them at the final stage when the other party had reasonable expectations of success, there arises an obligation to compensate for losses.

Practical advice: Implement pre-contractual agreements. Set forth in memoranda of understanding not only commercial objectives but also the conditions for withdrawing from negotiations and the allocation of due diligence costs.

Prohibition of Contradictory Conduct: Estoppel

One of the most significant innovations is the legalization of the doctrine of venire contra factum proprium (prohibition of contradictory conduct). Estoppel means that a party loses the right to rely on certain facts or rights if its prior conduct gave the other party reason to believe otherwise.

For example, if a landlord has accepted late rent payments for years without objection, they cannot suddenly terminate the lease by citing a breach of payment deadlines, since their prior conduct created legitimate expectations on the part of the tenant.

Practical advice: Any deviation from the text of the contract during its performance must either be documented as a modification of the terms or accompanied by a written reservation of rights; otherwise, you risk losing those rights by implied consent.

Warranties Instead of Nullity: Warranties

Previously, the discovery of false information in a contract often led to its invalidation (restitution), which is disastrous for complex transactions. The new code offers an alternative—the institution of warranties. A party may warrant certain facts (the condition of assets, the absence of debt, IP rights). If a warranty proves to be false, the contract remains in force, but the aggrieved party is entitled to recover damages or penalties, and in certain cases, to terminate the contract unilaterally.