Assurances about Circumstances and Indemnification of Losses: Content and Correlation of Institutions

Since 2015, the Russian legal order has introduced two institutions that have been in great demand by the turnover: assurances of circumstances (Article 431.2 of the Civil Code of the Russian Federation) and compensation for losses arising from the occurrence of certain circumstances (406.1 of the Civil Code of the Russian Federation). It is hardly possible to find agreements without the use of these institutions in modern turnover of stakes or shares. Their economic value can hardly be overestimated: the parties use assurances and indemnities as a way of redistributing the risks of certain negative events or as a way of removing the burden of excessive diligence from the buyer. This study attempts to analyse the two categories in a systematic way, taking into account the existing understanding of obligations, to highlight the most problematic issues, and to summarise some of the discussions on the relationship between assurances and indemnification.