Currency Сlause in Сommercial Сontracts in the Сontext of Financial LeasingJournal: LAW AND INNOVATIVE SOCIETY (Vol.1, No. 4)
Publication Date: 2015-03-23
Authors : VRUBLEVSKA K. M.;
Page : 223-230
Keywords : currency clause; business contract; financial leasing; investment in housing construction.;
Problem setting. This article analyzes the application of currency clauses in commercial contracts in the context of financial leasing. The author emphasized that currency clause is the condition of foreign economic activity and it’s confirmed by the practice of private international law. Thus, in Ukraine currency clause applied in the internal trade turnover with reference of currency instability. Target of research. The article analyzed existing approaches to the definition of currency clauses, and its classification. It’s noted that from the legal point of view, currency clause is a special condition of contract. It determines the currency of payment transactions, the mechanism of adjusting the contract value in relation to the currency that the parties have chosen as evaluation standard. It’s also analyzed the judicial practice in the context of using the currency clauses in commercial contracts through the example of financial leasing and investment in housing construction in Ukraine. It’s indicated that currency clause is usable only in the relationship with foreign par. That is absolutely reasonable, according to the author’s opinion. The author paid attention to the question of rights protection of persons who have currency bank credit. Article’s main body. It’s indicated that the Law of Ukraine ?On prevention of the global financial crisis influence on the construction and housing building industries development? has no provision about using currency clauses in mentioned field. It is confirmed that a necessary condition for the development of the mortgage market in Ukraine is lending in national currency. But in this case, it is important to terminate the mortgage lending in foreign currency. The devaluation of national currency leads to increasing of credit risks of banks related to borrowers with mortgage lending in foreign currency, but with fixed income in national currency. Such problems raised from the fact that banks, wishing to avoid currency and interest-rate risks, offered foreign currency credits at much more favorable terms for them. Particularly, foreign currency credits offered for a longer term and, at almost, with twice lower interest rate. As an alternative variant to exclude the currency risk is to formulate the currency clause in the credit contract in case of changing in exchange rate. That is actually in most cases approached such credits to foreign currency lending ? indirectly through a national currency. Such ignoring of risks in the economy of Ukraine led to a sharp fall of the national currency. Under such condition, the great quantity of foreign currency credits reduced to massive failure of the agreement, discontented in society have been increasing and populist draft law has been emerge. Conclusions. It is proved that currency clause should be understood as an essential condition of the agreement. Such condition provides for review of the payment amount in proportion to changes in the exchange rate. And in the current legislation of Ukraine this clause could apply for both foreign and national currencies credits, excluding the banning of consumer foreign currency credits. Also the article emphasized the necessity to disallow the fixation of currency clauses in credit contracts for subjects that have no foreign exchange earnings, particularly in agricultural activities.
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