Recovery of Losses Arising in the Event of Origination of Circumstances Provided for in an Agreement: The Illegality Factor

The work is devoted to the study of the issue whether or not the parties to entrepreneurial obligations are entitled to use contract mechanism of indemnity stipulated by clause 406.1 of the Civil Code of the Russian Federation in case the debtor’s obligation is defaulted. After considering the relevant legislative provi128 sions, court practice and scholars’ views, the author concludes that indemnity arising out of circumstances specified in the contract shall not be applied in case the obligation is violated by the debtor. It is noted that practical issues related to application of clause 15 of the Civil Code of the Russian Federation shall be eliminated by modifying the legal regime of compensation for losses, within which such means of protection of legal rights shall not be mixed up with indemnity in accordance with clause 406.1 of the Civil Code of the Russian Federation.