Protecting Rights in Case of Contract Defects or Invalidity: Effective Dispute Resolution Approaches

In legal practice, every defect in a contract opens the door to a complex labyrinth of legal consequences. In this context, the legal qualification of the defect - whether it constitutes nullity or voidability — plays a crucial role. This classification shapes the legal strategy: is it sufficient to seek only the consequences of invalidity, or is a formal claim for recognition of invalidity required? Is the breach alone enough to justify restitution, or must the claimant also prove the counterparty’s bad faith?

For businesses, this is not a theoretical question but a practical necessity. Choosing the wrong remedy may eliminate the possibility of restoring a violated right - or, at the very least, result in having to bring a second lawsuit and incur double the litigation costs.

"Invalidity vs. Nullity: Understanding Contract Defects"

In any legal conflict, the primary issue is not merely proving the breach but correctly defining the form and nature of the violation that requires protection. When it comes to defective transactions, this means understanding the legal nature of the transaction itself: is it void by operation of law, or is it merely voidable subject to judicial assessment?

Here lies a critical practical distinction: the effectiveness of the legal remedy depends on the correct qualification of the defect. Lawfulness is a constitutive element of any transaction as a legal fact. Civil transactions that violate public order are deemed void. If a transaction is void - meaning its invalidity is directly prescribed by law - then no formal declaration is necessary. The court must immediately apply the legal consequences, as the transaction is already legally “dead.”

If, however, the transaction is voidable - i.e., its invalidity depends on judicial evaluation of circumstances - then only a claim seeking its invalidation is an effective remedy. This approach reflects the principle of proportionality in legal response: the court should not issue abstract declarations but resolve the dispute in a manner that substantively restores the violated right, considering the content of the transaction, the conduct of the parties, and the consequences of its execution.

The legal assessment of a transaction as either void or voidable must always begin with an analysis of its compliance with Article 203 of the Civil Code of Ukraine, which sets out the general requirements for a valid transaction: legality of content, proper legal capacity of the parties, compliance with form, reality of will expression, and so forth. A breach of any of these requirements is a potential ground for invalidity. However, only a precise correlation between the nature of the violation and the chosen legal remedy will enable a party to protect its rights in court successfully.

Effective Protection: The Art of Strategic Choice

Under Article 13 of the European Convention on Human Rights, everyone whose rights and freedoms are violated shall have an effective remedy before a national authority, even if the violation was committed by persons acting in an official capacity.

According to the case law of the Grand Chamber of the Supreme Court of Ukraine, the choice of a specific remedy for protecting civil rights depends on the substance of the right or interest being protected and on the nature of the breach, non-recognition, or dispute. The right or interest must be protected effectively - i.e., that corresponds to the essence of the right, the nature of the breach, and the consequences resulting therefrom.

The essence of adequate judicial protection lies in achieving a real, not illusory, outcome. This includes restoring the violated right through restitution of property, compensation of losses, or elimination of unjust consequences. Thus, when choosing a legal strategy, one must answer a key question: is your interest in the very fact of the contract being declared invalid or in recovering what was lost as a result of its execution?

The Supreme Court consistently emphasises that the chosen remedy must align with the nature of the violated interest and the type of transaction rather than merely replicating typical claims. For example, in its ruling dated 4 June 2019 in case No. 916/3156/17, the Grand Chamber underlined that a claim seeking recognition of a void transaction as invalid is not an appropriate remedy since it does not lead to an actual restoration of the claimant's rights - the transaction is already void by law. At the same time, establishing the void nature of a transaction is not a remedy recognised by law.

A genuinely effective remedy would be applying the legal consequences of the transaction’s voidness—such as restitution of property or declaring that the contract does not create any obligations. Where there is a dispute about the legal consequences of an invalid transaction, and one party believes it to be void, the court must consider the arguments and, in the reasoning of its decision, confirm or refute the voidness based on the applicable substantive legal provisions.

This logic also applies in cases involving defects of will, breaches of rules of representation, or misleading actions. If a party’s interest lies not in the mere declaration of invalidity but in eliminating the legal consequences caused by the defective transaction, then the legal strategy must focus on these consequences. Otherwise, even if invalidity is established, the violated right will remain unrestored—and protection will be formal rather than practical.

Final Thoughts

Case law from 2019 to 2025 demonstrates a clear trend: courts are evaluating not only the legal conformity of the remedy but also its functional suitability for resolving the specific legal problem at hand. This paradigm shift - from formalism to substance, from ritual to real legal results - is a marker of the evolution of Ukrainian procedural law.

The effectiveness of the chosen remedy depends directly on the legal precision of the claim’s formulation and the logical link between the breach and its consequences. In recent years, courts have repeatedly highlighted that a claim for recognising a void contract as invalid - without seeking any consequences - fails to protect rights and may be dismissed. Legal protection is not an end in itself - it must be result-oriented. In this goal-oriented approach, the art of constructing a legal claim in defective transaction disputes reveals itself.

What Ensures the Choice of an Effective Legal Remedy?

• A proper level of legal counsel
• Precise formulation of claims that will lead to real restoration of the violated right or interest
• The possibility of enforcing the court’s decision

Despite its gravity, the invalidity of a contract is not the end of the story—it is a turning point where the genre shifts: the contract transforms into a “procedural legal thriller.” In this new setting, the winner is the one who correctly identifies the essence of the violated right and the depth of the legal defect and skillfully designs a claim where the remedy corresponds to the actual harm and the desired outcome. This means only one thing for businesses: know your rights and understand how, when, and with what tools to protect them. And therein lies the essential role of the professional legal advisor.

Sources:

• Civil Code of Ukraine, Articles 203, 215, 216, 220, 230, 210, 228 (Law No. 435-IV of 16.01.2003, version as of 01.01.2025)
• Ruling of the Grand Chamber of the Supreme Court dated 04.06.2019 in case No. 916/3156/17
• Ruling of the Grand Chamber of the Supreme Court dated 16.06.2020 in case No. 145/2047/16-c
• Ruling of the Grand Chamber of the Supreme Court dated 15.09.2020 in case No. 469/1044/17

Author: Tetiana Ohneviuk