Buyer who accepted the seller-initiated return of advance payment for goods without objections cannot subsequently demand delivery of the goods under Part 2 of Article 693 of the Civil Code of Ukraine – SC GC

The rule set out in Part 2 of Article 693 of the Civil Code of Ukraine, which grants the buyer the right to demand delivery of the paid-for goods or the return of the advance payment if the seller, having received the advance payment, fails to deliver the goods within the agreed period, implicitly also includes the buyer’s right to accept the return of the advance payment initiated by the seller (i.e., to agree to the seller’s proposal for such a return) or to object to it and demand that the seller deliver the goods.

The buyer’s acceptance of the returned advance payment without objections proves the termination of the obligation by mutual agreement of the parties (Part 1 of Article 604 of the Civil Code of Ukraine). However, the seller’s obligation to deliver the goods in kind remains if the buyer, without undue delay, unequivocally objects to the return of the money (by means of a claim or lawsuit) and demands delivery of the goods.

These conclusions were made by the Grand Chamber of the Supreme Court.

In this case, the dispute concerned the performance of a supply contract for agricultural machinery. The claimant (buyer) made a 20% advance payment for the goods, but the respondent (supplier) failed to fulfill its obligation to deliver the goods within the contractual timeframe. After the contract expired, the respondent unilaterally returned the advance, citing force majeure circumstances. The claimant, however, accepted the returned advance payment and for a prolonged period – more than one year and one and a half months after the seller returned the advance – did not raise any objections to the return of the prepayment or make any demands for delivery of the goods. Only then did the claimant file a lawsuit seeking specific performance of the obligation (delivery of the goods) and recovery of the penalty.

The courts of first and appellate instance dismissed the claim for delivery of the goods but awarded the penalty (reducing its amount).

The main issue before the Grand Chamber of the Supreme Court was whether the seller’s obligation to deliver the goods terminates in the event of the expiration of the contract term and the return of the advance payment to the buyer (without any corresponding demand from the buyer and in the absence of other grounds for termination of the obligation).

The Grand Chamber of the Supreme Court took into account that, according to the meaning of Part 2 of Article 693 of the Civil Code of Ukraine, the choice between demanding delivery of the goods or the return of the advance payment depends on the buyer’s will.

The Grand Chamber of the Supreme Court noted that the return of the advance payment initiated by the seller, but accepted by the buyer without objections, is equivalent to the return of such amount upon the buyer’s direct demand. This is because it equally reflects the buyer’s will regarding the further fate of the mutual contractual obligations and results in the termination of the obligation by mutual agreement of the parties (Part 1 of Article 604 of the Civil Code of Ukraine). This situation differs from the return of the advance payment initiated by the seller where the buyer objected to it before, during, or immediately after such return, insisting on the seller’s performance of the obligation to deliver the goods. In that case, the parties’ obligations do not terminate and must be duly performed (Part 1 of Article 525, Part 1 of Article 599, and Part 1 of Article 629 of the Civil Code of Ukraine).

In view of the above, the Grand Chamber of the Supreme Court concluded that in this case the obligations were terminated by mutual agreement of the parties. The buyer, through his conclusive actions (prolonged absence of objections and lack of a clearly expressed demand for delivery of the goods), demonstrated acceptance of the advance payment returned by the seller. Since this occurred after the expiration of the contract term, there are no grounds in this situation to raise the issue of non-compliance with the requirements of Article 654 of the Civil Code of Ukraine regarding the form of amendment or termination of the contract.

Accordingly, the Grand Chamber of the Supreme Court rejected the arguments of the claimant’s cassation appeal that the return of the advance payment for the goods under the circumstances of this case should be regarded as the seller’s unilateral refusal to perform the obligation to supply the goods.

Resolution of the Grand Chamber of the Supreme Court dated February 18, 2026, in case No. 911/969/24 – https://reyestr.court.gov.ua/Review/134833396.

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