What is a Protocol of Disagreements and when is it compiled?
Purpose and functions of the Protocol of Disagreements
A Protocol of Disagreements is a document that records specific discrepancies between parties regarding the content of contract terms. Upon receiving a draft of such a contract from the other party, a person, if they do not agree with certain provisions, has the opportunity to propose their own wording by setting them out in a protocol. Subsequently, this helps to settle differences and avoid misinterpretation of the contract.
Typical cases where the protocol is applied
A Protocol of Disagreements is compiled if a person, having received a draft contract from a counterparty, has their own vision of certain provisions: goods delivery terms, contract amount, grounds for termination, warranties, etc. Usually, such a protocol is drawn up specifically in the sphere of commercial legal relations. Moreover, drafting a Protocol of Disagreements is a relevant practice when concluding international agreements, as it is necessary to harmonize the norms of two different legislative systems. Furthermore, there are cases where a protocol is needed for a specific interpretation of contract norms due to translation complexities.
Regulatory framework regarding the Protocol of Disagreements
Article 181 of the Commercial Code of Ukraine strictly established certain provisions regarding the Protocol of Disagreements until August 16, 2020. It was noted that if there were objections to specific terms of the contract, the party receiving the draft contract should compile a Protocol of Disagreements. A reservation about this fact is made in the contract. Then, within a 20-day period, the person who compiled the protocol sends it to the other party in two copies together with the signed contract.
At the same time, it was indicated that the party receiving the protocol was obliged to review it within 20 days, and within the same period, take measures to settle differences with the other party and include all accepted proposals in the contract. Those discrepancies that the parties could not settle, with the consent of the second counterparty, had to be submitted to the court within the same period. If the parties ultimately reached an agreement on the contract terms set out in the protocol, such agreement is confirmed only in writing.
Currently, the above-described provisions of Article 181 of the CCU have already lost their validity; moreover, the Commercial Code of Ukraine has been repealed altogether.
Therefore, the currently relevant legal acts remain the Civil Code of Ukraine, which defines the legal regulation of obligations, as well as the Commercial Procedural Code of Ukraine, which specifies the mechanism and procedure for resolving disputes in case of inconsistency regarding contract terms.
Legal significance of the document
As can be understood from the content of the Protocol of Disagreements, it is not mandatory. Its conclusion is possible only if a party wishes to set out certain terms of the contract differently from how they were specified by the other party.
In addition, the Protocol of Disagreements can serve as evidence in court proceedings, in particular, to prove the party’s intentions and attempts to settle inconsistencies.
Thus, considering the legal significance, the named document: records proposals for changing the contract; is part of the main contract; affects the moment of the contract conclusion; serves as evidence in court.
Can a template or sample protocol be used?
In our opinion, a template or sample protocol can be used only as an example for writing your own document. You cannot simply download a template, enter the parties’ details, and consider the protocol compiled. This position is explained by the fact that each contract is individual with its own unique provisions. A template protocol will not be able to foresee all the features of every contract.
Therefore, a template or sample can save your time on drafting the document, but at the same time, such auxiliary tools must always be adapted to your own conditions.
Protocol of Disagreements to the Contract: Sample
PROTOCOL OF DISAGREEMENTS
Dnipro City “_” ___________ 20
TO THE GOODS PURCHASE CONTRACT No. ______ dated “_” ___________ 20
THE SUPPLIER, on the one hand, and THE BUYER, on the other hand, have concluded this Protocol of Disagreements to the Goods Purchase Contract No. ____ dated “_” ___________ 20 (hereinafter referred to as the “Protocol”) regarding the following:
- The Parties agreed to amend the following clauses of the Goods Purchase Contract No. ____ dated “_” ___________ 20 and state them in the following wording:
| Contract Clause No. | Contract Wording | Wording Proposed by the BUYER | Comment |
| 2.3 | The Supplier shall not be liable for the loss of goods. | The Supplier shall be liable for the lost goods in the amount of the value of such lost goods. | The Contract clause violates the rights of the BUYER |
| 3.4 | The Supplier has the right to terminate the contract unilaterally. | The Contract cannot be terminated unilaterally. | The Contract clause violates the rights of the BUYER |
This Protocol enters into force upon its signing by the parties.- This Protocol is drawn up in two copies having equal legal force.
- This Protocol is an integral part of the Contract ___________________________ (full name of the contract) No. ____ dated “_” ___________ 20, signed between the parties.
- The Contract ___________________________ (full name of the contract) No. ____ dated “_” ___________ 20 is considered concluded with changes in the wording set out in this protocol.
Details and Signatures of the Parties:
_____________________ // _____________________ //
Procedure for drafting a Protocol of Disagreements
Like any document, the Protocol of Disagreements also has its own order and drafting procedure.
Firstly, it is necessary to understand which clauses of the contract do not satisfy the party wishing to initiate the conclusion of the relevant protocol (by the way, such initiation can be done by either party). To do this, you should analyze the conditions of the main document and highlight those with which you disagree. This will help you set them out in the protocol faster in the form you wish to see them.
Secondly, surprisingly enough, you need to draft the Protocol of Disagreements itself. We will provide the details, basic requirements for it, as well as practical writing tips in the following sections.
Thirdly, the protocol should be sent together with the contract to the other party. After that, the coordination of provisions that caused disagreements takes place between the parties. Furthermore, if agreement is not reached on certain conditions, one should appeal to the court.
Structure and mandatory details of the Protocol of Disagreements
What should be contained in the document:
When we speak about an official document, which is what the Protocol of Disagreements represents, we always talk about its structure and mandatory details.
Regarding the structure and content of the protocol, it indicates:
- name of the document (in particular, indication of the contract to which the protocol is compiled);
- details of the parties;
- place and date of compilation;
- clauses of the contract subject to replacement, with the statement of their new wording;
- signatures and seals (if necessary) of the parties.
Therefore, when drafting a Protocol of Disagreements, one should adhere to the proper content and structure of the document for its proper execution.
How to formulate disagreements correctly
In order for the protocol to become a truly effective instrument for regulating disagreements, first of all, it is necessary to formulate them correctly. It can be safely stated that proper formulation of disagreements is the key to the success of their coordination.
Firstly, regarding the form of presenting disagreements, it is best to use a tabular view. You can make several columns titled: “Contract Clause No.”, “Contract Wording”, “Wording Proposed by the Party Initiating the Protocol of Disagreements”, “Comment”.
Secondly, formulate disagreements clearly. Specify specifically the clause you want to change and its new wording in your vision. Also, do not use general phrases, but use appropriate terminology (do not use words that have ambiguous interpretation).
Thirdly, which is very important, the proposals you submit must not contradict other provisions of the contract. After all, in case of non-compliance with the specified condition, collisions may arise that will only harm your legal relations.
In addition, do not neglect the “Comment” column. Use it to explain exactly why changes are being made. This justifies the introduction of new provisions and serves as an additional argument to support your position.
How to format and submit the protocol to the other party?
Formatting requirements
The Protocol of Disagreements, like any document, must be formatted in accordance with certain standards. The main thing is compliance with DSTU 4163:2020, which specifies all requirements for document formatting.
In particular, the mentioned standard establishes that:
- font Times New Roman with a size of 12-14 points should be used for printing texts;
- text of documents on A4 paper sheets is recommended to be printed with 1-1.5 line spacing;
- margins in the document must correspond to the following values: 30 mm – left; 10 – right; 20 – top and bottom.
Of course, there are a number of other provisions that should be followed for the appropriate formatting of the Protocol of Disagreements.
Procedure for submitting the Protocol of Disagreements
One of the important stages of concluding a Protocol of Disagreements is sending it to the other party, because not every submission will be considered proper. There is currently no procedure for appropriate submission fixed by legislation. Therefore, general submission rules should be followed, which will be relevant in this case as well.
There are several options for such submission.
Firstly, you can hand over the protocol personally to the other party. This can be convenient if you are located near your counterparty, as you will be sure that the person received the document.
Secondly, send by e-mail. To do this, documents must be signed with a Qualified Electronic Signature (QES).
Thirdly, you can use regular mail. The protocol should be sent by registered letter with a list of enclosures and an acknowledgment of receipt.
What to do if the other party does not agree?
Cases often occur when the initiating party has prepared changes to the contract, but the other party does not agree with them. What happens in such a situation, and what is the option for resolving it? Let’s try to answer the posed question.
To begin with, it should be noted that if the other party does not agree with the proposals you set out, the agreement may not take place at all. In case you are convinced that the conditions you cited have strong legal argumentation, other options can be applied, which we will consider below.
In case of conflicting positions regarding the contract provisions, it would be expedient to hold negotiations. During the negotiations, controversial clauses of the contract should be discussed and, if possible, a compromise reached regarding them.
In the event that it is still impossible to reach an agreement, one can appeal to the court. The court will consider both versions of the contract set out in the protocol and make a decision regarding the existence of legal grounds for its change.
In addition, there are situations when the other party simply ignores the Protocol of Disagreements submitted by you. In this case, the court may interpret such actions as a refusal of the contract, or conversely — agreement with the changes proposed by you in the protocol.
Typical mistakes when drafting a Protocol of Disagreements
When drafting a Protocol of Disagreements, cases of making mistakes that can have unforeseen and unpleasant consequences for the parties are not uncommon. In order to avoid such mistakes, we will try to list the most common of them.
Most often, the Protocol of Disagreements has flaws in its formatting. The following are absent or incorrect: name of the document, details of the parties, place and date of compilation, signatures and seals (if necessary) of the parties.
Also, situations often occur when the protocol cannot be considered correctly compiled due to incorrect presentation of proposals for changing the contract. As already mentioned in the previous sections, correct formulation of disagreements should not be neglected, because without their proper presentation, the document simply will not make sense.
In addition, we consider it necessary to add that if you are not sure about the correctness of drafting a Protocol of Disagreements to the contract, it is better to contact a qualified specialist. A lawyer or attorney will help you write the appropriate document in compliance with all prescribed requirements.