We start Part 2, Bases of the Law of Obligation. Here we start with obligation securities means, which we will discuss in more detail. First of all, I will name obligation security means. These are mortgage or pledge. When we speak about pledge, we speak about movable property. When we speak about mortgage, we speak about real estate. Next it is surety, independent guarantee for field which is equivalent to liquidated damages. Security payment, earnest money and retaining. What is important about obligation security means that securing obligation follows the main obligation? So let's suppose you take a credit in back. So you have primary agreement which is credit agreement, because when we speak about obligation securities means, for example, mortgage. You will never give your apartment or any other property into mortgage if you do not take credit. So what is important here? That primary location is great obligation, and subsidiary obligation collateral litigation is securing obligation like MOG. So the following rules shall apply here. First of all, secure an obligation follows the main obligation. What it means? It means if you have paid the credit mortgage stop. Next, volume of execution may decrease quantity of securing obligation. So if you paid nine-tenth of the credit, then your mortgage can be decreased. Non-validity of the main obligation will invalidate secure an obligation. Credit agreement invalid, the same follows or securing obligation. It is invalid as well. And opposite situation, non-validity of securing obligation will not invalidate main obligation. And in case of termination of the main obligation, security obligation shall also terminate. So that means that main obligation influences secure an obligation, but opposite situation, securing obligation does not influence main obligation. Let's discuss obligation securities means in more detail. If we speak about pledge, pledge arises either by agreement or under law. So for example, if you have paid 20% of the price automatically under law, pledge agreement will erase. But is to pledge our the following creditor and debtor, so creditor is pledgee and debtor is pledger. What can be subject matter of pledge subject matter of pledge can be property, securities, money. What cannot be subject matter of pledge property which is excluded from business turnover, like drugs or weapons, claims linked to pledges personality, like elementary payments, for example. Or other rights who's alienation is prohibited. So for example golden share. Golden say is the right of the Russian Federation to participate in public companies, in public companies limited machine. So it is prohibited to alienate these rights, and they cannot be subject matter of pledge. When pledge agreement is not executed. So when primary contract not executed when payment not affected by a person, so you haven't paid for what you took from the bank or your credit, then it is possible to put execution on mortgage property. So when we speak about property, when we speak about pledge, pledge is property security. What it means? It means that you can receive payment from mortgaged property before all other creditors. So the level of mortgaged property secures your obligation. What it means? It means that if property was provided for 5 million rubles, and your dad is 1 million rubles, then execution of property from your pledge is quite easy. So property will be sold. They'll Spot 1 million rubles plus expenses given to creditor and the rest given back to you. Other situation, if property which you provided is less than this 1 million rubles what will happen in this case? In this case, part of the properties of. For example, property was sold for 200,000 rubles, it is given to creditor and create a still the creditor so you haven't paid the property but creditor is the final one from creditors to receive your property. In certain cases, execution on properties put under the core decision. So for example, consent of other persons has been required for conclusion of the contract, consent of your sports, for example, when subject matter of pledges property. Of historical value when pledger is absent, when we speak about leaving premises, who are there only one dwelling of a natural person. Or when it is directly provided in pledge contract that court decision is necessary or when it is not provided that it is possible to put execution on pledged property without your consent. Property is sold at public auction if we speak about movable property. So when we speak about pledge open auction starts with 100 percent of market value, which is assessed by independent appraiser or by court. If we speak about real estate here, the situation is different, because in this situation starting price is 80% of the market value. A number of outcomes of the auction one of the outcomes that auction has failed, in this case, repeated auction shall take place price decreases in both cases. In case of mobile property decrease starts from 100% in case of a real estate. It starts from 8%. If repeated auction failed as well, so in this case it is possible. For pledgee to obtain the property in case of real estate 25% cheaper then it was initial price. And cases of termination of pledge are the following. Termination of the obligation secured by pledge in cages of Pur purchase of pledged property by the person being unaware that the property is the object of pledge. So property was sold in case of parish of pledged object in case of sale of the pledged property in case of recognition of agreement invalid or under the court decision. Very similar to pledge is the other obligation security. It means which is retaining what is the main difference between pledge and retain when we speak about pledge pledge arises under contract or under law retaining and actual situation. So when we speak about retaining in fact commission agent was not paid and retained property belonging to rinse. Another obligation security means, when we speak about not property guarantee, but personal guarantee is shorty or independent guarantee. Independent guarantee is the only obligation security means which does not depend on the main obligation. Surety depends on the main obligation that is why certain terminates with termination of the main obligation. But if we speak about independent guarantee independent guarantee does not depend on the main obligation and does not terminate with termination of the main obligation. So in case of independent guarantee, it is independent. It is provided from independent intrepreneurs and legal entities. It is substitution of what was before 2015 banks can guarantee but here not only banks participate but also other institutions including independent entrepreneurs. Other obligation security means is forfeit. Forfeit can have two forms. So it can be penalty or it can be instable sum. Security payment is quite new obligation security, means when payment is provided. So for example your rent certain property and provide for final month security. And if we speak about earnest money, so the case of earnest money is quite interesting because in case of earnest money there is guarantee. Additional guarantee to other participants. So first of all, if we compare security payment and earnest money, they have similar functions. Payment function, security function as attaining function and compensation. But what happens in case of earnest money or in case of security payment, if main obligation is not executed. So for example, we have parties A and B. You paid 1 million rubles as securities payment, for let's say buy an office space which costs 100,000 million rubles. So 1 billion rubles. So what happens in this case? Humane Securities payment, you found some other premises which are cheaper and you do not want to execute this obligation. So what you do in this case? This money will be returned to you, but losses which the other party has incurred can be taken from you. What happens in case your payment is named earnest money? Money is retained with injured party plus injured party may claim loss. Another situation, so you made the payment but party B does not want to execute obligation. 1 million is returned back to you and you blame loss. What happens in case of earnest money? The other party must return back to you 2 million rubles. So that means double sum of earnest money plus to you, you're entitled to losses.
