Deficiencies in the legislative regulation of the invalidity of transactions in the context of the relationship between the concepts of «public order» and «state interests»

The article investigates the deficiencies in the legal regulation of transaction invalidity, focusing on the interrelationship between the concepts of «public order» and «state interests» within the framework of the Civil Code of Ukraine (CC of Ukraine). It specifically highlights shortcomings in Article 228 of the CC of Ukraine, which amalgamates void transactions (those that violate public order) with voidable transactions (those that contravene the interests of the state, society, and its moral principles). The study substantiates the argument that this amalgamation deviates from the established structure of regulating transaction invalidity in the CC of Ukraine, wherein each article typically addresses a single category of invalidity—either void or voidable transactions—thereby ensuring systematic coherence in legislative design. The research traces the origins of this inconsistency, with particular emphasis on the inadequate justification provided in the explanatory note to Law of Ukraine No. 2756-VI for the amendments to Article 228 of the CC of Ukraine. This lack of robust reasoning is indicative of flaws in legislative drafting techniques, undermining the integrity of the norm-creation process. The article demonstrates the incongruity between the title of Article 228 of the CC of Ukraine and its substantive provisions. In its current formulation («Legal consequences of entering into a transaction that violates public order, made with a purpose contrary to the interests of the state and society»), the title fails to accurately encapsulate the normative rule it establishes, fostering a misleading impression that the article pertains exclusively to transactions violating public order. In reality, it governs two distinct types of invalid transactions: those breaching public order (void) and those conflicting with the interests of the state and society (voidable). This lack of alignment impedes the norm’s intelligibility and contravenes the principles of legal quality, including clarity, precision, comprehensibility, and consistency. The study conducts a comprehensive analysis of the concepts of «public order,» «state interests,» and «moral principles of society,» drawing on judicial practice—most notably decisions of the Supreme Court—and established doctrinal perspectives within legal scholarship. This analysis supports the proposition that transactions inconsistent with the interests of the state are inherently violations of public order by their legal nature. Consequently, such transactions ought to be classified as void rather than voidable, contrary to the provisions of current legislation. Additionally, the article addresses the challenge of delineating the scope of entities entitled to initiate proceedings to declare transactions that contravene the interests of the state, society, and its moral principles invalid. With reference to prevailing judicial practice, which limits this authority to a select group of entities vested with public powers, the study critiques this restrictive approach. It proposes expanding the range of eligible entities to include not only those with public authority but also the parties to the transaction and other interested persons seeking the invalidation of such transactions, thereby aligning with broader civil law principles.