Legal regulation of due diligence in selecting a counterparty under the legislation of Ukraine and the European Union

Abstract

The article is dedicated to the analysis of the regulatory framework governing the exercise of due diligence in the selection of counterparties under Ukrainian and European legislation. It provides an overview of the legal acts that define due diligence in contract formation and the selection of business partners. The article examines the specifics of the obligations of the parties in a contract arising from the requirements of due diligence when selecting a counterparty. It elucidates the legal aspects regulating the fulfillment of contract terms and liability for breaches of due diligence.

The article concludes that although Ukrainian legislation does not contain specific norms regarding the obligation of business entities to exercise due diligence in selecting their counterparties, its general provisions may be deemed sufficient for interpreting such an obligation. At the same time, the absence of specific norms regarding such obligations effectively means that the business relations existing between entities are not legally regulated, lack a unified system of implementation mechanisms, and are not subject to legal oversight by state authorities. In light of this, the author proposes improving the legal regulation in this area by defining and establishing the procedure for exercising due diligence when selecting counterparties and listing actions by business entities sufficient to avoid the risks of engaging with an unreliable counterparty; enhancing the oversight of compliance by business entities with the requirements for counterparty verification as a basis for exercising due diligence.

The author conducts a comparative analysis of the regulatory framework in Ukrainian and European legislation concerning the exercise of due diligence in the selection of counterparties. The analysis highlights the differences and similarities in the regulatory requirements concerning the selection of business partners and the application of due diligence. The research findings help to outline the main structural elements of regulation and identify the specific characteristics of regulatory approaches in Ukraine and the European Union.

The article aims to broaden the understanding of the legislative environment that defines the exercise of due diligence in counterparty selection as a process critical for ensuring the successful performance of business contracts and sustainable development.