Compensation for the Contractor: Analysis of Order No. 16346 of 2024

In the world of contracts, the unilateral withdrawal by the client can create situations of uncertainty for the contractor, particularly regarding compensation for lost profits. Order No. 16346 of June 12, 2024, issued by the Court of Cassation, offers a clear interpretation of how such compensation is quantified, establishing specific parameters that can help resolve disputes in this sector. Let's examine the content and implications of this ruling in detail.

Context of the Ruling

The Court of Cassation, in its Order, addressed the case of an appeal filed by C. (A. A.) against F. (T. A.), concerning the quantification of compensation due to the contractor following a unilateral withdrawal by the client. The central issue was whether a lump-sum calculation method, as provided for public contracts, could be applied in situations where it was difficult to prove the actual damage suffered by the contractor.

Headnote of the Ruling

Compensation for the contractor for lost profits - Determination - Quantification based on a presumptive lump-sum percentage derived from public procurement regulations - Applicability - Conditions. Where it is difficult to achieve certain proof of the extent of the damage with reference to legal relationships of prolonged performance, including private contracts, the compensation due to the contractor for lost profits suffered due to the client's unilateral withdrawal may be quantified equitably by applying by analogy the lump-sum and presumptive rate derived from public procurement regulations, equal to ten percent of the difference between the agreed consideration and that accrued for the partially completed works.

This headnote establishes an important principle: if concrete evidence of the amount of damage cannot be provided, a lump-sum quantification can be used. Specifically, compensation must be calculated as 10% of the difference between the agreed price and the amount actually accrued for the works completed up to the time of withdrawal.

Practical Implications

The implications of the ruling are manifold and of crucial importance for contractors and clients. Here are some key points to consider:

• Definition of compensation: clarifies what is meant by lost profits and how this can be quantified.
• Use of the lump-sum percentage: offers a simple and practical method for calculating compensation in case of withdrawal, avoiding lengthy and complex legal disputes.
• Applicability by analogy: establishes a precedent that could influence future disputes regarding private contracts.

Conclusions

In conclusion, Order No. 16346 of 2024 represents an important milestone in the regulation of contracts and damages. The possibility of resorting to a lump-sum quantification in case of unilateral withdrawal from a contract represents a safeguard for contractors, facilitating the determination of compensation and reducing the uncertainty associated with disputes. It is essential that all stakeholders involved in the contracting sector are aware of these provisions to protect their rights and duties.