A breach of contract may consist of a service never performed, delivered late, or performed in a manner inconsistent with the agreements. If you operate in Milan and are facing an issue with a supply, an IT project, or an exclusivity pact, it is natural to ask whether proving the violation is sufficient, which losses are recoverable, and whether it is advisable to maintain or terminate the relationship.
In this guide, I want to help you distinguish between breach, damage, and proof, because they are connected yet distinct elements. We will see how actual loss and loss of profits are quantified, which clauses can limit the claim, and what alternatives to consider before initiating a lawsuit.
When a Breach Entitles You to Damages
Not every irregularity produces compensable damage. First, it is necessary to identify a due performance and demonstrate that it was not executed correctly. The contract, orders, technical attachments, and agreed-upon modifications serve to establish what was supposed to be delivered, by what deadline, and according to which characteristics.
Article 1218 of the Italian Civil Code places the consequences of inaccurate performance upon the debtor, unless they prove that the impossibility of performance derives from a cause not imputable to them. Internal organizational difficulties or an employee's error do not automatically equate to a release from liability. The general framework is contained in the Italian Civil Code, Articles 1218 and following.
The violation must have caused the loss claimed. If a delivery arrives late but the client's business continues without increased costs or lost revenues, the breach may exist without generating the claimed amount. Gravity also assumes a different role when, in addition to damages, the termination of the contract is requested.
Actual Loss and Loss of Profits: What Changes
Actual loss is an effective loss. It may include, if causally justified, the cost incurred to remedy a defective performance, the higher expense for a substitute supplier, unused materials, or technical activities made necessary by the breach. It is not enough for the cost to be subsequent to the violation: it must be a concrete consequence of it.
Loss of profits is the missed gain that the contract would have reasonably allowed to obtain. As a rule, it does not coincide with the entire hoped-for turnover. One must consider the costs that would have been incurred to produce that revenue and arrive at the economic margin actually lost.
Articles 1223 and following of the Italian Civil Code require a direct link between the breach and the financial consequences. If the breach is not intentional, the foreseeability of the damage at the time the obligation arose is also relevant. A risk communicated and incorporated into the contract differs from an exceptional consequence that the other party could not know.
For example, a delay in delivering a component intended for an already confirmed order can impact an identifiable revenue. A generic prediction of future growth is weaker. The probability must rest on facts such as orders, advanced negotiations, historical series, production capacity, and availability of the necessary resources.
How Damages Are Proven and Quantified
The contract proves the obligation, not the loss by itself. For actual loss, invoices, payments, substitute estimates, and analytically reconstructed internal costs can be useful. For loss of profits, canceled orders, customer communications, coherent accounting data, and verifiable margins count, not just the statement of the damaged business.
The equitable assessment of damages provided for by Article 1226 of the Italian Civil Code helps when it is impossible or very difficult to determine the exact amount. However, it does not replace the proof of the existence of the damage. A 2025 ruling by the Italian Supreme Court reaffirms the need to prove the consequent-damage and the relative causal connection: Civil Review of the Supreme Court, February 2025.
The creditor's conduct also matters. Article 1227 can reduce damages if the creditor's behavior contributed to the loss and excludes damages that could have been avoided with ordinary diligence. Promptly seeking a reasonable alternative can therefore limit the prejudice without meaning a waiver of one's rights.
B2B Supplies and Payment Delays
In supplies between businesses, non-payment and inexact execution of the supply must be distinguished. In the first case, the principal credit, interest, and any further damages follow rules that do not entirely coincide. In the second, quantities, quality, delivery terms, disputes, and product acceptance methods become central.
Legislative Decree no. 231 of 2002 applies to payment delays in commercial transactions. The rate of statutory default interest depends on the reference rate of the semester concerned, while any different agreements are subject to the limits provided by the regulations: Article 5 of Legislative Decree no. 231 of 2002.
Disputing a supply does not always authorize suspending all payments. It is necessary to connect the withheld portion to the disputed performance and respect good faith and proportionality. If a share is peacefully due, blocking the entire consideration may expose one to a counter-claim for breach.
IT Contracts: Specifications, Testing, and Service Levels
In IT contracts, the expected result must be identifiable. Expressions like complete software or functioning system are insufficient if they are not linked to requirements, functions, integrations, performance, and acceptance criteria. Specifications, attachments, testing records, and modification requests delimit the promised performance.
A blocking malfunction that prevents the use of the system differs from a secondary correctable defect. Likewise, a function requested after signing may be an out-of-scope modification, not an originally due performance. The qualification of the problem changes the remedy: correction, completion, penalty, damages, or, in the most serious cases, termination.
In continuous services, SLAs (service level agreements) and dependencies on the client—such as access, data, infrastructure, and approvals—assume relevance. If the delay depends on both parties, the reconstruction must separate their respective conducts. Tickets and technical tracking are useful when they indicate the date, severity, duration, and impact of the disruption.
Exclusivity Pacts and Loss of Commercial Opportunities
Exclusivity must be read within its boundaries. It is necessary to understand which products or services it includes, in which territory it operates, how long it lasts, and which sales it prohibits. A clause limited to one commercial channel does not necessarily prevent any relationship with competitors; a broad prohibition cannot be extended beyond its text and the function of the contract.
The violation can generate an actual loss, for example promotional costs that have become useless, or a loss of profits for missed sales. Projected turnover is not enough: concrete commercial opportunities, the capacity to fulfill them, and a plausible margin are needed. It must also be excluded that the loss depends on price, quality, or independent customer decisions.
If a penalty clause is provided, it can predetermine the economic consequence of the breach. The possibility of obtaining higher damages depends on the clause, while a manifestly excessive penalty can be reduced by the judge. Penalty and ordinary damages must therefore not be automatically added together.
Performance, Termination, or Agreement: Options to Compare
Asking for performance keeps the contract alive. It can be the most useful choice if the performance retains value and can still be completed within an acceptable time. Claims for correction or replacement provided by the contract or the specific relationship's regulations can accompany damages for delay.
Termination dissolves the relationship for a breach of sufficient relevance, according to Articles 1453 and 1455 of the Italian Civil Code. Not every marginal defect allows one to free oneself from the contract. Express termination clauses, essential terms, and formal notices can affect the path, but must be applied respecting the text and legal conditions.
An agreement can instead establish completion times, an agreed-upon price reduction, replacement of performance, installment payments, or a damage amount. The settlement must define what it closes: a formula that is too broad may entail the waiver of damages not yet quantified; a vague formula may leave the same conflict open.
Finally, clauses on limitations of liability must be read. Maximum caps, exclusions of indirect damages, and obligations to dispute are not decorative formulas. However, the limits of Articles 1229 and 1341 of the Italian Civil Code remain, including the prohibition to preemptively exclude liability for willful misconduct or gross negligence and, in general conditions, the rules on the specific approval of certain clauses.
Frequently Asked Questions
Can I claim damages without terminating the contract?
Yes, generally speaking. You can request the execution of the performance and compensation for damages produced by delay or inaccuracy, if proven. Termination is a different choice and requires a sufficiently relevant breach. Incompatible requests with maintaining the relationship must be avoided.
Is the invoice enough to prove actual loss?
The invoice mainly proves the indicated cost. You must also connect it to the breach and show that the expense was reasonable. An invoice for broader or improvement interventions does not prove that the entire amount is necessary to remedy the defective performance.
Can I claim all lost turnover as loss of profits?
As a rule, no. Turnover includes costs that the business would have had to incur. The claim must refer to the reasonably lost net profit and must rest on concrete opportunities, production capacity, previous performance, and causal link with the breach.
Does the penalty clause eliminate every problem of proof?
The penalty predetermines an economic consequence and normally avoids proving the amount of the covered damage. However, the breach provided for by the clause must be proven. Greater damage can only be claimed if reserved, while the judge can reduce a manifestly excessive penalty.
In a B2B relationship, can I claim interest for late payment?
Yes, when the prerequisites of the regulations on commercial transactions are met. The calculation depends on the due date, the default semester, and permissible agreements. Interest does not automatically replace any further damage, which requires a distinct legal and evidentiary basis.
How to Set the Next Step
Before choosing the remedy, it is advisable to define the violated obligation, economic consequences, applicable clauses, and residual utility of the contract. If Milan is indicated as the forum, it must be verified whether the clause is valid and referable to the controversy: one party's headquarters does not always make the Milanese judge competent. To examine these alternatives, you can contact me.