Compensation to the Contractor: Analysis of Ordinance No. 16346 of 2024

In the world of contracts, the unilateral withdrawal of the client can create uncertainty for the contractor, particularly regarding compensation for loss of profit. Ordinance No. 16346 of June 12, 2024, issued by the Court of Cassation, provides a clear interpretation of the methods for quantifying such compensation, establishing specific parameters that can help resolve disputes in this sector. Let’s take a closer look at the content and implications of this ruling.

The Context of the Ruling

The Court of Cassation, in its Ordinance, addressed the case of an appeal filed by C. (A. A.) against F. (T. A.), regarding the quantification of the compensation due to the contractor following a unilateral withdrawal by the client. The central question was whether it was possible to apply a flat-rate calculation method, as provided for public contracts, in situations where proving the actual damage suffered by the contractor was difficult.

Summary of the Ruling

Compensation to the contractor for loss of profit - Determination - Quantification based on a presumed flat-rate percentage derived from public procurement regulations - Applicability - Conditions. When it is difficult to achieve a certain demonstration regarding the extent of the harm in relation to long-term contractual relationships, which includes private contracts, the compensation due to the contractor for the loss of profit suffered due to the unilateral withdrawal of the client can be equitably quantified by analogously applying the flat-rate and presumed percentage derived from public procurement regulations, amounting to ten percent of the difference between the agreed remuneration and that accrued for the partially completed works.

This summary establishes an important principle: in cases where it is not possible to provide concrete evidence of the amount of damage, a flat-rate quantification may be used. Specifically, the compensation should 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 hold crucial importance for contractors and clients. Here are some key points to consider:

  • Definition of compensation: clarifies what is meant by loss of profit and how this can be quantified.
  • Use of the flat-rate percentage: offers a simple and practical method for calculating compensation in the event of withdrawal, avoiding lengthy and complex legal disputes.
  • Applicability by analogy: establishes a precedent that could influence future disputes in the realm of private contracts.

Conclusions

In conclusion, Ordinance No. 16346 of 2024 represents an important milestone in the regulation of contracts and damage compensation. The ability to resort to a flat-rate quantification in the event of unilateral withdrawal from the contract represents a safeguard for contractors, facilitating the determination of compensation and reducing the uncertainty associated with disputes. It is essential that all parties involved in the contracting sector are aware of these provisions to protect their rights and obligations.

Bianucci Law Firm