Contractual penalties cannot become a risk-transfer instrument

The principle: whoever causes the delay cannot penalise for it

In the performance of public procurement contracts, delay penalties serve to sanction the failure to fulfil contractual obligations on time. However, this mechanism presupposes a fundamental premise: the party invoking penalties must have acted in good faith and must not have contributed itself to causing the delay.

In the analysed case, the Contracting Authority claimed penalties for exceeding delivery deadlines, even though a series of obstacles generated by the Authority itself had prevented the timely performance of contractual obligations.

The obstacles identified

The case analysis revealed several behaviours of the Contracting Authority that caused or aggravated the delays:

• Creating artificial obstacles in the contract performance process
• Delaying the reception of products, without objective and documented reasons
• Lack of genuine cooperation in identifying reasonable solutions for performing the contract on time

These elements arose in the context of circumstances unforeseen by the parties, which however did not constitute force majeure — situations that called for cooperation and flexibility, not contractual rigidity.

The central legal argument

The Contracting Authority's conduct was incompatible with the principle of good faith and the requirements of contractual balance. In a public procurement contract, both parties have an obligation to cooperate towards achieving the purpose of the contract. When one party creates or amplifies obstacles to performance, it cannot subsequently invoke the same delays to impose penalties.

Contractual penalties cannot become an instrument for transferring one's own risk or one's own contractual passivity and cannot be applied rigidly, without acknowledging one's own conduct.

The outcome

The court upheld our arguments and delivered a favourable ruling, confirming that the application of penalties must be assessed in the context of both contracting parties' behaviour. The decision is not final, but it establishes an important principle: contractual balance presupposes mutual responsibility.