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An analysis of certain atypical, but predictable situations in the field of contractual liability. When can a framework agreement give rise to contractual liability? 

by Ana Diculescu-Sova, Daniela Gramaticescu

Published: May, 2018

Submission: May, 2018

 



“The framework agreement is an agreement whereby the contracting parties define and establish the main rules and conditions that will govern future agreements that will be concluded between them and that are called agreements “for the application” or “for the enforcement” of the framework agreement.” (High Court of Cassation and Justice Decision n0. 1801/December 6, 2017)


The obligation that is the object of the framework agreement is not to provide a service or to conclude future agreements, but to regulate a certain contractual behavior in the performance of subsequent agreements, if concluded. The purpose of the framework agreement is a normative one, namely to establish the specific legal context in which the future relations between the parties will be carried out.


Thus, as a rule, concluding subsequent agreements pursuant to a framework agreement is not an obligation but an option and, obviously, not concluding them does not constitute a breach of the framework agreement.


Based on the same logic, it should be stated that, in the absence of a breach of a contractual obligation there cannot be a right to claim damages.


Just like in the case of any agreement, contractual liability can be triggered if 4 requirements are met: (i) there is a breach of a contractual obligation (thus, the premise is that there must be a contractual obligation); (ii) there is fault (iii) there is harm (which must also meet the requirements of being direct, certain and foreseeable); (iv) there is a causal relation between the illicit action and the harm.


The fact that the framework agreement is associated only with the option and not the obligation to conclude subsequent agreements automatically makes it impossible to fulfill the first requirement, without which we cannot talk about contractual liability.


However, once there is a legitimate expectation of a party to a framework agreement that a subsequent agreement will be concluded, which could generate profit, if this subsequent agreement is breached, we can then talk about damages.


In other words, only in the case of subsequent agreements – if any are concluded – can one claim damages arising out of non-performance thereunder, either for non-compliance with the clauses contained in the framework agreement, or for breach of the specific obligations undertaken through the subsequent agreement.


Only in this scenario – when the framework agreement was followed by the breach of the subsequent agreement – can one claim damages in both of its forms: actual damages (damnum emergens) and lost profits (lucrum cessans).


Once the situation presented above exists, there must be a verification as to whether for any of the components of damages – actual damages (damnum emergens) and lost profits (lucrum cessans) – the requirements of Arts. 1085-1086 have been met: the harm must be certain (it did in fact occur and it is possible to assess it at the date damages are requested), direct and foreseeable.


In other words, in the case of lost post profits, its “hypothetical”/”virtual” nature should not give the wrong idea that it is not certain or foreseeable. The “hypothetical”/”virtual” nature does not mean uncertain or unforeseeable and does not exclude the obligation of the harmed party to prove its existence.


Thus, another important rule that must be emphasized is the burden of proof. As a principle, for damage that is certain, regardless of whether we are talking about actual damages or lost profits, is the one whose existence is proven. The only legal presumption in the field of contractual liability is the existence of fault that results from the non-performance of the agreement, but not the existence of damage. The existence and extent of the damage must be proven must be proven, and the burden of proof rests with the harmed party.


This is consistent with the findings of the High Court of Cassation and Justice from the aforementioned decision, which we cite below.


“In order to determine the existence of the harm, even in the form of lost profits, appellant – plaintiff had to prove that it could have performed all the transport agreements by having the necessary capacity and to show what would its gains have been and what expenses it would have made.


Put differently, the lost profits requested by appellee – plaintiff cannot be based on the transport agreements that were no longer concluded between the parties and that, only had they been concluded, would have constituted legal support for the payment for services, in other words, benefits.


Consequently, since no transport agreements were concluded, appellant plaintiff is not entitled to ask for lost profits as a result of the non-performance of the framework agreement (…)” High Court of Cassation and Justice Decision no. 1801/6.12.2017.


 


 

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