The damage caused to contractual partners by termination of contracts in progress. Legal qualification and evaluation – domestic law and comparative law landmarks

DEZBATERI

Abstract

A debtor’s insolvency limits their ability to fulfil the legal or contractual obligations and, moreover, in the context of the insolvency proceedings, the lawmaker has introduced provisions that attenuate the principle unanimously accepted in private law, pacta sunt servanda. Specifically, these legal provisions to be examined in this study provide the debtor with the express possibility, in order to maximize their wealth, to terminate the contracts in progress at the time of opening the proceedings, through their legal representative (official receiver/trustee in bankruptcy) in order to relieve themselves unilaterally from the task of performing their own obligations. The impact of opening the insolvency proceedings on the contracts in progress is significant both in the domestic law system and in the other law systems analysed. The rights of creditors cannot be neglected either, and exceptions to the common law of contracts must be strictly interpreted and justified for the purpose of the insolvency proceedings. In the event that the insolvency practitioner chooses to terminate the ongoing contracts, the principle of compensating the co-contracting creditor impacted by the consequences of such termination becomes of primary importance and, accordingly, the remedies available to the creditor, their legal basis and the way of obtaining the amounts to which it is entitled. 

Keywords: contracts in progress; insolvency; damage