- Hunedoara County Court
LONG-TERM CONTRACTS - CONCESSION CONTRACT FOR THE USE OF A LAND – BETWEEN A ROMANIAN PUBLIC AUTHORITY AND A ROMANIAN INDIVIDUAL – UNIDROIT PRINCIPLES IN SUPPORT OF THE SOLUTION ADOPTED UNDER APPLICABLE DOMESTIC LAW (ROMANIAN LAW)
AGGRIEVED PARTY’S DUTY TO MITIGATE HARM – REFERENCE TO SPECIFIC ARTICLES OF ROMANIAN CIVIL CODE (2011) WHICH CORRESPOND IN SUBSTANCE TO ART. 7.4.8 UNIDROIT PRINCIPLES AND ART. 77 CISG.
A Romanian public authority (Claimant) and a Romanian individual (Respondent) entered into a long-term concession agreement for the use of a land. The contract provided a penalty clause according to which Respondent should have paid a penalty equal to 5% of the fee due under the concession agreement for each day of late payment; in the event of a delay of more than 30 days, Claimant could withdraw from the concession agreement.
Claimant brought an action against Respondent requesting the payment of the penalty for delayed performance for a period of time exceeding the 30 days. Respondent argued that, once the period of 30 days had elapsed, Claimant was no longer entitled to request the payment of the penalty for delayed performance, but should have asked for the termination of the contract, which however Claimant did not do. Therefore, Respondent asked for the dismissal of the Claimant’s request.
The First Instance Court granted Claimant only the penalty corresponding to a period of time of 30 days, since it considered the penalty clause at stake unconscionable or abusive by its nature.
In confirming the lower court’s ruling, the Appellate Court also affirmed that Claimant as aggrieved party breached its duty to mitigate the harm since it submitted its request for the payment of the penalty only 5 (five) years after Respondent’s defective performance. In so doing, the Court quoted Articles 1531(2) and 1534(2) of the Romanian Civil Code (2011) which correspond, in substance, to Art. 7.4.8 of the UNIDROIT Principles and to Art. 77 of CISG.
Original full text in Romanian available at www.rolii.ro}}