When a partner fails to fulfill their contractual obligations, the appropriate remedy depends on what the contract stipulates, the severity of the breach, and the available evidence. A notification can be useful, but it is not, in all cases, a mandatory condition before taking action.

Check the obligation and the evidence

Read the contract and the attachments to identify exactly the remaining obligation, the maturity date, the payment conditions, the notice clause, the deadline for rectification and any penalties. Keep the contract, orders, invoices, minutes, messages and proof of payments or deliveries. Specifically note what has been executed, what is missing and when.

Is a notification required?

The Civil Code allows the debtor to be put in default through a written notice or a request for court summons. The notice must be communicated in accordance with the law and the contract, with proof, and as a rule, it must grant a reasonable period for execution. In some situations, the debtor is in default by law, for example if this effect is provided for in the contract or the legal cases are met. Therefore, it does not imply that the notification is always mandatory nor that it can be omitted without consequences.

The notice describes the breached obligation, the relevant documents you request, and the applicable deadline. Carefully check the clauses regarding the address and method of communication. Some remedies may only be requested after the deadline for remedy has expired or after a contractual procedure has been completed.

What remedies can you request?

Depending on the contract and the legal conditions, the creditor may require the full and timely execution of the obligation, execution in kind when possible, damages and interest, and, for the sufficiently important contractual non-execution, resolution or termination. In certain contracts, a proportional reduction of the creditor’s own remuneration may also be available.

The resolution terminates the contract under the law; the termination usually applies to contracts with successive execution and has effects for the future. They do not automatically apply to any delay: the severity of the non-execution matters, the contract clauses and compliance with the legal procedure are important factors. Sometimes they can be declared unilaterally if the conditions provided by law or the commission agreement are met; in other cases, a court is required.

Can you suspend your own performance?

In a contract with reciprocal obligations, the law can allow the temporary suspension of one’s own performance if the other party does not fulfill the required obligation, under the legal conditions and limits. Do not automatically stop payments, deliveries, or other obligations: check whether the obligations are correlated, whether there is a period for remedy, and whether the suspension is proportionate. Unjustified suspension can put you, in turn, at fault.

Penalties and damages-interests

A penalty clause can stipulate in advance the amount owed for the failure to fulfill the obligation described in the contract, so that the creditor does not, in principle, have to prove the actual value of the damage in order to claim the penalty. However, the contract and the fact that the situation for which the penalty is provided by the clause has occurred must be proven. The Civil Code limits the accumulation of the penalty with the execution in kind and allows the court to reduce it in the cases provided by law, including when it is clearly excessive.

If you seek compensation without an applicable clause, prepare evidence of the damage, your relationship with the non-performance, and the other conditions of contractual liability. For monetary obligations, interest or penalties may be due under the contract and the law.

When can the court help?

You can request the court to grant the appropriate remedy, and forced execution can be used if you have a lien and the procedural requirements are met. The preliminary order can only order provisional measures in urgent cases, in compliance with the requirements of the Code of Civil Procedure; it does not definitively resolve the contract’s underlying issue and does not guarantee a decision on the same day.

Practical steps

  • collect the contract, the annexes and the evidence of execution;
  • calculates the remaining amounts and the damage, without confusing them with contractual penalties;
  • checks the deadlines, notifications and dispute resolution clauses;
  • choose the remedy according to the purpose: execution, compensation or termination of the contract;
  • requests a legal analysis before suspending their own performance or declaring the termination of the contract.

For information about assistance in commercial disputes, please consult the page Commercial law.

Legislation

Civil Code – in particular Articles 1516, 1521–1523, 1527–1530, 1538–1541 and 1549–1553 and Code of Civil Procedure – Art. 997 et seq.. Check the current form and the contract clauses before taking any action.