Frequently Asked Questions
Search a question and read the short, guiding answer with its legal basis.
- FAQ4735Debarment and Defence02 September 2026
Does a prohibited act by a company manager during performance of the contract also affect the company?
Prohibited acts or conduct by managers or shareholders of a legal person during performance of the contract matter under the provisions of the Law on shareholding and management. Whether the act was committed on behalf of the company, and the person's legal capacity, must be assessed together with the trade registry records.
- FAQ4735Debarment and Defence02 September 2026
Does a criminal investigation into the events giving rise to termination halt the debarment?
A criminal investigation and administrative debarment are separate processes, and one need not in every case await the other. However, the technical findings and evidence in the criminal file may affect the lawfulness of the administrative act.
- FAQ4735Debarment and Defence02 September 2026
What should a contractor do before termination and debarment?
During performance of the contract the contracting authority and the contractor may have various disputes. When a notice of termination reaches the contractor, however, the authority's intention has become clear. The contractor should therefore set out its grounds and explain the matter to the authority, and prepare that correspondence with legal assistance.
- FAQ4735Debarment and Defence02 September 2026
Where a contract is terminated, are forfeiture of the performance bond and debarment the same act?
No. Forfeiture of the performance bond is a contractual and financial consequence, whereas debarment is a separate administrative sanction suspending participation in tenders. The basis, the authority and the route of objection or action for each must be checked separately.
- FAQ4735Debarment and Defence02 September 2026
Within what period must a debarment decision following termination be taken?
The date on which the act or situation is established matters in the debarment process. The competent authority must decide within the special period laid down in Law No 4735 and carry out the publication process. Those prejudiced by a wrongful debarment should seek legal assistance.
- FAQ4735Debarment and Defence02 September 2026
Which authority takes the debarment decision following termination of the contract?
Which authority takes the debarment decision following termination is determined in Law No 4735 according to the administrative structure to which the contracting authority is attached or related. The unit carrying out the termination and the authority empowered to take the debarment decision may not always be the same.
- FAQ4735Debarment and Defence02 September 2026
How are the prohibited acts and conduct in Law No 4735 assessed during performance of the contract?
Fraud, forged documents, performance of the work contrary to the contract and the other acts listed in the Law must be established during performance of the contract by concrete evidence. The same event may have different consequences as regards termination, the guarantee, debarment and criminal law.
- FAQ4735Debarment and Defence02 September 2026
Does termination of the contract mean that the contractor is automatically debarred from public procurement?
Not every termination gives rise to debarment. It must be determined separately whether the ground for termination falls within a fault or prohibited act to which Law No 4735 attaches the sanction of debarment. Debarment, criminal investigation and forfeiture of the guarantee are distinct legal consequences, each with its own requirements as to authority, time limits, act and evidence.
- FAQ4735Contract Disputes02 September 2026
May damages be claimed for wrongful termination?
Where the termination is contrary to the law or the contract, damages may arise in respect of the contractor's accrued claims and demonstrable loss. The type and amount of the loss and the causal link with the termination may require documents and an expert examination.
- FAQ4735Contract Disputes02 September 2026
Which judicial remedy is used against a decision terminating a contract?
According to the nature of the termination, a case may involve the private law contract between the parties, separate administrative acts such as debarment, and criminal proceedings arising from an offence. Because different judicial routes may arise in one file, legal assistance is essential.
- FAQ4735Contract Disputes02 September 2026
Is the contractor paid for the works carried out up to the date of termination?
Termination does not of itself extinguish the price of works properly carried out earlier and acceptable to the contracting authority. However, penalties, losses, advances and other set-offs may be taken into account in the liquidation account.
- FAQ4735Contract Disputes02 September 2026
How do the death or insolvency of the contractor, or a change in the company structure, affect the contract?
The death or insolvency of a contractor who is a natural person, and mergers, divisions and changes of type in companies, are subject to different legal consequences. The possibilities of continuation, assignment or termination in the Law are applied according to the particular company and contract structure.
- FAQ4735Contract Disputes02 September 2026
Where a public procurement contract can no longer be assigned, does termination arise?
Assignment of a contract is subject to specific conditions in the Law. Where those conditions are absent, the parties may not freely appoint a new contractor. In that event the provisions on termination and liquidation for impossibility of performance are assessed separately.
- FAQ4735Contract Disputes02 September 2026
May the contractor terminate the contract where the contracting authority fails to pay a progress payment?
Delay in payment by the contracting authority may give the contractor rights in respect of the debt and default; however, the contractor's power to bring a public procurement contract to an end unilaterally is separately limited by the Law.
- FAQ4735Contract Disputes02 September 2026
Do delays attributable to the contracting authority justify unilateral termination of the contract?
Delays attributable to the contracting authority must be granted to the contractor as additional time. Where the authority refuses to accept a delay it has itself caused and terminates the contract unilaterally, serious disputes arise.
- FAQ4735Contract Disputes02 September 2026
How is the general liquidation of the account carried out after termination?
A settlement is made by determining the work carried out as at the date of termination, the usable production or goods, the progress payment, penalties, advances, guarantees and the contracting authority's claims. The findings must rest on joint records and measurements.
- FAQ4735Contract Disputes02 September 2026
Is the performance bond always forfeited where the contract is terminated?
Forfeiture of the guarantee depends on the ground for termination. Termination for the contractor's default does not have the same consequence as termination for force majeure or termination attributable to the contracting authority. Where termination is attributable to the contractor, however, the guarantee is forfeited.
- FAQ4735Contract Disputes02 September 2026
Does the contractor's declaration of composition with creditors automatically bring the contract to an end?
The effect of composition with creditors on the contract is determined by the provisions of Law No 4735 on the contractor's financial position and by the scope of the composition order. A separate legal assessment is required for the progress payment, the guarantee and the continuation of the work.
- FAQ4735Contract Disputes02 September 2026
May a contract be terminated on grounds of force majeure?
Conditions are required, namely that the force majeure does not arise from the contractor, that it prevents performance of the undertaking and that it is notified in time. Where the event causes only delay, an extension of time is considered first; where it makes performance impossible, termination is also considered.
- FAQ4735Contract Disputes02 September 2026
May a contractor terminate a public procurement contract of its own accord?
The contractor's right of unilateral termination is limited, and withdrawing from the contract outside the special cases listed in the Law gives rise to serious financial and debarment consequences. The legal basis must be checked before any notice of termination is given.