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Termination of Contract

  1. Concurso de acreedores
  2. Termination of Contract

Yesterday I was in a Preliminary Hearing in Madrid (the phase where the evidence is taken to Court). The dispute was about the termination of a contract on behalf of the opposing party (client in the contractual relationship) for shortcomings in delivery on behalf of my defendant. The service was the installation of software, a very credible basic program on the market. But it could have been the same situation in a franchise or distribution contract. For various reasons, the problem reached the court through the urgings of the client. No-one knows yet the results of the proceedings.

It’s very difficult during the process of personally installing a program or implementing and opening a franchise, to define and determine the obligations of the parties and when is the exact moment to consider that delivery has not been fulfilled, or when defaulting on these sorts of deliveries are of a sufficient size as to provoke the breaking of the contract.

Taking all of the above into consideration, it is important to define the contract in a sufficiently clear and precise way (if necessary, including the colour of the display background), and above all, to manage the development of the contract very carefully – endeavoring to put each contractual modification on record and their economic repercussions (whether there are or not) and the temporary delay that this modification will involve. This is normal practice in the construction world where architects take note of each works visit and, therefore, monitor in detail any changed circumstances on a week by week basis.

It may be said that this task is arduous, that it slows down the process, etc. and it’s probably true but at least it is worthwhile, for the ’party in compliance’ to avoid unfounded lawsuits or aspirations of getting rich without base or real foundation, which lack of documentation make difficult  to contradict. As the saying goes, prevention is better than cure, and so good documentation saves costs and allows, on occasions, the avoidance of unfounded lawsuits.

See you later!

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