What compensation must be paid when terminating an agreement?

Lieselot SeghersAdverit Antwerp, Belgium

You signed an agreement (for example, for the supply and installation of solar panels), but you wish to terminate it. What compensation are you then required to pay to the other party?

This compensation generally consists of the loss suffered by the other party and the profit it has been deprived of (art. 1149 of the Old Civil Code). Specifically with regard to contracts for work, art. 1794 of the Old Civil Code provides that the client may terminate the contract, even after work has already begun, provided that the client compensates the contractor for all expenses incurred, all work performed, and everything the contractor could have earned from the contract.

In principle, the other party must prove the existence and extent of this damage and loss of profit, unless the parties agreed upon concluding the contract that the compensation for breach of contract would be set at a fixed amount, for example, 1/3 of the value of the agreement. In that case, you are required to pay this fixed amount, even if the other party proves no damage whatsoever.

Therefore, if you are entering into an agreement, be sure to carefully check whether any fixed compensation amounts have been included in the event the agreement is cancelled.

Do you have any questions about this? Please do not hesitate to contact us at contact@alisadvocaten.be.

Related practice areas

Civil law Commercial law Construction law

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