TITLE XIX. ADMINISTRATIVE CONTRACTS
Chapter 1. General Provisions: A Commentary
The realm of administrative law, particularly as it pertains to contractual engagements, represents a critical interface between the sovereign state and private entities. This chapter offers a jurisprudential commentary upon the foundational principles governing administrative contracts, as articulated within Title XIX of the Civil Code. The unique nature of these agreements, driven by public interest and the inherent prerogatives of governmental authority, necessitates a distinct analytical framework that transcends the conventional tenets of private contract law.
Article 3131: Applicable Legal Regimen for Administrative Authorities’ Contracts
Sub-article (1) establishes the fundamental principle that contracts executed by the State or other administrative authorities are primarily subject to the general and special provisions of the Civil Code pertaining to contracts. This signifies that, absent specific derogations, the established principles of offer, acceptance, consideration, capacity, and legality, alongside the rules governing particular contractual types (e.g., sale, lease, service contracts), retain their applicability. This approach underscores a continuity with the broader private law framework, positing administrative contracts not as an entirely distinct species, but rather as a specialized variant.
Sub-article (2) introduces the crucial hierarchical relationship: the provisions of Title XIX are designed to supplement or, where appropriate, to replace the general civil law rules when a contract assumes the character of an administrative contract. This legislative intent reflects the recognition that the public interest, the inherent powers of the administration, and the distinct objectives of public service necessitate a departure from purely private law principles. The concept here is one of lex specialis derogat legi generali—special law derogates from general law. This structured application ensures that the peculiar demands of public administration are adequately addressed without necessitating a complete re-invention of contractual jurisprudence.
Article 3132: Definitional Criteria of Administrative Contracts
This article is pivotal, providing the definitional criteria by which a contract is classified as “administrative,” thereby triggering the application of the specialized rules within this Title. The criteria are presented disjunctively, meaning the satisfaction of any one criterion suffices for classification.
(a) The explicit qualification of a contract as administrative, either by law (qualification légale) or by the parties (qualification conventionnelle), provides a clear, albeit sometimes formalistic, basis for classification. Legislative designation ensures legal certainty, while party agreement, though less common as a sole determinant, may reflect a mutual understanding of the contract’s public law nature. This criterion underscores the importance of legislative intent and, to a limited extent, party autonomy in shaping the legal regime.
(b) This criterion introduces a functional and organic test. An administrative contract is identified by its dual connection: firstly, to an “activity of the public service,” emphasizing the contract’s purpose in fulfilling a public mission; and secondly, by the “permanent participation” of the private contracting party in the execution of that service. This implies a degree of integration or collaboration between the private entity and the public administration in delivering a public good or service. This criterion is often associated with the concept of service public in continental administrative law, where the contract’s object is intrinsically linked to the continuous operation or provision of a public utility.
(c) This criterion, often termed the “exorbitant clauses” test (clauses exorbitantes du droit commun), is perhaps the most nuanced. It posits that a contract is administrative if it contains provisions that could only have been conceived under “urgent considerations of general interest extraneous to relations between private individuals.” Such clauses typically confer upon the administrative authority powers that would be considered exceptional or even unlawful in a purely private contract. Examples include unilateral modification rights, termination for public interest without fault, or stringent control mechanisms over the contractor’s operations. These clauses reflect the inherent asymmetry of power between the state, acting in the public interest, and a private contractor. Their presence signals a departure from the principle of contractual equality, justified by the overarching public mission.
Article 3133: Applicability to Certain Business Organizations
This article extends the reach of administrative contract law beyond direct governmental entities to certain private business organizations. The rationale is rooted in the public nature of their financial operations: organizations that “appeal to public savings” or “place their shares with the public” are deemed to engage with a broader public interest. Consequently, competent authorities are empowered to compel such entities to adhere to the procedures and formalities prescribed for administrative authorities in their contractual engagements. This provision serves as a regulatory mechanism, ensuring transparency, fairness, and accountability in the contractual practices of private entities that, by virtue of their public financing, assume a quasi-public character. It reflects a policy concern for investor protection and broader economic stability.
Section 1. Formation of Contracts
The formation of administrative contracts, while sharing commonalities with private agreements, exhibits distinct procedural and substantive requirements, primarily influenced by the principles of public accountability, transparency, and the imperative for deliberate administrative action.
Paragraph 1. Consent
Article 3134: Formal Requirements for Acceptance
Sub-article (1) establishes a fundamental deviation from the general contract law principle that silence can, in certain circumstances, constitute acceptance. For administrative authorities, the conclusion of a contract necessitates an “express manifestation of will.” This requirement is crucial for public accountability, ensuring that governmental commitments are deliberate, recorded, and attributable. It mitigates the risks of implied obligations arising from inaction, which could undermine fiscal prudence and public oversight.
Sub-article (2) reinforces this principle by explicitly stating that silence on the part of an authority competent to approve a contract shall not, absent a formal provision, be construed as approval. This is a direct counterpoint to the private law concept of qui tacet consentire videtur (he who is silent is deemed to consent), emphasizing that public administrative action typically requires positive affirmation. This serves as a safeguard against inadvertent contractual obligations and ensures that high-level approvals are consciously granted.
Sub-article (3) extends these stringent requirements for express manifestation and non-inference from silence to the “prorogation of, or modifications to, a contract.” This ensures that extensions or alterations of existing administrative contracts are subjected to the same rigorous scrutiny and formal assent as their initial formation, preventing informal or unrecorded changes that could compromise public interest or fiscal integrity.
Article 3135: General Conditions Applicable to Administrative Contracts – 1. Formulation
This article introduces the concept of standardized contractual instruments: “model specifications,” “general clauses and conditions,” and “common directives.” These instruments are designed to promote uniformity, efficiency, and transparency in public contracting. Their formal drafting by interested administrative authorities and subsequent publication in the Negarit Gazeta (the official gazette) lends them legal authority and public accessibility. This practice aligns with principles of good governance, allowing potential contractors to understand the standard terms and expectations beforehand.
Article 3136: 2. Definitional Scope
This article provides precise definitions for the standardized instruments mentioned in Article 3135: (1) Model specifications are characterized as “standard specifications, formulated in advance and in a general way… for the concession of public services.” These are typically technical or operational standards that ensure consistency in the quality and delivery of public services, such as infrastructure projects or utility concessions. (2) General clauses and conditions are broader, fixing “provisions applicable to all or some of the contracts concluded by a specified administrative authority.” These might cover general administrative procedures, dispute resolution mechanisms, or standard liability clauses applicable across a range of contracts. (3) Common directives are defined as fixing “technical provisions applicable to all contracts relating to a given kind of works or supplies.” These are often industry-specific technical standards, ensuring that public works or procurements meet certain quality or safety benchmarks. The systematic development and application of these instruments reflect a move towards rationalized public administration and a reduction in ad hoc contractual arrangements.
Article 3137: Effect of Specifications, Clauses, Conditions, and Directives – 1. Contract Conclusion
This article clarifies the role of these standardized instruments during the contract formation process. It stipulates that provisions within general clauses and conditions concerning the manner of contract conclusion may be invoked by candidates, particularly tenderers in competitive bidding. This empowers prospective contractors to insist on adherence to established procedural rules, ensuring fairness and preventing arbitrary deviations from publicized tender processes. It reinforces the principle of procedural legality in public procurement.
Article 3138: 2. Contractual Content
Sub-article (1) addresses the integration of standardized provisions into the content of a specific contract. It states that provisions from model specifications, general clauses and conditions, or common directives concerning the interpretation, content, and execution of a contract will not apply to a specific contract unless that contract expressly refers to them. This prevents the automatic imposition of extraneous terms and ensures that the parties’ actual agreement, as reflected in the specific contract document, takes precedence. It balances the administrative desire for standardization with the need for contractual specificity.
Sub-article (2) allows for derogation from these standardized provisions by “specifications specially relating to a concession or to a given contract.” This provides necessary flexibility, acknowledging that unique projects or concessions may require tailored terms that deviate from general rules. This reflects a pragmatic approach, recognizing that a rigid application of standard clauses might impede efficient public administration in complex or specialized undertakings.
Article 3139: Modification to Specifications, etc.
This article addresses the temporal effect of these standardized instruments. (1) It mandates that when contractual rights and obligations are determined by reference to specifications, general clauses and conditions, or common directives, these instruments are to be considered as they existed at the time the contract was concluded. This principle safeguards against retroactive application of new rules, ensuring legal certainty and protecting the legitimate expectations of the contracting parties. (2) Consequently, the rights and obligations of the contracting parties are expressly declared unaffected by modifications subsequently made to these standardized instruments. This reinforces the principle of pacta sunt servanda (agreements must be kept) and prevents administrative authorities from unilaterally altering the terms of an existing contract by changing general regulations. This stability is crucial for long-term administrative contracts, allowing contractors to plan and execute projects with predictable legal parameters.
Article 3140: Opening of Credits in Favour of Administrative Authority
This article clarifies the distinction between internal budgetary authorizations and external contractual rights. (1) The “opening of credit accounts” by budgetary authorities in favor of an administrative body is an internal administrative act related to fiscal management. This provision explicitly states that such an act does not, in itself, confer upon private individuals any right to utilize these credits. This prevents private parties from directly claiming funds based solely on internal governmental financial allocations, emphasizing that a separate contractual agreement is required. (2) Similarly, the “authorization given to an administrative authority to incur an expense” does not automatically equate to an “authorization to contract.” This reinforces the principle of specialité in public law, where distinct administrative acts (budgetary authorization vs. contractual authorization) serve different purposes and have different legal effects. A public body may have funds allocated for a project but still require specific legal authorization to enter into a contract for that project.
Article 3141: Contractual Freedom of Administrative Authorities
This article addresses the discretionary nature of administrative contracting. (1) It stipulates that an authorization granted to an administrative authority to conclude a contract does not compel that authority to enter into the contract. This preserves the administrative authority’s discretion to decide whether or not to proceed with a contract, even after receiving internal or external authorization. This is a critical aspect of administrative flexibility, allowing authorities to adapt to changing circumstances or priorities before a final commitment is made. (2) Such authorization merely confers upon the authority the right or legal capacity to conclude the contract, without creating an obligation to do so. This distinction is vital for understanding the administrative decision-making process, where multiple layers of approval and discretion may exist before a contract is finalized.
Article 3142: Lack of Credit
This article introduces a significant departure from private contract law principles concerning the validity of a contract in the absence of funding. It states that a contract concluded by an administrative authority remains valid even if the authority has not received the necessary credits for its performance. This provision protects the private contractor, ensuring that the contract’s enforceability is not undermined by internal administrative budgetary shortfalls. It shifts the risk of internal financial management from the private party to the administrative authority, reinforcing the state’s responsibility to honor its commitments once formally made. The implication is that internal budgetary issues do not vitiate an otherwise valid administrative contract.
Article 3143: Absence of Authorization
(1) In contrast to the previous article, the absence of necessary authorization prescribed by administrative laws or regulations renders a contract concluded by an administrative authority “of no effect.” This provision is critical for upholding the principle of legality (principe de légalité) in public administration. Administrative authorities operate under specific mandates and powers; acting outside these authorized powers (ultra vires) renders their actions legally void. This ensures that public funds are committed and public services are undertaken only through properly authorized channels. (2) The nullity arising from such an absence of authorization is explicitly equated with nullity on the ground of an “unlawful object” under the general contract law provisions of the Code. This classification underscores the gravity of the defect, treating unauthorized administrative contracts as fundamentally flawed and contrary to public order.
Article 3144: Approval of Contract
This article addresses situations where a contract’s conclusion is contingent upon a “further approval.” (1) It clarifies that the contract is not “complete” until such approval is granted. This establishes a condition precedent, meaning the contract does not become fully binding or effective until this subsequent administrative act occurs. This is common in public contracting, where initial agreement might be reached by one administrative unit, but final legal efficacy requires endorsement by a higher authority or a specialized oversight body. (2) The administrative authority that initially concluded the contract is placed under an obligation to “perform all the acts necessary to obtain such approval.” This imposes a duty of diligence on the contracting authority to pursue the necessary internal processes to finalize the agreement. (3) Furthermore, the authority “may do nothing which might hinder or imperil such approval.” This imposes a negative obligation, preventing the authority from taking actions that could undermine the very approval it is obligated to seek. These provisions collectively aim to ensure that administrative contracts, once initiated, are diligently pursued through the necessary approval stages.
Article 3145: Late Approval
This article provides a remedy for the private party when administrative approval is unduly delayed. If the contract is not approved within six months (or a mutually agreed shorter period), the private party may “release himself from the contract by giving notice” to the administrative authority. This protects the private contractor from indefinite limbo, allowing them to withdraw from an unconfirmed agreement and pursue other opportunities. It introduces a time limit for administrative action, preventing the administrative process from becoming an indefinite burden on the private sector.
Article 3146: Liability in Case of Non-Conclusion of Contract
This article addresses pre-contractual liability, a concept often termed culpa in contrahendo. (1) It establishes a fault-based liability: if administrative authorities fail to conclude a contract, they must indemnify a person who incurred expenses “through the fault of the administrative authority” during pre-contractual negotiations. This covers situations where the administration’s conduct (e.g., misrepresentation, arbitrary withdrawal without justification) led the private party to incur costs. (2) Significantly, the article also introduces a form of no-fault liability: even in the “absence of fault,” administrative authorities must indemnify a person who, as a consequence of negotiations, “made studies, drawn up plans, initiated works or incurred expenses,” provided these were made “with the consent of the administrative authorities and the latter have derived a benefit therefrom.” This provision is crucial for protecting private parties who invest resources in anticipation of a contract at the administration’s behest, even if the contract ultimately does not materialize. It aligns with principles of unjust enrichment and fair dealing in public procurement, recognizing the unique power imbalance and the public benefit derived from such preparatory work.
Paragraph 2. – Procedure for the Allocation of Contracts by Tender
This paragraph delves into the specific and highly regulated procedure of competitive tendering, a cornerstone of public procurement designed to ensure transparency, fairness, and optimal use of public funds.
Article 3147: Utilization of Tender Procedure
(1) This sub-article affirms that administrative contracts may be concluded by tender, indicating it as an available method. (2) Crucially, it mandates that administrative contracts shall be concluded by tender, “under pain of nullity,” whenever the law imposes such an obligation. This highlights the mandatory nature of competitive bidding for certain types of public contracts (e.g., those exceeding a certain value, or for specific public works). The “pain of nullity” underscores the seriousness of this procedural requirement; non-compliance renders the resulting contract void. This is a fundamental safeguard against corruption, favoritism, and inefficient resource allocation.
Article 3148: Notice of Allocation by Tender – 1. Principle
This article emphasizes the principle of public notice for tender allocations. The allocation must be “notified to the public” in the prescribed manner (administrative regulations) or, failing that, in the “most appropriate” manner. This ensures widespread dissemination of information about public contracting opportunities, fostering competition and enabling qualified bidders to participate. Transparency in notice is a prerequisite for fair competition.
Article 3149: 2. Contents of Notice
This article specifies the essential information that must be included in the public notice for tenders. These elements are critical for enabling potential bidders to assess the opportunity and prepare their submissions: (a) Location for consulting specifications: provides access to detailed requirements. (b) Identifying authorities: clarifies who is responsible for the process. (c) Time for sending tenders: sets a clear deadline. (d) Place, day, and hour for allocation: ensures transparency of the opening process. (e) Security/guarantees: informs bidders of financial requirements (e.g., bid bonds). The comprehensive nature of these requirements aims to eliminate ambiguity and provide all necessary information upfront.
Article 3150: 3. Time for Publication
This article sets a minimum timeframe for the publication of the tender notice: “not less than one month before the expiration of the time prescribed for sending in the tenders,” except in cases of urgency. This provision ensures that potential bidders have sufficient time to prepare their proposals, conduct necessary studies, and gather required documentation. Adequate preparation time is essential for competitive and well-considered bids.
Article 3151: 4. Effect of Publication
This article reinforces the integrity of the tender process by stipulating that, once the notice is published, “no modification may be made to the specifications unless a new publication is made.” This prevents arbitrary changes to the tender requirements after the process has commenced, which could disadvantage certain bidders or undermine the fairness of the competition. Any substantial change necessitates a re-publication, effectively restarting the process or at least providing equal notice to all potential participants.
Article 3152: Specifications
(1) This sub-article mandates that tender specifications must clearly indicate the “conditions required from tenderers.” These conditions serve as eligibility criteria. (2) Administrative authorities are granted discretion to impose “all the conditions relating to technical and professional qualifications which they consider desirable.” This allows the administration to ensure that only competent and qualified contractors undertake public projects, safeguarding quality and public interest. (3) The specifications must also detail “qualifications which are required for admission to tender and the eliminating tests to which the projects or samples submitted will be subjected.” This transparency regarding evaluation criteria allows bidders to understand the standards against which their proposals will be judged and helps to ensure objectivity in the selection process.
Article 3153: Documents to be Submitted
This article outlines the formal requirements for tender submission: contractors or suppliers must deposit a “declaration of their intention to tender” and their “tender” at the specified place and within the specified time. This formalizes the submission process, ensuring all bids are received uniformly and by the deadline.
Article 3154: Declaration of Intention to Tender
(1) The declaration of intention to tender serves as an initial formal expression of interest, requiring basic identifying information about the candidate (name, qualification, address). (2) It also mandates the annexation of “references” and, if required by specifications, a “regular act of suretyship.” References provide a means to assess the candidate’s past performance and reliability, while a suretyship (e.g., a bid bond) provides a financial guarantee of the bidder’s commitment, protecting the administrative authority from frivolous bids or withdrawals.
Article 3155: Tender – 1. Contents and Forms
(1) The tender itself must contain the “offer of the price and the undertakings of the candidate.” This forms the core of the proposal, outlining the financial terms and the contractor’s commitment to perform. (2) The requirement that it “shall be deposited in a sealed envelope according to the conditions fixed in the specifications” is a crucial procedural safeguard. This ensures the confidentiality of bids until the public opening, preventing collusion or unfair advantage.
Article 3156: Duty to Maintain Tender
(1) This article imposes a binding obligation on the tenderer: they “may not withdraw or modify his tender until the allocation has been declared.” This “irrevocability of the offer” during the tender period is essential for the integrity of the process, allowing the administrative authority to evaluate bids without fear of sudden changes or withdrawals. (2) However, a tenderer may “expressly limit in his tender the period for which he binds himself.” This provides a degree of flexibility, allowing bidders to set a reasonable validity period for their offer, beyond which they are no longer bound.
Article 3157: Office of Allocations
This article delegates the establishment of the “office of allocation” (the body responsible for managing the tender process) to administrative regulations and internal rules. This allows for flexibility in structuring the specific administrative unit responsible for procurement, while ensuring that its constitution is formally defined.
Article 3158: Publicity of Allocations
The principle of “publicity of allocations” is enshrined here: the proceedings “shall be held in public.” This is a fundamental pillar of transparent public procurement, allowing for public scrutiny of the bid opening and initial evaluation, thereby minimizing opportunities for corruption or impropriety.
Article 3159: Admission of Candidates – 1. Duties of Office
(1) The office of allocations’ initial duty is to “take cognizance of the declarations of intention to tender.” This involves reviewing the formal submissions. (2) Subsequently, it must “verify whether these have been regularly deposited and whether the tenderers fulfill the conditions required for admission to the allocation.” This is a crucial screening stage, ensuring that only formally compliant and qualified bidders proceed to the next phase.
Article 3160: 2. Discretionary Power
(1) This sub-article grants the office a significant discretionary power: it “shall admit to the allocation such tenders only as are made by contracts or suppliers who present all the desirable financial and professional guarantees.” This allows for a qualitative assessment of bidders beyond mere formal compliance, ensuring that the chosen contractor possesses the necessary capacity and reliability. (2) Unless otherwise specified, the office is “not bound to hear the candidates whom it turns down.” This streamlines the process by avoiding lengthy appeals or justifications for rejected bids. (3) Similarly, it is “not bound to give reasons for its decision.” While this might appear to limit transparency, it is often justified by the need for administrative efficiency and to prevent endless challenges to discretionary judgments in a high-volume process.
Article 3161: 3. Irrevocable Character of Decision Taken
This article establishes a point of no return: “From the moment that the envelopes containing the tenders have been unsealed, the decision to admit to the allocation a contractor or supplier may no longer be altered.” This prevents manipulation or arbitrary changes to the list of admitted bidders once the substantive evaluation process has formally commenced.
Article 3162: Reading of Tenders
(1) The ceremonial opening of tenders “in public” is a key aspect of transparency. (2) The tenders must then be “read out.” This public disclosure of the submitted bids (typically the price and key terms) ensures that all participants and observers are aware of the offers, further safeguarding against unfair practices.
Article 3163: Minute of Allocation
The requirement to reduce the “results of the allocation” to a formal “minute” that states “all the circumstances of the allocation” ensures a comprehensive and official record of the proceedings. This minute serves as a vital document for accountability, audit, and potential legal review.
Article 3164: Designation of Provisional Tenderer – 1. Principle
(1) The office of allocations is tasked with identifying the “tenderer who has made the tender which is most advantageous for the administrative authorities” and declaring them “provisionally the successful tenderer.” This emphasizes the principle of “best value for money” or “most economically advantageous tender” in public procurement, which goes beyond merely the lowest price. (2) To this end, the office must consider “the price offered and all the modalities of the tender in conformity with the specifications.” This holistic evaluation ensures that qualitative aspects, technical solutions, and other specified criteria are weighed alongside the financial offer.
Article 3165: 2. Exception
(1) This article provides an exception to the requirement of designating a provisional successful tenderer: if allocation regulations specify that administrative authorities “do not intend to negotiate beyond a certain price.” This indicates a “fixed-price” or “no-negotiation” tender, where bids exceeding a pre-set ceiling are automatically disqualified. (2) Crucially, such a “certain price shall not be brought to the knowledge of the tenderers.” This maintains the integrity of the competitive process, preventing bidders from simply offering the maximum acceptable price rather than their most competitive one.
Article 3166: 3. Where Several Tenders are Equal
(1) In the rare event of “equivalent tenders” where the office cannot distinguish between multiple bidders, allocation regulations may provide for the assignment of the contract to be decided by ballot. This introduces a mechanism for breaking ties in an objective manner. (2) In the absence of such a specific provision, a “new allocation shall take place,” indicating that the default solution for an unbreakable tie is to re-tender the contract, ensuring a truly competitive outcome.
Article 3167: 4. Effects of Provisional Designation
(1) This sub-article unequivocally states that the designation of a provisional successful tenderer “shall not conclude the contract.” This is a critical point: the provisional designation is not the final contractual act. (2) Its effect is limited to designating the “only tenderer with whom the contact may be concluded.” This means that the administrative authority is now bound to negotiate exclusively with this provisional winner, preventing parallel negotiations or a return to other bidders. (3) Importantly, it “shall release the other tenderers from the obligations arising out of their tender.” This frees unsuccessful bidders from their commitments, allowing them to pursue other opportunities without being held indefinitely.
Article 3168: Approval by Administrative Authorities
(1) This article reiterates the administrative authority’s ultimate discretion: they “may in their discretion approve or refuse to approve the result” of the allocation. This final approval power acts as a crucial check, allowing the authority to review the provisional designation and ensure it aligns with overarching public interest and policy. (2) The contract is “complete where such approval is given.” This signifies that the formal approval is the definitive act that brings the administrative contract into full legal force.
Article 3169: Additional Clauses
(1) This article permits the inclusion of “additional clauses agreed on by the parties” in contracts made by allocation. This provides flexibility for tailoring the final contract, even after the tender process, provided these additions are mutually agreed upon and do not fundamentally alter the basis of the tender. (2) It also allows for the “maintenance in effect or renewal by mutual agreement” of contracts upon their expiry. This provides a mechanism for continuity of public services without necessarily requiring a full re-tendering process, provided such extensions are justified and mutually agreed.
Paragraph 3. – Cause
Article 3170: Absence of Cause
This article addresses the concept of “cause” (or purpose/object) in administrative contracts. A contract is deemed “null on the ground of lack of cause” if, at its formation, it “makes it impossible to attain the result desired by the administrative authorities and known to the other contracting party.” This is a significant deviation from private contract law, where “cause” typically refers to the immediate reason for contracting (e.g., payment for goods). In administrative contracts, the “cause” is intrinsically linked to the public interest objective. If the contract, from its inception, cannot achieve the public purpose known to both parties, it lacks a valid cause and is void. This reflects the public law emphasis on the contract’s utility for the community.
Article 3171: Unlawful Cause
(1) A contract is “null on the ground of unlawful cause” if it is made by administrative authorities with an “unlawful object in view.” This is a standard principle in contract law, but its application in the administrative context is particularly stringent due to the public nature of the parties. (2) Sub-article (1) is specifically applied where the contract is made with a view to “procuring advantages of a pecuniary nature to the other contracting party and not for a reason of general interest.” This provision directly targets corruption, favoritism, and cronyism. It ensures that administrative contracts are entered into for legitimate public purposes, not for private gain or undue benefit to a contractor. The absence of a “reason of general interest” renders the cause unlawful, leading to nullity. This is a vital safeguard for public integrity.
Section 2. Effect of Contracts
This section examines the operational aspects of administrative contracts, including their normal performance, mechanisms for revision due to changing circumstances, and consequences of non-performance. These provisions highlight the unique powers and responsibilities of administrative authorities in managing contractual relationships.
Paragraph 1. – Normal Performance of Contracts
Article 3172: Contents of Contractual Performance
(1) This sub-article reiterates the fundamental principle of pacta sunt servanda: contracting parties must perform their obligations as stipulated in the contract. (2) Performance must be “correct,” “satisfactory according to the rules of art prevailing at the time,” and relevant to the “kind of activity concerned.” This emphasizes the professional and qualitative standards expected in public contracts, ensuring that public works or services meet established industry norms and quality benchmarks. (3) Finally, performance must be undertaken “diligently.” This imposes a duty of care and promptness, reflecting the public interest in timely and efficient execution of administrative contracts.
Article 3173: Manner of Performing Obligations
(1) This article grants the private contractor discretion in selecting suppliers for materials and goods necessary for performance, “unless otherwise agreed.” This allows the contractor operational flexibility in sourcing. (2) Similarly, “unless otherwise agreed,” the contractor may choose workmen or employees, performing obligations “under his responsibility.” This reinforces the contractor’s autonomy in managing their workforce while maintaining their ultimate accountability for the quality and completion of the work. These provisions generally reflect private law principles of contractor autonomy in execution, subject to specific contractual terms.
Article 3174: Time for Performance – 1. Principle
(1) The primary rule for performance timing is adherence to the time fixed by the contract. This emphasizes the importance of agreed-upon schedules in public projects. (2) In the absence of a specific contractual provision, obligations must be performed within a “reasonable time.” This is a default rule, allowing for flexibility where explicit deadlines are not set but still imposing a standard of timely execution.
Article 3175: 2. Prerogatives of Administrative Authorities Regarding Time
This article highlights a potential unilateral power of administrative authorities regarding time. They generally “may not impose unilaterally” an unagreed time for performance, unless they are empowered by the contract to fix such time “by means of requisition orders.” This “requisitioning power” (or pouvoir de réquisition) is an example of an “exorbitant clause” (as per Article 3132(c)), allowing the administration to unilaterally accelerate or modify deadlines in specific circumstances, typically driven by urgent public need. This power is a significant deviation from private contract law, where unilateral time changes are generally impermissible.
Article 3176: Payment of Price
The payment of the price by administrative authorities is subject to strict adherence to “rules of finance laws and of public accountancy.” This underscores the rigorous financial controls and auditing procedures that govern public expenditure. It ensures fiscal transparency and accountability in the disbursement of public funds.
Article 3177: Exception Non Adimpleti Contractus
(1) This article significantly restricts the application of the exceptio non adimpleti contractus (the right to withhold performance when the other party is in breach) in administrative contracts. The non-performance by administrative authorities generally “shall not entitle the other party to fail to perform his obligations,” unless it renders the private party’s performance “impossible.” This exception is narrowly construed, typically applying only to fundamental breaches that physically or legally prevent the contractor from proceeding. (2) In other cases, the private party “may not avail himself of the failure by administrative authorities to perform their contractual obligations in order to suspend the performance of the contract.” This principle prioritizes the continuity of public service. Even if the administration is in breach (e.g., late payment), the private contractor is generally expected to continue performance to avoid disrupting public functions. This reflects the state’s paramount interest in uninterrupted public service delivery, even at the cost of some inconvenience to the contractor, who would then seek other remedies (e.g., compensation).
Article 3178: Set-off
This article restricts the private contractor’s ability to invoke “set-off” (the right to deduct a debt owed by the other party from a debt owed to them). Set-off is generally prohibited against administrative authorities “except in the case of debts other than fiscal debts.” This prevents contractors from unilaterally reducing payments owed to the state, particularly tax obligations, by claiming counter-debts. This safeguard protects public revenue and ensures that financial obligations to the state are met separately from contractual disputes.
Paragraph 2. – Revision of Contracts
This paragraph addresses mechanisms for adapting administrative contracts to changing circumstances, a critical aspect given the often long-term nature of public projects and the dynamic environment in which public administration operates.
A – Prerogatives of Administrative Authorities
Article 3179: Principle of Unilateral Modification
This article enshrines one of the most distinctive features of administrative contracts: the administrative authority’s power to “unilaterally impose… certain modifications of the contract,” even if the contract contains no such provision. This power is contingent upon a “change of circumstances” that “justifies such modifications in the general interest.” This is the doctrine of pouvoir de modification unilatérale or jus variandi. It is an “exorbitant power” that allows the administration to adapt the contract to evolving public needs, technological advancements, or unforeseen public exigencies, ensuring the contract remains suitable for its public purpose. This power is a direct consequence of the public interest overriding strict contractual immutability.
Article 3180: Termination of Contract for Public Interest
Complementing the power of unilateral modification, administrative authorities may also “terminate the contract,” even “notwithstanding that the other party has committed no fault,” if the contract has become “useless to the public service or unsuitable for its requirements.” This is the doctrine of résiliation unilatérale pour motif d’intérêt général. It allows the administration to extricate itself from contracts that no longer serve a public purpose or have become inefficient, even if the contractor is performing perfectly. This power is crucial for administrative flexibility and the optimal allocation of public resources.
Article 3181: Compensation for Modification or Termination
(1) While administrative authorities possess broad unilateral powers of modification and termination, these powers are not exercised without consequence for the private contractor. The contractor “shall be entitled to compensation equal to the loss sustained by him by reason of the modification or termination.” This ensures that the private party is made whole for actual losses incurred due to the state’s exercise of its unilateral prerogatives. (2) In determining compensation, “regard shall be had to all the benefits which the party could legitimately expect to derive from the contract.” This suggests that not only direct costs but also anticipated profits may be considered in the compensation calculation, aiming for a comprehensive indemnification. (3) However, the court “may… limit the amount of compensation insofar as it refers to loss of profit, where it appears that the modification or termination… is due to extraneous causes and not to a fault of the administrative authorities.” This introduces a nuanced approach to lost profits, suggesting that if the need for modification/termination arises from external, unforeseeable events (e.g., a major economic downturn or a natural disaster) rather than administrative fault, the compensation for lost profits might be reduced. This balances the contractor’s right to full compensation with the public’s burden in unforeseen circumstances.
Article 3182: Termination at the Request of Other Party
(1) While the administration has unilateral termination rights, this article provides a limited right for the private contractor to seek termination. The contractor may “require the termination of the contract where an intervention by the administrative authorities has as its effect to upset the general economy of the contract.” This refers to situations where the cumulative effect of administrative actions (e.g., multiple modifications, delays, or new regulations) fundamentally alters the financial equilibrium of the contract, making it unduly burdensome for the contractor. (2) The court’s role is crucial: it “shall determine whether… the importance of the modifications… exceeds or not what could be expected on the making of the contract.” This involves a judicial assessment of the extent of the disruption and whether it falls outside the reasonable commercial risks assumed by the contractor. (3) Crucially, “unless otherwise expressly agreed, the party may not of his own motion declare the termination of the contract.” This means the private contractor cannot unilaterally terminate; judicial intervention is required. This safeguards the continuity of public service and prevents contractors from abandoning projects without proper legal review.
B – Unforeseen Circumstances (Théorie de l’Imprévision)
This section introduces the doctrine of théorie de l’imprévision, a significant concept in administrative law that mitigates the harshness of pacta sunt servanda in the face of truly unforeseen economic disruptions. It differs from force majeure in that performance remains possible, albeit significantly more onerous.
Article 3183: Principle of Unforeseen Circumstances
(1) This sub-article states that if “circumstances which could not be foreseen on the making of the contract upset the balance of the contract,” the private contractor “shall perform his obligations where such performance remains materially possible.” This reaffirms the principle of continuity of public service: even under hardship, the contractor must continue performing if physically able. (2) However, the contractor “may… require that the administrative authorities… assist him in overcoming the supervening difficulties by sharing in the loss arising from such circumstances.” This introduces the concept of partage des pertes (sharing of losses), where the administrative authority contributes to the additional costs incurred by the contractor due to the unforeseen event. This is a mechanism for maintaining contractual equilibrium and ensuring the viability of the public service.
Article 3184: Definition of Contractual Upsetting
The “balance of the contract shall be deemed to be upset” when “new circumstances impose on the party contracting with the administrative authorities additional obligations which certainly surpass the extreme limits which could be expected by the parties on the making of the contract.” This sets a high threshold for invoking imprévision: the additional burden must be truly extraordinary and beyond what a reasonable contractor would have anticipated as normal commercial risk.
Article 3185: Unforeseeable Events
(1) An event is “unforeseeable where it could not reasonably be envisaged by the parties on the making of the contract.” This objective standard requires an assessment of what a prudent and diligent contractor would have anticipated. (2) An event is not unforeseeable if it is “due to the act of the person who avails himself thereof.” This prevents a party from benefiting from their own actions or omissions. (3) The concept of unforeseeability can also extend to “unforeseeable consequences or an unforeseeable extension of events which had already happened on the making of the contract.” This acknowledges that even known events can have unforeseen impacts that fundamentally alter the contractual balance.
Article 3186: Provisions for Price Variation or Revision
This article addresses the interplay between imprévision and contractual clauses for price variation or revision. It clarifies that the mere existence of such a clause does not prevent compensation under imprévision where: (a) The price variation clause “has not been enforced”; or (b) The enforcement of the clause “is not sufficient to remedy the effects of the economic upsetting of the contract,” such as when fluctuations affect elements not chosen as an index in the variation clause. This ensures that imprévision acts as a safety net when contractual adjustment mechanisms prove inadequate for truly extraordinary economic disruptions.
Article 3187: Loss Necessary
This article clarifies that imprévision compensation is only due for actual “loss.” If circumstances have merely “reduced or taken away the benefits, without bringing about a loss for the party,” no compensation may be claimed. This means the doctrine protects against actual financial detriment, not merely a reduction in expected profitability.
Article 3188: Amount of Compensation
(1) The compensation granted under imprévision “shall leave at the charge of the party a part of the loss arising from the circumstances.” This is the essence of partage des pertes: the administrative authority does not fully absorb the loss, but shares it with the contractor. This encourages the contractor to mitigate losses and acknowledges that some risk remains with the private party. (2) In determining the amount, “regard shall be had to the efforts made by the party to overcome his difficulties, the general position of the enterprise and all other equitable elements.” This allows for a flexible and equitable assessment, considering the contractor’s diligence and overall financial health.
Article 3189: Cessation of Unforeseen Events
(1) The state of imprévision “shall cease where the balance of the contract is re-established.” This indicates that the compensation mechanism is temporary, designed to assist during the period of disruption. (2) If the unbalancing of the contract “appears to be definitive,” each party may “require the court to ascertain the situation thus created.” This allows for judicial determination of the long-term viability of the contract. (3) “Failing amicable agreement on the revision of the contract, the court shall declare the cancellation of the contract.” This provides a final judicial remedy when the contractual equilibrium cannot be restored, leading to termination.
C – Acts of Government (Fait du Prince)
This section addresses the fait du prince doctrine, which concerns the impact of governmental actions, external to the specific contract, that affect its performance.
Article 3190: General Measures – 1. Affecting Substance of Contract
(1) This article establishes the principle that “laws, regulations, orders and other measures of general application, made by the public authorities,” which directly modify, prevent enforcement of, or prematurely terminate a contract, entitle the contractor to compensation. This is the core of fait du prince: when the state, acting in its legislative or regulatory capacity (not as a contracting party), imposes a general measure that specifically and detrimentally impacts an existing administrative contract, the contractor is entitled to be indemnified. This protects contractors from unforeseen legislative or regulatory changes that fundamentally alter their contractual obligations. (2) Such compensation “may not be refused unless the measure of general application has specified that no compensation shall be paid.” This sets a high bar for denying compensation, requiring an explicit legislative act to override the right to indemnification.
Article 3191: 2. Making the Performance of the Contract More Onerous
(1) This article distinguishes between measures that affect the substance of the contract (compensable under 3190) and those that merely “modify the conditions of its performance and render such performance more difficult or more onerous.” Generally, the latter do not create a right to compensation. This reflects the principle that contractors are expected to bear normal commercial risks, including the general impact of new regulations that increase costs but do not fundamentally alter the contract’s terms or object. (2) However, compensation shall be due if the measure itself or the contract explicitly provides for it. This allows for contractual or legislative exceptions to the general rule of non-compensation for increased onerousness.
Article 3192: Particular Measures – 1. Taken by Contracting Authorities
(1) This article addresses “particular measures taken by the contracting public authority” (i.e., the specific administrative entity that is a party to the contract). If such measures affect the substance of the contract or render performance more difficult/onerous, they create a right to compensation. This covers actions by the contracting authority that go beyond its contractual rights but are not a general regulatory act. (2) No compensation is due if the measure is “merely the ascertainment or the inevitable consequence of economic facts extraneous to the parties.” This excludes compensation for administrative actions that simply reflect broader market realities or unavoidable economic shifts.
Article 3193: 2. Taken by Another Authority
(1) This article states that “no compensation shall be due where the act which is the cause of the damage emanates from an authority other than that which has concluded the contract.” This establishes a principle of non-liability for acts of third-party administrative bodies. The rationale is that the contracting authority cannot be held responsible for the actions of other, independent state organs. (2) However, this does not affect the rules relating to “unforeseen circumstances” or “the responsibility of public authorities” generally. This means that while the contracting authority might not be directly liable for the act of another authority, the contractor might still seek remedies under the théorie de l’imprévision if the act constitutes an unforeseen event, or pursue claims against the responsible public authority under general administrative liability rules.
Paragraph 3. – Non-performance of Contracts
This paragraph outlines the remedies and consequences for non-performance in administrative contracts, again highlighting the unique position of the administrative authority.
Article 3194: Compulsory Performance of Contracts
(1) This is a fundamental principle: “The court may not order the administrative authorities to perform their obligation.” This reflects the doctrine of insaisissabilité (immunity from seizure) and the non-compellability of the state. Courts generally cannot compel the state to perform specific acts, as this would infringe upon administrative discretion and the separation of powers. (2) Instead, the court “may, however, make an order for the payment of damages unless the administrative authorities prefer to perform their obligations.” This establishes pecuniary compensation as the primary judicial remedy for administrative breach, allowing the administration to choose between paying damages or fulfilling the original obligation. (3) “Unless otherwise provided by law, it may also cancel such measures as have been taken by the administrative authorities in violation of their contractual undertakings.” This grants the court the power of annulment for administrative acts that breach contractual commitments, providing a significant check on administrative power.
Article 3195: Requisitioning Powers
(1) This article explicitly limits the administrative authority’s “right of requisition”: it “may not be used… for the purpose of ensuring the performance of a contact concluded by them.” This prevents the administration from using its extraordinary power of requisition (typically for public order or national defense) as a means to enforce its own contracts, distinguishing between general public powers and specific contractual rights. (2) However, the “personnel of the public services may… be requisitioned to put an end to a strike.” This clarifies that the power of requisition remains valid for maintaining essential public services during labor disputes, as this falls under its broader public order function.
Article 3196: Interest for Delay
This article establishes specific conditions under which interest for delay becomes “due as of right by administrative authorities without their having to be placed in default.” This is a significant provision, as it creates an automatic accrual of interest, bypassing the usual requirement for a formal notice of default. This applies when: (a) Within fifteen days of the contractual deadline, the authorities have not taken steps for ascertainments leading to payment; or (b) Within three months of ascertainment, they have not taken steps to issue payment orders. These provisions aim to incentivize prompt administrative action in financial matters and compensate contractors for administrative delays.
Article 3197: Clause of Non-Responsibility
This article protects the private contractor from clauses that seek to limit the administrative authority’s liability for delay. “Notwithstanding any stipulation to the contrary,” the contractor may claim interest for delay or compensation if: (a) The delay exceeds six months; or (b) It is due to the administrative authority’s “intention to cause harm or to its gross negligence or grave fault.” This provision acts as a public policy safeguard, preventing administrative authorities from contractually absolving themselves of responsibility for prolonged or egregious delays, particularly those caused by their own misconduct.
Article 3198: Lapse of Notice Placing Party in Default
(1) This article addresses the effect of subsequent negotiations on a notice of default. If, after placing the other party in default, administrative authorities “begin negotiations… with a view to resuming the contract on other bases,” the original notice of default “shall lapse and need be renewed.” This encourages good faith negotiations by preventing the initial default notice from hanging over the revamped agreement. (2) However, the mere passage of a “long period” without applying sanctions, or the continuation of “commercial relations,” does “not necessarily imply a tacit waiving of the right to apply sanctions and shall not make a new notice necessary.” This protects the administrative authority’s rights, preventing its forbearance or continued engagement from being construed as a waiver of its contractual remedies.
Article 3199: Delay of Suppliers
(1) This article explicitly states that the contractor “may not raise force majeure on the ground of the delay or default of his own suppliers.” This means that problems with the contractor’s supply chain do not excuse their non-performance vis-à-vis the administrative authority. (2) Similarly, the contractor “may not raise that the delay or default of his suppliers constitutes a case of force majeure releasing him from his liability for the non-performance of the contract.” This places the risk of supplier performance squarely on the primary contractor, reinforcing their ultimate responsibility for fulfilling the administrative contract. This is a common principle in public procurement, ensuring that the state deals with a single, accountable entity.
Article 3200: Preferential Rights
(1) This article limits the administrative authority’s power to unilaterally impose penalties: they “may not themselves decide that the other party is liable to a penalty by reason of the non-performance of the contract.” (2) Nor may they “fix the amount of compensation due by the other party by reason of the non-performance or delay.” This prevents the administration from acting as judge in its own cause, ensuring that penalization or damage assessment is subject to an independent determination. (3) The court “may order the administrative authorities to pay compensation for the damage caused to the other party in consequence of sanctions which such authorities have applied contrary to the law.” This provides a judicial remedy for contractors who have been unlawfully penalized by administrative authorities, reinforcing the rule of law.
Paragraph 4. – Assignment of Contracts and Sub-contracts
This paragraph addresses the transfer of contractual rights and obligations in administrative contracts, distinguishing between full assignment and partial sub-contracting.
Article 3201: Definitions
(1) An “assignment” is defined as an act where the original contractor “substitutes a third party for himself for the total performance of the contract.” This implies a complete transfer of the contractual relationship. (2) A “sub-contract” is defined as a contract where the original contractor “substitutes a third party for himself for the performance… of a part only or of an item of the contract.” This signifies a partial delegation of duties, with the original contractor retaining overall responsibility.
Article 3202: Administrative Authorization Necessary
(1) Both assignments and sub-contracts require “previous authorization” from the administrative authorities. This is a crucial control mechanism, allowing the administration to vet the proposed new party or sub-contractor to ensure they meet the necessary qualifications and do not compromise the public interest. This contrasts with private law, where assignments might be freely permitted unless explicitly prohibited. (2) Unless otherwise specified, the “authority competent to authorize the assignment or sub-contract is the authority competent to conclude the contract.” This ensures that the decision to approve a transfer rests with the same level of authority that originally committed the state.
Article 3203: Obligations and Rights of Administrative Authorities Regarding Authorization
(1) Administrative authorities are obligated to respond to a request for assignment or sub-contract within a “reasonable time.” This prevents undue delays in administrative processing. (2) For a “grantee of a public service,” the administrative authorities’ refusal of authorization is limited: it can only be based on “grounds of technical or financial incapacity of the new grantee who is proposed.” This reflects the public service nature, where the primary concern is the continued competent provision of the service. (3) In “other cases,” administrative authorities retain a “discretionary power to approve or refuse to approve the assignment or sub-contract.” This broader discretion applies to contracts not directly related to public service concessions, allowing the administration more flexibility in choosing its contractual partners.
Article 3204: Sanctions for Unauthorized Assignment or Sub-contract
(1) An “unauthorised assignment or sub-contract shall not affect the administrative authorities.” This means the administration is not bound by the unauthorized transfer and can continue to hold the original contractor liable. (2) Furthermore, it “shall constitute a contractual fault justifying the cancellation of the contract through the fault of the party having contracted with the administrative authorities.” This provides a strong deterrent against unauthorized transfers, allowing the administration to terminate the original contract due to the contractor’s breach.
Article 3205: Effect of Authorization – 1. Assignment
(1) When an assignment is approved, it has the effect of “substituting the assignee for the original contractant.” This means the new party steps into the shoes of the old one for the entire contract. (2) “Unless otherwise agreed, the original contractant shall cease to be liable for the performance of the contract.” This signifies a novation, where the original party’s obligations are extinguished upon the valid substitution. (3) Any securities furnished by the original contractor “may be retained by the administrative authorities only to the extent that there are litigations between them and him.” This ensures that securities are not held indefinitely once the original contractor’s liability ceases.
Article 3206: 2. Sub-contract
(1) The approval of a sub-contract “shall not affect the contractual bond between the administrative authorities and their contracting party.” This is a crucial distinction from assignment: the original contractor remains primarily liable to the administration. (2) The original party “shall remain liable for the works done and supplies made by the sub-contractor as though they had been done or made by himself.” This reinforces the principle that sub-contracting does not absolve the main contractor of their ultimate responsibility to the administrative authority. (3) However, the approval of the sub-contractor by the administrative authorities “shall… imply the exoneration of the contractant from the penalties for delay, where such delay is attributable to the sub-contractor.” This provides a limited relief for the main contractor, acknowledging that the administration’s approval of the sub-contractor implies some acceptance of the risk associated with that specific third party’s performance regarding delays. This nuance balances the main contractor’s overall responsibility with the administrative authority’s role in approving the sub-contractor.
The provisions within Title XIX collectively reveal a legal framework for administrative contracts that is fundamentally shaped by the twin imperatives of public interest and administrative prerogative. While drawing upon general contractual principles, the Code introduces significant adaptations—such as unilateral modification powers, restricted application of exceptio non adimpleti contractus, and the doctrines of imprévision and fait du prince—to ensure that contracts serve their primary function of facilitating efficient and accountable public service delivery. The emphasis on transparency, formal procedures, and judicial oversight further underscores the unique public law character of these essential agreements.