Coercive sanctions and manifestly excessive nature of late payment penalties

On the occasion of a dispute relating to the conditions of termination and the application of penalties for delay in the context of a project management contract awarded to a solidarity group, the Council of State recalls the rights of the public person with regard to the application of coercive sanctions, and specifies the methods of assessment by the judge of the manifestly excessive nature of penalties for delay.

Firstly, the Council of State recalls that the possibility for the public entity to implement coercive measures (substitution contract and termination for fault) against the holder of a public contract exists, even without a contractual clause : "it follows from the general rules applicable to administrative contracts that the public purchaser who has unsuccessfully given formal notice to his co-contracting party to perform the services he has undertaken to perform in accordance with the stipulations of the contract, has the option of having those performed. -here, at the expense and risk of its co-contracting party, by a third party company. The conclusion of substitution contracts, intended to overcome the inertia, failures or bad faith of the co-contracting party when they hinder the performance of a contract, is possible even in the absence of any stipulation of the contract expressly providing for it, because of the general interest attached to the performance of the services. The implementation of this coercive measure, which may relate to only part of the services covered by the contract and which does not have the effect of severing the contractual link between the contracting authority and its co-contracting party, cannot be subject to prior termination of the contract by the public purchaser. The rule according to which, even in the silence of the contract, the public purchaser may have recourse to substitute markets at the expense and risk of his co-contracting party takes on the character of a rule of public order"and" even if the market does not contain any clause to this effect and, if it contains such clauses, whatever the hypotheses in which they provide that a termination at the sole fault of the holder is possible, it is always possible, for the contracting authority to pronounce such termination when the contract holder has committed a fault of sufficient gravity " .

With regard to the judge's assessment of the manifestly excessive nature of late payment penalties, the Council of State first of all recalls the principle of such an assessment by the judge: "when the holder of the contract seizes the judge of conclusions tending that he moderates the penalties imposed on him, he cannot usefully maintain that the contracting authority has not suffered any prejudice or that the prejudice he has suffered is less the amount of the penalties imposed on it. It is up to him to provide the judges with all information, relating in particular to the practices observed for comparable contracts or to the particular characteristics of the contract in dispute, such as to establish to what extent these penalties are, in his opinion, manifestly excessive in nature. In view of the arguments of the parties, it is up to the judge either to reject the conclusions referred to him by applying the clauses of the contract relating to penalties,". Then, the Council of State specifies on what basis this assessment must be made in the event of a contract awarded to a group and for which the share incumbent on each member is specified: "When an agreement, to which the master of work is part, sets the share due to each member of a solidarity group in the performance of a service, and when the judge is seized by one of these members of conclusions tending to moderate the penalties charged to him because of delays in the performance of the services for which he was responsible, it is up to the judge, to assess their manifestly excessive nature in view of the amount of the contract,to take into account only the part of this market which is allocated to it pursuant to this agreement .

EC of April 12, 2023, n° 461576

Procedure applicable in the event of a replacement contract

The Council of State recalls the rules incumbent on the administration when it concludes a substitution contract to compensate for the shortcomings of the holder of a contract: "It follows from the general rules applicable to administrative contracts that the contracting authority may, after having unsuccessfully given formal notice to its co-contracting party to continue the performance of the services which it has undertaken to perform in accordance with the stipulations of the contract, decide to entrust the completion of the services to another company at the expense and risk of its co-contracting party. The defaulting contracting party must be able to monitor the execution of the substitution contract thus concluded in order to enable it to ensure the safeguard of its interests, the amounts resulting from the additional costs borne by the administration due to the completion of the services by a new entrepreneur under his care. For this purpose,".

The Council of State also specifies that the holder of the initial contract cannot invoke " in support of its request contesting the amount of the replacement contract, that this contract would have been awarded in disregard of the principle of equal treatment between the candidates for a public procurement contract ".

EC of April 5, 2003, n° 463554

Illicit nature of a contract

A recent judgment of the Council of State gives a concrete illustration of a case of illegality of a contract justifying its cancellation: "the content of a contract is illegal only if the very object of the contract, as it was formulated by the contracting public entity to launch the procedure for awarding the contract or as it results from the stipulations agreed between the parts which must be regarded as defining it, is, in itself, contrary to the law, so that by engaging for such an object, the co-contractor of the public body necessarily disregards it. By ruling that the lack of marketing authorization for a product whose supply constituted the very subject of the disputed contract tainted the content of this contract with unlawfulness and that such a defect was likely to justify its cancellation ,

EC of April 5, 2023, n° 459834

Invitation to tender: transmission of the backup copy

A decree published on April 22 modifies the second paragraph of article 2-I of appendix 6 of the public procurement code by adding a new mode of transmission of the backup copy: electronically, when the buyer authorizes it in the documents of the consultation.

Order of April 14, 2023 amending appendix 6 of the public procurement code