Termination of the government contract after completion of works
Our client, a contractor under a government contract, was obliged to restore the functionality of X-ray equipment. According to the customer’s request, this required replacement of spare parts.
The contractor purchased the parts for a million rubles. However, during the repair stage, it turned out that the customer incorrectly stated the cause of the malfunction. The restoration of the X-ray equipment's functionality required maintenance. The equipment was restored. However, the customer was discontented with just maintenance services. He wanted to terminate the contract without reimbursing the price of the spare parts. How should the contractor behave in such a situation? Is it possible to get the money spent back?
Case was handled by
Our client, a contractor under a government contract, was obliged to restore the functionality of X-ray equipment. According to the customer’s request, this required replacement of spare parts. The contractor purchased the parts for a million rubles. However, during the repair stage, it turned out that the customer incorrectly stated the cause of the malfunction. The restoration of the X-ray equipment's functionality required only maintenance. The equipment was restored. However, the customer was discontented with just maintenance services. He wanted to terminate the contract without reimbursing the price of the spare parts. The contractor refused to terminate the contract on the terms offered by the customer. The latter filed a lawsuit. The task of the lawyers was: to prevent the termination of the public contact. The lawyers did the following:
1. Insisted in the court that there were no grounds for terminating the contract for reasons convenient for the customer. It was the customer who commissioned the work involving the purchase of the spare parts. The contractor agreed with such requirements. The equipment was made operational again.
2. Presented their notice of withdrawal from the contract to the customer. Also requested the customer to compensate damages to the extent of the price of the purchased spare parts. The lawyers insisted that the customer, through its actions, impeded the performance of the work and implementation of the public contract.
The courts of first instance and appeal upheld the customer's position. In their opinion, there is a significant change in the circumstances and the contractor should be responsible for all risks. The courts concluded that our client's withdrawal from the contract was unfair.
3. The lawyers brought the client's case before the court of cassation.
The court agreed that the restoration of the equipment to its serviceable state with less effort than agreed in the contract might be foreseen. The customer had no reasonable grounds for terminating the contract. All previous judicial decisions were overturned and the claim was dismissed.