- If you provide services to the Government and the Government defaults on the payment, or guidelines, of its contracts, the contractor is relieved of its obligation without any liabilities.
Public procurement is a vehicle for the Government to meet its needs in a timely manner. In exchange for acquiring goods or services, the Government is obliged, among other things, to pay timely for what it has received. However, for various reasons and not infrequently, the Government delays its payments.
In the event of such delay, particularly unjustified delay, the contractor may not only claim the payment of default interest but, subject to certain conditions, may also (justifiably) not comply the contractual obligation. This justified breach of contract is what is called the exception of non-performance or exception on adimpleti contractus, originated in the law applicable to private subjects contracts, however, by way of resolutions of competent judicial authorities, it has been extended and applied to public contracts, those agreed between the Government and the suppliers.
In order to apply the exception of non-performance, the supplier-contractor must ensure that at least the following requirements are met:
- It must be a bilateral contract.
- Good faith of the party claiming the exception.
- The Government’s breach must be guilt or willful.
- The Government’s breach must be of importance and transcendence, not a minorbreach.
- The performance of the obligation on the part of the Government must be enforceable.
- The supplier-contractor must not have motivated the non-compliance of the Government.
The supplier-contractor who has complied with its contractual obligation and does not receive the payment due in a timely manner, may request the payment of default interest.
We advise that the supplier-contractor verifies that it has complied with its obligations and subsequently initiate the procedure for recognition of payment of default interest and, secondly, evaluate the opportunity and convenience of not complying with its contractual obligations until the Government complies with its obligations.