Compensation for Positive or Negative Contractual Interest?

By Cristian Martea, Cooperate Legal Services, Lda.

The resolution of a contract operates under our Law as one of the forms of extinguishing its effects based on some just cause, objective or subjective, that has occurred during the term of the contractual bond. It is true that Article 801(2) of the Civil Code establishes that the resolution of the contract (due to subjective just cause – namely, default by the other party) entails, regardless of the right to compensation, the right to non-performance of the provision or, if it has already been performed, the right to its full restitution.

In turn, Article 798 of the same Code states that “The debtor who culpably fails to fulfil the obligation becomes liable for the damage caused to the creditor”. However, regarding the present subject, the doubts that arise consist in knowing the extent of the right to compensation as a consequence of the resolution of the contract.

In other words, does the compensation due after the resolution of a contract for breach by the counterparty cover all losses suffered by the conclusion of the contract, aiming to place the performing party in the situation they would be in if they had never concluded the contract, or does it cover all losses suffered as a consequence of that breach, aiming to place the performing party in the situation they would be in if the contract had been punctually and fully performed? In doctrinal terms, should the compensation be limited to the negative contractual interest or should it encompass the positive contractual interest?...continued in the PDF...