Damage due to a price change can occur due to a delay in the performance of a monetary obligation established by the contract, i.e. the termination of the contract or due to a delay in the performance of an obligation determined by a legally binding decision. It can only be realised in the manner and under the conditions prescribed by the special provisions of the Law of Contract and Torts.
Compensation for damages due to a delay in the execution of a monetary obligation
In case of late payment of the contractually established monetary obligation, the debtor owes the creditor, in addition to the principal, default interest.
The creditor shall be entitled to default interest regardless of whether he has suffered any damage due to the debtor’s delay, as prescribed by the imperative provisions of Article 278, paragraph 1 of the Law of Contract and Torts.
Suppose the damage suffered by the creditor due to the debtor’s delay in the performance of the monetary obligation constituted by the contract is greater than the amount he would have received in the name of default interest. In that case, he has the right to demand the difference up to the total compensation of the damage, following the provisions of Article 278, paragraph 2 of the Law of Contract and Torts. Applying the provisions of Article 278, paragraph 2 of the Law of Contract and Torts, is possible only in case of delay in the fulfilment of the contract.
The right to compensation for damages due to a delay in the performance of a monetary obligation established by the contract can be exercised until the expiration of the statutory limitation period for the payment of the owed monetary amount, namely:
- within three years, when it comes to the execution of a financial obligation from a contract in the economy
- within ten years or a shorter period if it concerns monetary obligations constituted by a contract concluded between individuals or individuals and legal entities.
The statute of limitations begins on the first day after the day of payment in delay.
Debtor’s delay can also result in damage, expressed in the difference caused by the increase in the price of goods or services and the monetary value of which represents a debt obligation from the contract.
The right to compensation for damages due to an increase in the price of goods during the period of debtor’s delay in executing the sales contract can be exercised following the general rules prescribed by Article 266 of the Law of Contract and Torts. The burden of proving that, due to debtor’s delay, he suffers damage more significant than the amount that would be due to him based on the default interest is on the creditor.
The right to an increased price due to the termination of the sales contract
When the sale is terminated due to breach of contract by one of the contracting parties, the other party has the right to compensation for damages suffered, according to the general rules on compensation for damages caused by breach of contract.
The party loyal to the contract has the right to compensation for the following types of damage if it suffered them due to the termination of the contract:
- simple damages and profit lost
- abstract damages and
- concrete damages caused by the difference in price due to the sale or purchase for coverage.
Simple damages and profit lost
Compensation for simple damages and profit lost is realised following the provisions of Articles 266 and 526 of the Law of Contract and Torts.
The right to compensation for simple damages and profit lost is recognised when the amount of abstract or concrete damages is less than the actual damage caused to the party faithful to the contract.
The injured party from the contract of sale is recognised with that right by the provisions of Article 526 of the Law of Contract and Torts. However, compensation for this damage can only be realised following the rules prescribed by Article 266 of the Law of Contract and Torts. Therefore, the existence and amount of such damage must be proven.
The burden of proof lies with the injured party. In addition to the presence of simple damage or profit lost, it is obliged to prove its foreseeability on the part of the debtor of the contractual obligation.
The burden of proving these facts implies a degree of predictability, which in legal transactions is expressed within the limits of the attention of a good businessman, that is, a good host.
Abstract damage
Compensation for abstract damages is realized following the provisions of Article 524 of the Law of Contract and Torts. According to the provisions of Article 524, paragraph 1 of the Law of Contract and Torts, when the sale is terminated due to a breach of contract by one contractor, and the item has a current price, the other party may demand the difference between the price determined by the contract and the current price on the day of termination of the contract on the market of the place of effecting the transaction.
The difference between the price specified in the contract and the current price on the day of termination of the contract in the market of the place of effecting the transaction represents abstract damage, regardless of the damage that the party faithful to the contract suffered.
The injured party loyal to the contract can exercise the right to compensation for damages in an amount greater than the amount due to him based on abstract damages if he proves the existence of a more significant amount of actual damages.
Abstract damage can only be realized in case of contract termination and belongs to the party faithful to the contract, regardless of whether it is the seller or the buyer.
Abstract damage cannot be realized when the price is not specified in the sales contract, and in the case of contracting, the current price is a determinable sales price. If a determinable price is stipulated in the purchase contract, abstract damages can be charged only in cases where the criteria for determining the purchase price are precisely determined.
According to the provisions of Article 524 of the Law of Contract and Torts, the current price is determined on the day of termination of the contract on the market of the place of effecting the transaction, and should there be no current price in the market of the place of effecting the transaction, a current price shall be taken into account, in order to come to the amount of redress, existing in a market which could replace it in the given case, but increased by the difference in transportation costs. Which place is considered to be the market of the place of effecting the transaction shall be determined by the court in each specific case of realization of the right to compensation for abstract damages.
Abstract damage and concrete-proven damage represent different forms of damage, and for this reason, each represents a separate basis for realizing the right to compensation for damage.
Concrete damage caused by the difference in price due to the sale or purchase for coverage
Compensation for damages for coverage is realized following the rules prescribed by the provisions of Article 525 of the Law of Contract and Torts According to the provisions of Article 525, paragraph 1 of the Law of Contract and Torts, should the subject of sale be a certain quantity of objects specified in kind, and should one party fail to meet the obligation on time, the other party may sell for cover (expenses), or purchase with the same purpose and may demand the difference between the price agreed by the contract and the selling price or purchasing price obtained in the transaction for cover.
The conditions for the realization of compensation for damage for coverage are common for both sale for coverage and purchase for coverage, and they are:
- that the subject of the sales contract is replaceable items
- the existence of a delay in the performance of contractual obligations and
- the subject of the purchase contract for coverage must be items of the same type and quality as those that were the subject of the primary purchase contract.
The conditions for compensation for damages for coverage are:
- the existence of a contract for sale, i.e. purchase for coverage, based on which there is a difference in the price determined by the contract and the price at which the purchase, i.e. the sale for coverage, was made
- that the purchase or sale is carried out within a reasonable time and in a reasonable manner and
- that the injured party has fulfilled the obligation to notify the other contractual party in advance of the intended sale or purchase for coverage.
The right to compensation for damages for the purpose of coverage is realized as a consequence of the delay in the performance of contractual obligations and not as a right arising from the termination of the contract.
However, there is an exception in the case when the fulfilment of the deadline is an essential element of the contract when the consequences of the delay in the fulfilment of the contractual obligation are the termination of the contract by force of Law and the constitution of the right to compensation for damages for coverage. Even then, as well as in the case of delay when fulfilment by the deadline is not an essential element of the contract, the injured party must provide the other party with a notice of the intended sale, i.e. purchase for coverage, to invite the other party for the last time to fulfil the assumed obligation from the contract. After the expiration of the period specified in the notification, the right to compensation for damages for coverage, as well as the termination of the contract itself, shall be realized.
Compensation for damages due to a delay in the performance of an obligation determined by a final decision
A delay in the performance of an obligation determined by a legally binding decision occurs with the expiration of the maturity period defined by the enforceable document for enacting the performance ordered by it. According to the Law on Civil Procedure (“Official Gazette of the RS”, no. 72/2011, 49/2013 – US decision, 74/2013 – US decision, 55/2014, 87/2018, 18/2020 and 10/2023 – etc. law) Article 345, paragraph 2 and Article 486, paragraph 1, point 2) provide that unless otherwise determined by a particular regulation, the general maturity period is fifteen days, that is, the period of eight days for the execution of performances in commercial and bills of exchange and check disputes, and for performances that do not consist in giving money, the court can set a longer term.
The legal basis for a claim for damages due to non-fulfilment is a final decision whose deadline for voluntary fulfilment has expired, and this type of damages can be realized under the conditions and in the manner prescribed by the provisions of Article 293 of the Law of Contract and Torts.
The following conditions must be cumulatively met to realize the request for compensation for damages due to non-fulfilment:
- the existence of a final decision
- that the deadline for voluntary compliance determined by a final decision has passed
- that the creditor invited the debtor to fulfil the obligation in a subsequent appropriate period
- that the creditor declares that after the expiration of the subsequent time limit, he will not accept performance, requesting instead the redress of loss caused by the breach of obligation and
- that the debtor did not fulfil his obligation even in the subsequent period.
According to the provisions of Article 293, paragraph 2 of the Law of Contract and Torts, after the expiration of the subsequent time limit the creditor may request only the redress of loss caused by the breach. This means that if the creditor has chosen to collect compensation for damages due to non-fulfilment acting under the provisions of Article 293, paragraph 1 of the Law of Contract and Torts, after the expiration of the subsequent term, it is impossible to submit a proposal for execution based on the original enforceable document.
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Compensation for profit lost »
Unenforceability of the claims for damages »
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