Breach of Contract in Romania: Your Remedies as a Foreign Company

In brief. When a Romanian counterparty fails to perform, the law rarely leaves you with a single option. You may be able to compel performance, bring the contract to an end, recover damages, or claim a reduction in price, and often a combination of these. Which routes are genuinely open to you, and how quickly you can use them, is determined less by the gravity of the breach than by the wording you agreed at the outset. This note sets out the remedies available under Romanian law, and the decisions that separate a swift recovery from a protracted one.

The other side has not done what it promised. A delivery never arrived, an invoice sits unpaid, or the work delivered is not the work you agreed. The instinct is to ask whether you can sue. The more useful question is narrower: what does your contract actually permit, and how fast?

What amounts to a breach

Not every disappointment is a breach in law, and not every breach carries equal weight. Romanian law distinguishes between a failure that goes to the heart of the bargain and one that is minor or partial, and the distinction governs which remedies you may reach for.

A serious failure, one that substantially deprives you of what you contracted for, unlocks the strongest remedies, including bringing the contract to an end. A minor shortfall will seldom justify unwinding the whole agreement, but it may still entitle you to damages or to insist on proper performance. Where the line falls is a question of degree, and of what the contract itself treats as essential, which is precisely why a carefully drafted agreement identifies its fundamental obligations rather than leaving the point to argument.

The remedies available to you

Romanian law equips the injured party with a set of instruments rather than a single answer. In practice the right course is often a combination, and the order in which you deploy them matters.

Compelling performance. Your first option is frequently to require the other side to do what it undertook, rather than to walk away. This serves you best where what you need is the thing itself, a specific delivery, an executed document, an obligation only that counterparty can discharge, rather than money in its place. Its practical worth turns on whether performance remains possible and still valuable to you.

Bringing the contract to an end. Where the breach is grave enough, you may terminate. Romanian law draws a distinction of real consequence here. Rezoluțiune unwinds a contract as though it had never existed, typically for one off obligations such as a sale, with each party restoring what it received. Reziliere ends a continuing relationship for the future, such as a lease or a service arrangement, leaving past performance undisturbed. Which of the two applies decides what you may recover.

Recovering damages. Whether or not you terminate, you may generally seek compensation for the loss the breach has caused, the object being to place you where you would have stood had the contract been honoured. Damages may stand alone or accompany termination, and it is in quantifying them, with evidence of actual loss, that these claims are usually won or lost.

Reduction and cure. In certain contracts, sales in particular, you may be entitled to have a defect remedied, the goods replaced, or the price reduced to reflect what you truly received. These remedies are often quicker and less costly than a full dispute, and they merit consideration before matters escalate.

Your remedies

Four instruments, often used together

Compelling performance

Require the other side to do what it undertook, rather than walk away. Best where you need the thing itself, a specific delivery, an executed document, an obligation only that counterparty can discharge, rather than money in its place. Its value turns on whether performance is still possible and still worth it to you.

Bringing the contract to an end

Where the breach is grave enough, you may terminate. Romanian law distinguishes rezolutiune (unwinding a one off contract as if it never existed, with each party restoring what it received) from reziliere (ending a continuing relationship for the future, leaving past performance in place). Which applies decides what you can recover.

Recovering damages

Whether or not you terminate, you may seek compensation for the loss the breach caused, aiming to place you where you would have stood had the contract been honoured. Damages can stand alone or accompany termination, and they are won or lost in the quality of the evidence of actual loss.

Reduction and cure

In some contracts, sales in particular, you may have a defect remedied, the goods replaced, or the price reduced to reflect what you truly received. Often quicker and less costly than a full dispute, and worth considering before matters escalate.

Rezoluțiune Unwinds the contract as if it never existed. Typically for one off obligations such as a sale. Each party restores what it received. Use it when you want to be put back to where you started.

Reziliere Ends a continuing relationship for the future. For ongoing contracts such as a lease or service arrangement. Past performance stays in place. Use it when you simply need the relationship to stop going forward.

The clause that decides everything: pact comisoriu

If one provision separates a rapid recovery from a slow one, it is the termination clause.

Absent an express clause, ending a Romanian contract for breach may require an application to court for judicial termination, with the delay and expense that entails. With a well drafted express termination clause, known in Romanian law as a pact comisoriu, you may bring the contract to an end yourself, in defined circumstances, without awaiting a judge. The more precisely it is drawn, the more directly it operates.

This is why the moment of breach so often leads back to the moment of signature. The company that secured a clear termination clause can act within days. The company that relied on a template, or on nothing, may spend months in court merely to establish its right to leave. If you are reading this before a dispute, the lesson is to get the clause right now. If you are reading it during one, the first task is to establish what your contract already provides.

Fixing the number in advance: clauza penală

A penalty clause, clauza penală, settles in advance the sum payable on breach. Rather than proving your precise loss after the event, you point to the figure the parties already agreed.

For a foreign company this is valuable certainty, rendering the consequence of breach predictable and giving you a defined amount to claim rather than a case to construct. Note that a Romanian court retains a limited power to reduce a penalty it regards as manifestly excessive, so the clause is best drawn to be reasonable rather than punitive. Set with care, it is among the most practical protections a contract can hold.

When the breach is simply late payment

Late payment is the most common breach of all, and Romanian law, giving effect to the European rules on commercial transactions, treats it with corresponding seriousness.

In dealings between businesses, a creditor is generally entitled to statutory interest on late sums and to a fixed compensation for recovery costs, even where the contract is silent, so a measure of protection exists by default. Yet a contract that stipulates payment deadlines, interest on overdue amounts and a penalty for delay places you in a far stronger and faster position than reliance on the statutory minimum. Where your immediate difficulty is an unpaid invoice, the questions that matter are whether the debt is clear and undisputed, what your contract says about late payment, and, above all, whether the debtor remains solvent.

Recovery when the counterparty may be in difficulty

A judgment, or a sound claim, is not the same as money in your account. Where the Romanian company that owes you is drifting towards insolvency or dissolution, the timing of your action may decide whether you recover anything at all.

The rule is uncomfortable but plain: the earlier you move, the better your prospects. Once a debtor enters formal insolvency, individual enforcement ordinarily yields to a collective procedure in which creditors are paid by rank, and unsecured creditors frequently recover little. The deadlines to register a claim in such procedures are strict and easily missed from abroad. If there is any indication your counterparty is failing, the matter is urgent, not routine.

The steps that protect your position

Whichever remedy you ultimately rely upon, a few early measures consistently strengthen a foreign company's hand.

Record the breach promptly and in writing, keeping to the facts. A clear notice, identifying the specific obligation and the relevant clause, both preserves your position and often prompts performance without more. Gather and preserve the evidence of the breach and of your loss, for damages are proven with documents rather than grievance. Observe your contract's notice requirements, since many agreements demand notice in a particular form or with a cure period, and neglecting that step can undermine an otherwise sound claim. And take advice before terminating, because ending a contract wrongly can turn the injured party into the party in breach.

Before you react

Four moves that protect your position

Whichever remedy you rely on, these early steps consistently strengthen a foreign company's hand.

• ✓Record the breach in writing, promptly. A clear notice citing the obligation and the clause preserves your position and often prompts performance on its own.
• ✓Preserve the evidence. Damages are proven with documents, not grievance. Keep the record of the breach and of your loss.
• ✓Follow the contract's notice rules. Many agreements require notice in a set form or with a cure period. Skip it and you can weaken a sound claim.
• ✓Take advice before terminating. Ending a contract wrongly can turn the injured party into the party in breach.

Forum and language

Where a dispute proceeds depends on what your contract chose. Many cross border contracts with Romanian parties nominate either the Romanian courts or arbitration, each carrying its own balance of cost, speed, privacy and enforceability.

For a foreign company, the practical questions are which forum the contract selected, in which language the proceedings will run, and how any decision will be enforced against assets in Romania. A favourable ruling in the wrong forum, or one that proves difficult to enforce locally, is worth less than it appears, which is why this clause repays attention at the drafting stage and close reading the moment a dispute emerges.

How we help

We act for foreign companies when a Romanian counterparty has failed to perform. That means reading your contract to establish precisely which remedies are open, advising whether to compel performance, terminate or claim damages, handling the notices and evidence that protect your position, and pursuing recovery through negotiation, court or arbitration as the matter requires. Where money is owed and the debtor may be in difficulty, we move quickly, because in recovery time is usually the decisive factor.

If a contract has been broken and you are weighing your options, the sooner your position is assessed, the more of them you are likely to keep.

Questions foreign companies ask

Breach of contract in Romania, answered

What can I do if a Romanian company breaches our contract?

Depending on the breach and on what your contract provides, you may generally compel performance, terminate, claim damages, or in some cases seek a price reduction or cure. The best remedy turns on how serious the breach is and on the wording you agreed, so the first step is to read the contract against Romanian law.

Do I have to go to court to end a contract in Romania?

Not always. If your contract contains an express termination clause, a pact comisoriu, you may be able to end it yourself in defined circumstances without a court. Without such a clause, you may need judicial termination, which is slower and more costly.

Can I claim interest if a Romanian company pays late?

Yes. In commercial dealings, Romanian law affords a creditor statutory late payment interest and a fixed recovery compensation, even where the contract is silent. A clear payment and penalty clause makes recovery faster and stronger.

How much can I claim as damages for breach of contract?

Damages aim to place you where you would have been had the contract been performed, so the amount depends on the actual loss you can prove with evidence. A penalty clause, if your contract has one, can fix the figure in advance and remove much of that uncertainty.

My Romanian debtor may be insolvent. Can I still recover?

Possibly, but timing is critical. Once formal insolvency begins, individual enforcement usually gives way to a collective procedure with strict deadlines, and unsecured creditors often recover little. If you suspect trouble, act urgently rather than waiting.

A contract has been broken?

The sooner it is assessed, the more options you keep.

We act for foreign companies when a Romanian counterparty fails to perform, from establishing your remedies to pursuing recovery through negotiation, court or arbitration. Where money is owed and time matters, we move quickly.

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