{"id":47818,"date":"2026-11-06T14:26:57","date_gmt":"2026-11-06T13:26:57","guid":{"rendered":"https:\/\/lexcase.com\/?p=47818"},"modified":"2026-11-06T14:26:57","modified_gmt":"2026-11-06T13:26:57","slug":"termination-of-a-framework-agreement-prior-to-any-purchase-order-compensation-for-costs-incurred","status":"publish","type":"post","link":"https:\/\/lexcase.com\/en\/termination-of-a-framework-agreement-prior-to-any-purchase-order-compensation-for-costs-incurred\/","title":{"rendered":"Termination of a framework agreement prior to any purchase order: compensation for costs incurred"},"content":{"rendered":"
\n

French Council of State, 18 June 2026, R\u00e9gion Provence-Alpes-C\u00f4te d’Azur, No. 502577, reported in the Tables of the Recueil Lebon<\/strong><\/p>\n

A framework agreement with purchase orders, terminated before any order has been placed, may give the contractor the right to compensation for costs incurred. The French Council of State (Conseil d’\u00c9tat) has ruled that the absence of purchase orders is not, in itself, sufficient to exclude compensation under Article 46.4 of the 2009 General Administrative Clauses for Public Works Contracts (CCAG Travaux).<\/p>\n

On 10 May 2018, the PACA THD joint public authority awarded a framework agreement without a minimum purchase commitment to a consortium for the installation of fibre-optic infrastructure. Following the local authorities’ decision to abandon the public service project, the contract was terminated on public-interest grounds on 25 April 2019, before the first purchase order had even been issued. The companies, which had notably purchased fibre-optic cables to meet the contractual deadlines, claimed nearly \u20ac8 million in compensation. The Marseille Administrative Court of Appeal (CAA) dismissed the claim for loss of profit but held the regional authority liable for the expenses incurred and ordered an expert assessment. The region’s appeal before the Council of State was dismissed.<\/p>\n

A landmark decision: actual losses are distinct from the absence of a guaranteed minimum<\/h2>\n

The significance of this decision lies in the clear distinction drawn between the two components of loss arising from contract termination. Since the Council of State’s decision of 10 October 2018, No. 410501, a contractor holding a framework agreement without a minimum purchase commitment has not been entitled to compensation for loss of profit: such profits remain hypothetical, since the contracting authority was under no obligation to place any orders.<\/p>\n

The Provence-Alpes-C\u00f4te d’Azur Regional Council sought to extend this reasoning to expenses incurred. The Council of State rejected this approach, holding that, in relation to actual losses, the relevant question is not the likelihood of making a profit, but whether an expense was genuinely incurred and whether it was connected to the contract. As the Government Commissioner (rapporteur public) pointed out, the loss in this case was not hypothetical: the amounts had already been paid.<\/p>\n

Practical implications: preparatory expenditure is no longer necessarily a lost investment<\/h2>\n

For contractors holding framework agreements, which are often concluded without a minimum purchase commitment, this decision provides greater legal certainty for a common business practice.<\/p>\n

    \n
  • Prepare from the date of notification.<\/strong> Purchasing materials, reserving teams and engaging subcontractors: these expenses may be recoverable if the contract is terminated (including implicitly) before the first purchase order is issued.<\/li>\n
  • A negotiating tool.<\/strong> In the event of early termination, the contractor may claim reimbursement of its expenses, even where there is no guaranteed minimum and no entitlement to compensation for loss of profit.<\/li>\n
  • Due diligence at the tender stage.<\/strong> Contractors must check that the contract refers to the CCAG without derogating from its provisions, or includes an equivalent clause. Otherwise, the courts accept that a contractual clause may exclude any right to compensation, and this risk must therefore be factored into the contract price.<\/li>\n<\/ul>\n

    Practical challenges: compensation remains subject to strict conditions<\/h2>\n

    This decision opens a door, but does not provide automatic access to compensation. Contractors will face four key challenges.<\/p>\n

      \n
    1. Establishing a link with the contract.<\/strong> Expenses must have been incurred specifically “for the purposes of the contract”. In the absence of purchase orders, no specific services have been requested. Contractors will therefore need to demonstrate that the purchases were intended for this particular contract, rather than for the company’s general business activities or other projects.<\/li>\n
    2. The requirement that expenses be “strictly necessary”.<\/strong> The Government Commissioner emphasised the need to reiterate this requirement, which had been expressed too broadly in the appellate judgment. Stock levels based on the maximum value of the framework agreement will be difficult to justify, whereas supplies proportionate to the contractual deadlines are more likely to meet this requirement.<\/li>\n
    3. Evidence and assessment.<\/strong> The burden of proof lies with the contractor. Invoices, schedules and correspondence with the contracting authority must be retained from the date of contract notification. The resale or reuse value of supplies must also be deducted from the amount claimed. This makes an expert assessment almost unavoidable, as in the present case, where seven years had elapsed since termination.<\/li>\n
    4. Contractual provisions.<\/strong> The outcome remains dependent on the applicable contractual terms: an amended CCAG, a derogating clause or a contract falling outside the scope of the CCAG may lead to a different result. Drafting the contractual documents is therefore a key issue for both the contracting authority and the contractor.<\/li>\n<\/ol>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

      French Council of State, 18 June 2026, R\u00e9gion Provence-Alpes-C\u00f4te d’Azur, No. 502577, reported in the Tables of the Recueil Lebon A framework agreement with purchase orders, terminated before any order has been placed, may give the contractor the right to compensation for costs incurred. The French Council of State (Conseil d’\u00c9tat) has ruled that the […]<\/p>\n","protected":false},"author":10,"featured_media":17084,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[125],"tags":[],"class_list":["post-47818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-public-law"],"acf":[],"yoast_head":"\nTermination of a framework agreement prior to any purchase order: compensation for costs incurred - LexCase<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/lexcase.com\/en\/termination-of-a-framework-agreement-prior-to-any-purchase-order-compensation-for-costs-incurred\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Termination of a framework agreement prior to any purchase order: compensation for costs incurred - LexCase\" \/>\n<meta property=\"og:description\" content=\"French Council of State, 18 June 2026, R\u00e9gion Provence-Alpes-C\u00f4te d’Azur, No. 502577, reported in the Tables of the Recueil Lebon A framework agreement with purchase orders, terminated before any order has been placed, may give the contractor the right to compensation for costs incurred. 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