The unilateral termination of the contract did not allow Vilnius City Municipality to avoid its obligation to pay for the works
Vilnius City Municipality unilaterally terminated the contract after accusing the designers of being behind the construction project of the Ice Arena. However, we were able to prove in court that the termination was unlawful. In addition, the municipality will have to pay €57,000 in damages to the designers of the arena.
Vilnius City Municipality terminated the contract on the grounds that the designers had failed to fulfil their obligations by the contractual deadline and had not renewed the performance security on time. But this is not true. In fact, the designers had performed most of the services and had taken the Municipality to court for damages.
NOOR lawyer Gintas Andruška, who represented one of the project developers Projektų rengimo centras, convinced the Vilnius Regional Court that the client had already completed about 83% of the work related to the preparation of the technical project and that the municipality itself was to blame for the project’s delays, as it had clearly failed to co-operate with the designers.
The court concluded that our client had not committed any material breach of contract that would have allowed the unilateral termination of the contract and upheld the claim of UAB Projektų rengimo centras – it declared the unilateral termination of the Design Services Contract by Vilnius City Municipality Administration unlawful.
The court also ruled that in the case of the unlawful termination of the contract by the client, Vilnius City Municipality Administration is obligated to compensate the contractor for the losses incurred for the actual design work performed up to the point of the unlawful contract termination. It is to be welcomed that the courts have taken the duty of cooperation between the parties in contractual relations quite seriously and have imposed on the party failing to comply with that duty adequate consequences for the breach of that duty.
