PRICE ADJUSTMENT, CONTRACTUAL PENALTIES AND PERFORMANCE GUARANTEES IN ROMANIAN PUBLIC WORKS CONTRACTS: NOTES FROM RECENT PRACTICE

Abstract

This article examines three mechanisms that, in the ordinary course of a Romanian public works contract, rarely operate in isolation: price adjustment, contractual penalties, and performance guarantees. All three acquired renewed practical significance after 2022, once the gap between 2022-2023 tender prices and the actual cost of materials, labour and financing widened to a point where fixed-price contracts ceased to reflect any real economic equivalence between performance and consideration. The first part sets out the current legal architecture of price adjustment under Romanian public procurement law and its relationship to the penalty clause of the Civil Code. The second, and analytically more difficult, part examines what becomes of the adjustment entitlement where a subcontractor, rather than the main contractor, has performed the works in question, particularly where the subcontractor was never formally declared to the contracting authority. Drawing, in anonymised form, on recurring patterns encountered in recent Romanian construction practice, the article sets out the author's own position on how price adjustment, penalties and performance guarantees interact, and argues that price adjustment is not a discretionary concession contracting authorities may grant or withhold, but an imperative statutory entitlement that a main contractor cannot retain for itself by invoking its own failure to declare the subcontractor whose work generated it.