Contract with the Administration

The issue under discussion was quite clear and revolved around whether a municipality can compel an entrepreneur to continue with a public service management contract (in this case, a municipal nursery school) arguing "public interest" , even though the contract and the specifications expressly state that any extension can only be made if both parties agree expressly. The contract was signed for 2 years and provided for annual extensions

, but always with that condition, the mutual express agreement. After several extensions, the entrepreneur notified that did not want to continue , explaining that there were economic reasons to leave. Nevertheless, the municipality demanded that he continue providing the service until there was a demanded to continue providing the service until there was new contractor , justifying it on grounds of public interest needs.

The contractor requested compensation for the additional costs of that "imposed" continuity by the city council. At first instance it was partially recognized, but on appeal the High Court of Justice ruled in favor of the Administration and considered that such extension could be imposed without consent when there is a public interest (mentioning Law 30/2007 art. 23. 2, current Law 9/2017 art. 29. 2).

However, the Supreme Court accepts the appeal as it considers that, if the contract and the specifications require agreement from both parties to extend the management contract of a public service, the company cannot be forced to continue under the pretext of public interest.

Our professionals can advise you and address all issues related to contracting with the Administration.