Eugen Sarbu, attorney-at-law
In public procurement contracts, the lack or delay of financing may have significant consequences for the private contractor. The issue arises particularly in projects financed from public or non-reimbursable funds, where the contracting authority includes contractual provisions making payment of the contract price, performance of the works or payment of price adjustments conditional upon the availability or actual transfer of funds.
This approach raises a fundamental question: can a contracting authority transfer the risk of insufficient project financing to the private contractor?
The analysis must start from the nature of the public procurement contract, the contracting authority’s obligation to identify the source of financing, as well as the rules governing payment terms and the unfairness of certain contractual provisions.
1. The issue: transferring financing risk to the private contractor
In practice, financing risk may be transferred from the contracting authority to the economic operator through a series of contractual provisions.
The contractual documentation does not need to expressly state that “the contractor assumes the risk of insufficient financing”. The same effect may be achieved through clauses which, considered individually, appear to regulate only the payment mechanism or suspension of performance.
The most relevant situations include:
- provisions exempting the contracting authority from payment of the contract price where it lacks financing, while maintaining the contractor’s obligation to perform its contractual obligations;
- provisions under which payment is suspended until the necessary funds become available;
- provisions allowing suspension of the performance of the contract in the absence of financing, without adequately regulating the costs arising from such suspension;
- unclear provisions generating disputes over demobilisation, maintenance, security, equipment standby, remobilisation and indirect costs;
- provisions that condition or defer payment in such a manner that the public procurement contract is, in substance, deprived of its onerous character;
- provisions establishing payment terms exceeding those permitted under Law No. 72/2013;
- provisions making payment of price adjustments conditional upon the obtaining or reimbursement of financing;
- provisions that upset the contractual balance by transferring to the private contractor actual and necessary costs which, having regard to the nature of the project, should be borne by the contracting authority as the project beneficiary.
The legal issue is therefore not the existence of financing as such, but the allocation of financing risk within the contractual relationship between the contracting authority and the economic operator.
2. The contracting authority’s obligation to secure and identify the source of financing
A first relevant reference point is Government Decision No. 395/2016.
Pursuant to Article 12, the contracting authority is required to prepare an annual public procurement programme, serving as an instrument for planning and monitoring its procurement portfolio, as well as for planning the resources required to carry out the relevant procurement procedures.
The annual public procurement programme must include, among other matters, the source of financing.
In the case of projects financed from non-reimbursable funds and/or research and development projects, the contracting authority is required to prepare, separately for each project, a public procurement programme relating to that project, following the execution of the relevant financing/co-financing agreement.
The contracting authority may also subsequently amend or supplement the annual public procurement programme only provided that the relevant sources of financing have been identified.
These provisions are relevant from the perspective of risk allocation. Financing is an element that must be taken into account by the contracting authority when planning the procurement and managing the resources required for its implementation.
Accordingly, the risk that the contracting authority may not have the funds necessary to perform its own contractual obligations cannot be transferred to the economic operator that has undertaken to perform the works, services or supply the relevant products.
This conclusion is particularly important where the economic operator has performed its own contractual obligations and the contracting authority has benefited from such performance.
3. A public procurement contract is a contract for pecuniary interest
A key argument in analysing financing risk arises from the very definition of a public procurement contract.
Article 3(1)(l) of Law No. 98/2016 defines a public procurement contract as a contract for pecuniary interest.
The onerous nature of the contract presupposes the existence of consideration.
The economic operator undertakes to perform the works, supply the products or provide the services, while the contracting authority has the corresponding obligation to pay the contract price.
Against this background, the obligation to pay the price cannot become contingent upon an external element outside the contractual relationship, such as the obtaining or transfer of financing to the contracting authority.
Otherwise, the economic operator would perform its obligations, bear the associated costs and assume the risks inherent in its own activities, while recovery of the contractual consideration would depend on an event over which it has no control.
Such a situation would affect the very nature of the public procurement contract as a contract for pecuniary interest.
4. Contractual provisions through which financing risk is transferred in practice
4.1. Exemption of the contracting authority from payment of the contract price in the absence of financing
A first category consists of provisions under which the contracting authority is exempted from paying for the contractual performance where it does not have the necessary funds.
The issue becomes particularly apparent where, at the same time, the contract requires the contractor to continue performing its own obligations.
Such a mechanism may result in the economic operator effectively financing the project by bearing the costs of performance while the recovery of those costs is deferred for an indefinite period.
The risk is particularly significant in works contracts, where the contractor must continuously bear costs relating to personnel, materials, equipment, subcontractors and site organisation.
4.2. Suspension of payments
Another form of risk transfer consists in suspending payments until the contracting authority receives the necessary funds.
In such circumstances, it must be assessed whether payment is linked to the performance and acceptance of the contractual obligations or whether it is made conditional upon an event external to the contractual relationship.
Particularly in projects financed through reimbursement mechanisms, the relationship between the contracting authority and the financing body should not be confused with the contractual relationship between the contracting authority and the contractor.
Where the contractor has duly performed its obligations, the fact that the contracting authority has not yet received the relevant funds from the financing body cannot automatically turn the contractor’s receivable into an uncertain claim or defer payment indefinitely.
4.3. Suspension of the performance of the contract
Financing risk may also be transferred through provisions allowing the contract to be suspended in the absence of funds.
This situation may have significant economic consequences and, in practice, frequently gives rise to disputes or arbitration proceedings between the parties.
Suspension of works may involve:
- demobilisation of personnel and equipment;
- security costs;
- maintenance costs;
- preservation and protection of completed works;
- equipment standby costs;
- indirect costs;
- subsequent remobilisation costs.
In the absence of adequate contractual regulation, the question arises: who bears these costs where the suspension is not caused by the contractor’s conduct, but by the lack of project financing?
Automatically transferring such costs to the contractor may result in a contractual imbalance and give rise to disputes concerning recovery of the resulting losses.
5. Payment terms and the unfairness of payment clauses
Another relevant legal instrument is Law No. 72/2013 on measures to combat late payment in the performance of payment obligations involving sums of money arising from contracts concluded between professionals and between professionals and contracting authorities.
Pursuant to Article 12, a practice or contractual provision establishing a payment term, a level of interest for late payment or additional damages that is manifestly unfair to the creditor is considered unfair.
When determining whether a provision is unfair, the court takes into account all the circumstances of the case, including serious deviations from established practices between the parties, compliance with the principles of good faith and due diligence in the performance of obligations, the nature of the goods or services, and the existence of objective reasons for derogating from the statutory payment terms.
Article 14 identifies certain provisions which are deemed unfair by law, without any further assessment of the circumstances referred to in Article 13 being required.
Of particular relevance to public procurement contracts is the fact that provisions establishing, in contracts between professionals and contracting authorities, a payment term exceeding the statutory period are deemed unfair.
Pursuant to Article 15, unfair contractual provisions are absolutely null and void.
Accordingly, the mere existence of a contractual provision is not, in itself, sufficient to justify delayed payment.
The provision must be assessed by reference to the applicable legal framework and to its actual effect on the contractual balance. An unfair provision is, as a matter of law, removed from the contractual framework.
6. Price adjustment and financing risk
A separate issue arises in relation to price adjustment.
Price adjustment represents an important component of the contract price, particularly in the context of legislative amendments introducing mandatory price adjustment mechanisms.
Against this background, provisions making payment of price adjustments conditional upon the obtaining or reimbursement of financing must be assessed by reference to the nature of the obligation to pay the contractual price.
Where an adjustment is due under the applicable statutory or contractual mechanism, the relationship between the contracting authority and the financing body cannot, in itself, turn the obligation to pay the contract price, or a component thereof, into an uncertain obligation.
7. Court decisions on financing risk in public procurement contracts
The issue of transferring financing risk has also been examined in the case law of Romanian Courts of Appeal.
In Decision No. 321/2020 of 23 September 2020, the Ploiești Court of Appeal held that an interpretation under which the contractor’s entitlement would depend on financing received by the public authority would effectively transform a public procurement contract, which is by its nature synallagmatic, into an aleatory contract.
This reasoning is fundamental to the analysis of financing risk.
A public procurement contract establishes a legal relationship under which the contractor’s performance corresponds to the contracting authority’s obligation to pay the price.
If payment were to depend indefinitely on an element external to the contractual relationship – namely, the financing received by the public authority – the economic operator would bear a risk over which it has no control.
In the same case, the court held that lack of funds cannot constitute a ground for exemption from payment and that the consequences of insufficient financing should not be borne by the provider of public services.
Recent case law
A further relevant decision is Judgment No. 151/2026 of 12 March 2026, issued by the Olt Tribunal.
In that case, the contract provided that it would become effective only subject to the execution of the financing agreement or the allocation of budgetary appropriations for the relevant investment objective.
The court drew an important distinction between the condition for the contract to enter into force and the payment obligation arising once that condition had been fulfilled.
Once the condition precedent had been satisfied, the contract produced full legal effects and the contracting authority was required to make payment of the amounts due within the time limits stipulated in the contract.
The Tribunal held that the temporary lack of funds, internal administrative procedures or the timetable for the transfer of funds by the financing ministry could not be invoked against a private counterparty that had fully performed its contractual obligations.
The court also found that accepting such a defence would amount to transferring financing risk to the contractor, contrary to the principles governing public procurement contracts and the binding force of the contract.
A further relevant reference is Judgment No. 5686/2026 of 4 June 2026, issued by the Bucharest Tribunal.
In that case, the court examined contractual provisions making payment to the contractor of amounts representing price adjustments conditional upon reimbursement of such amounts from the state budget.
The Tribunal considered those provisions unfair, holding that payment of amounts representing price adjustments takes place within the contractual relationship between the beneficiary and the contractor, whereas reimbursement to the beneficiary occurs subsequently, on the basis of supporting documentation.
The court assessed the situation by reference to Articles 12 and 14(d) of Law No. 72/2013 and found the condition linking payment to the contractor to the reimbursement of the relevant amounts from the state budget to be inequitable.
8. Sarbu Partners’ view
Financing risk is, essentially, a risk that must be assessed at the level of the contracting authority and within its relationship with the source of financing. It cannot be transferred, through the insertion of contractual provisions, to the economic operator that has performed its contractual obligations.
A public procurement contract is a contract for pecuniary interest. The contracting authority cannot benefit from the contractor’s performance while simultaneously turning payment of the contract price into an uncertain obligation dependent on the obtaining or transfer of funds by another entity.
Particular attention should be paid to seemingly technical provisions concerning financing, suspension and payment. In practice, precisely these provisions may generate the most significant economic consequences for the contractor.
In particular in works contracts, the transfer of financing risk may produce a chain of consequences: delayed payment may create cash-flow difficulties; suspension may generate demobilisation, standby and remobilisation costs; and delayed financing may lead to disputes concerning the contract price, price adjustments, interest and recovery of additional costs.
Where these consequences have already materialised, the issue is no longer a theoretical one concerning risk allocation, but a highly practical and pressing question of recovering amounts due.
In a dispute concerning payment of the contract price, price adjustment, interest, costs arising from the suspension of works or recovery of other losses, the legal classification of provisions relating to financing may become decisive in determining the scope of the parties’ respective obligations.
Accordingly, financing risk must also be considered from the perspective of its potential dispute-related consequences. Where a contracting authority relies on lack of financing to justify non-payment, suspension or refusal to bear certain costs, the dispute must be assessed by reference to the contract, the applicable legal framework and relevant case law.
For the economic operator, the relevant question is not merely whether the project is financed, but also whether the contractual documentation transfers financing risk to the contractor and to what extent such risk-transfer provisions are valid or constitute unfair provisions, or provisions which, when interpreted in light of the applicable legal framework, should instead be given a different legal characterisation – in many cases, provisions characterised as conditions being more appropriately construed as provisions relating to a term.
Where such a provision has already produced effects and resulted in payment delays, additional costs or a refusal by the contracting authority to perform its obligations, a legal assessment of the circumstances may be essential to formulating and substantiating the economic operator’s claims in dispute resolution proceedings.
The proper identification and interpretation of provisions concerning financing, payment, suspension and price adjustment may therefore become central elements in a contractual dispute and in legal proceedings aimed at recovering amounts due and losses incurred.