Price Increases in Commercial Contracts in Romania

Parties to a contract are required to perform their obligations, even if their performance has become more onerous, either due to increased costs of performing their own obligation or due to a decrease in the value of the consideration. 

However, according to the Romanian Civil Code, hardship may be triggered if the performance of the contract has become excessively onerous due to an exceptional change in circumstances which would make it manifestly unfair to oblige the debtor to perform the obligation, in which case the court may order: 

• the adaptation of the contract, in order to distribute the losses and the benefits resulting from the change of circumstances in an equitable manner between the parties; or 
• termination of the contract, at the time and under the conditions established by the court. 

Please note that hardship can only apply if: 

• the change of circumstances occurred after the conclusion of the contract; 
• the change of circumstances, as well as its extent were not and could not be considered by the debtor, reasonably, at the time of concluding the contract; 
• the debtor did not assume the risk of changing circumstances and could not reasonably be considered to have assumed this risk; 
• the debtor has tried, within a reasonable time and in good faith, to negotiate the reasonable and equitable adaptation of the contract. 

Our recommendation is that a legal review should be conducted on a case-by-case basis. Having a proper legal assessment of the contractual clauses (as well as of the hardship or other legal mechanisms applicable) helps avoid issues not only of enforceability, but also other legal issues that may arise in other fields, such as competition. 

Yes, if a party invokes hardship in a contract, termination of the agreement is one possible solution that a court may order. Hardship can be triggered when the performance of the contract becomes excessively burdensome due to exceptional changes in circumstances, making it clearly unfair to require the debtor to fulfil their obligations. 

In such cases, if a court determines that the contract should be terminated, it has the authority to decide the timing of the termination and the specific conditions under which it will take place. 

For additional information on hardship, please refer to our response to Question 1(a) above. 

Yes. In a contract, the parties involved can mutually agree to allow for adjustments to the price of a specific product or service based on certain predetermined conditions. These conditions may include: 

• Adjustment frequency: The parties can agree on the number of adjustments or predetermined intervals at which adjustments can be made.  
• Adjustment trigger: The parties can agree that price adjustments will only be triggered by specific events or conditions. These triggers may include changes in production costs, inflation rates, or prevailing market conditions. 
• Adjustment calculation: The parties can agree to use a defined formula or methodology for calculating price adjustments. 

Other important aspects to consider for such a price adjustment clause may include notice and timing, negotiation principles and dispute resolution mechanisms.

To ensure that the price adjustment clause is enforceable, several legal considerations should be taken into account.  

From a general perspective, the Civil Code requires that contractual clauses, including price adjustment clauses, must be clear, precise, and specific in their language to avoid ambiguity or confusion. Unclear or vague clauses may be interpreted against the party that drafted them.  

Also, an unfair price adjustment clause that would unilaterally favour one party to the detriment of the other party could be deemed null and void. In such cases, if a court declares a price adjustment clause as null and void, it would be unenforceable, and the original terms of the contract regarding pricing would remain in effect. 

Additionally, Law no. 72/2013 on measures to combat late payment obligations arising from contracts concluded between professionals and between professionals and contracting authorities, are also relevant to this matter. 

When determining the fairness of a term or practice, the court considers various circumstances, including: 

• Serious deviations from established practices or those aligned with public policy and morality. 
• Failure to adhere to the principles of good faith and diligence in fulfilling obligations. 
• The nature of the goods or services involved. 
• Lack of objective reasons for waiving payment deadlines or interest rates in accordance with the aforementioned law. 
• A contractor's dominant position in relation to a small or medium-sized enterprise. 

Certain contractual terms may be deemed unfair under the law, including: 

• Clauses that exclude penalty interest or set penalty interest rates lower than the statutory requirement. 
• Obligations to issue a notice of default before interest accrues. 
• Stipulations for a longer period before interest becomes payable on a debt, exceeding the permissible timeframe defined by the law. 
• Lengthening the payment period beyond what is prescribed in Article 7 (1) and (2) for contracts between professionals and contracting authorities. 
• Elimination of the possibility of payment for additional damages. 
• Imposing a time limit for the issuance/receipt of invoices. 

We emphasize that unfair terms are invalid and unenforceable. Liability for damages resulting from such terms and practices is governed by the provisions of Law no. 287/2009, republished and amended. 

We could not identify sector-specific regulations relevant to this matter. However, we do note the following additional issues that parties should consider for implementing their price adjustment clauses: 

• Market dynamics: Parties should assess the market dynamics and factors specific to their industry or market segment. This includes considering supply and demand fluctuations, competitive forces, and any market-specific factors that may influence pricing. Understanding these dynamics can help parties determine the appropriate triggers, frequency, and calculation methodologies for price adjustment clauses. 
• Cost components: Parties should identify and evaluate the various cost components associated with their products or services. This may include labour costs, raw material costs, transportation costs, regulatory compliance costs, or any other relevant expenses. Understanding these cost components will help determine the appropriate basis for price adjustment clauses. 
• Price indexes: Parties can consider utilizing price indexes or benchmarks that are specific to their industry or market. These indexes can provide objective reference points for price adjustments, taking into account industry-wide or market-wide fluctuations. 

For public sector contracts, there are special requirements for price adjustments due to raw material price increases. Please refer to our CMS Expert Guide on rising raw material prices. 

Parties to a B2C contract may agree on future price increases. Note that, under the consumer protection legislation, a notification to consumers is expressly required to be sent 30 days before the application of the new prices. 

Consumers must be given the opportunity to opt-out during this 30-day time period and should be advised of the fact that inaction/silence to a price increase will be considered consent to future price increase (which may be done through the consumer’s acceptance of the terms and conditions/upon execution of the contract). 

From a consumer protection point of view, one additional issue is that clauses obliging consumers to agree to contractual conditions about which they did not have the real possibility to become aware at the date of signing the contract may be considered abusive and non-enforceable. In view of this, it could be argued that a broad consent given by a consumer within a standardized contract such as the General Terms & Conditions (“GT&Cs”) (which is provided on a “take it or leave it” basis), with respect to any changes in the contract price, prior to the consumer becoming aware of the actual new price that he/she must pay, may be considered unenforceable under Romanian law. To avoid this interpretation, it is advisable to include wording in the clause that would ensure a level of predictability to consumers (e.g. by providing the calculation method of the increase). 

For multi-jurisdictional products, it is advisable to work on a proper localization of the GT&Cs in order to ensure compliance with the mandatory requirements of each country.