General interest

Compensation for losses arising from the early termination of public contracts for reasons of public interest

Can a public contract be terminated early on the ground that it is in the public interest to do so, without the contractor being able to claim any compensation? The question might come as a surprise because its two terms seem so inseparable. Early termination in the public interest is anchored every bit as firmly in administrative contract law as the principle of compensation, a variant of liability without fault for sovereign acts, which is its corollary. Being a rule applicable to all administrative contracts, including contracts between public entities, the early termination of a contract in the general interest cannot be the subject of any waiver by the administration and consequently can only be varied by legislation. There has thus long been enshrined in law, as in some foreign legal systems, the idea that matters in the general interest entitle the administration to require of its contractor the early termination of contracts to which it is party in exchange for fair compensation.