Compensation for Breach of Contract under Syrian Law
Conditions, Scope, and Judicial Assessment
The legal protection of a contract is not complete merely by obliging the contracting parties to perform what they agreed; it also extends to redressing the harm suffered by one party when the other party refuses to perform its obligation, delays performance, or performs it incompletely or defectively.
Hence the importance of compensation for breach of contract as one of the most significant consequences of contractual liability under Syrian law. Compensation is not intended to punish the debtor; rather, it is intended to restore the balance disrupted by non-performance of the contract and, as far as possible, place the creditor in the financial position they would have occupied had the obligation been properly performed.
This article examines the concept of contractual compensation, the conditions for entitlement to it, the elements involved in its assessment, and the limits that Syrian civil law places on claiming it.
The article focuses on four main areas: the conditions for entitlement to compensation, the scope of compensable harm, the judge's authority to assess compensation, and the practical evidence that strengthens a claim before the courts.
What is meant by compensation for breach of contract?
Contractual compensation is the sum or performance awarded for the benefit of the injured party to redress harm resulting from the other party's breach of an obligation arising from a valid contract.
A breach of contract may take the form of:
Complete non-performance of the obligation.
Delay in performance.
Partial performance.
Defective performance or performance that does not conform to specifications.
Breach of an ancillary obligation, such as confidentiality, non-competition, or cooperation.
Unlawful refusal to complete the contract.
The effect of these forms is not limited to characterising the breach; they also determine the type of protection appropriate for the creditor. The creditor may seek specific performance if it remains possible and useful, or seek compensation where performance is impossible or insufficient on its own to redress the harm.
Specific performance is the general rule
Under Syrian civil law, the general rule is that, after being put in default, the debtor is compelled to perform the obligation in kind whenever that is possible.
Recourse may be had to monetary compensation when specific performance becomes impossible or is disproportionately onerous for the debtor, provided that dispensing with it does not cause serious harm to the creditor.
For example, if a contractor undertakes to repair a specified defect in a building, the general rule is to require the contractor to remedy the defect. If repair becomes impossible or futile, however, the creditor may be awarded compensation for the resulting harm.
When is the creditor entitled to compensation?
Compensation is not awarded merely because a breach is alleged; the elements of contractual liability must usually be established, namely:
First: the existence of a valid contract
There must be a valid and effective contract binding the two parties.
If there is no contract, or if the contract is void, contractual liability does not arise, although tort liability or restitution of an undue payment may be considered depending on the nature of the facts.
Second: occurrence of a contractual breach
It must be established that the debtor failed to perform the obligation, delayed its performance, or performed it in a manner inconsistent with the contract.
The breach need not always be total; it is sufficient that it affects the creditor's interest.
Third: occurrence of harm
There is no compensation without harm.
If the debtor breaches the contract without causing actual harm, there is no basis for awarding compensation, although performance or rescission may be sought as appropriate.
Fourth: causation
The harm must be a direct and natural result of the breach.
If it is established that the harm arose from another cause unrelated to the debtor's conduct, liability is excluded to the extent of that cause.
As a general rule, the creditor bears the burden of proving the breach, the harm, the causal link, and the amount of compensation claimed, while the debtor may rebut liability by proving performance, an external cause, or the creditor's contribution to the occurrence or aggravation of the harm.
What types of harm are compensable?
Compensation under Syrian law covers two principal types of harm:
First: actual loss
This is what has actually been lost from the creditor's assets because of the breach.
Examples include:
Costs of repairing defective work.
Purchasing a substitute at a higher price.
Additional storage or transport expenses.
Amounts paid to third parties because of delay in performance.
Damage to materials or equipment.
Expenses the creditor had to incur to mitigate the harm.
Second: loss of profit
This is the profit the creditor was expected to earn but for the debtor's breach.
Examples include:
Profits from a project halted because equipment was not supplied.
The return lost by the buyer because the property was not delivered on time.
Loss of a subsequent transaction connected to performance of the original contract.
The company's inability to operate a facility or production line.
Loss of profit is not presumed; it must be proven with a sufficient degree of seriousness and likelihood. Reliance on theoretical expectations or remote profits is not enough.
Syrian civil law provides that compensation includes the loss suffered by the creditor and the profit forgone, provided that it is a natural result of non-performance or delay in performance.
Direct and indirect harm
Accordingly, it is not enough for the creditor to establish that a loss occurred after the breach; the creditor must establish that the loss was its direct and natural result and could not have been avoided through reasonable efforts.
Accordingly, compensation may be denied for:
Remote or unusual harm.
Losses the creditor could have avoided.
Harm resulting from the injured party's failure to take reasonable measures.
Consequences not connected to the breach by a direct causal link.
This means that the creditor is practically obliged to mitigate the aggravation of harm and may not allow the loss to increase and then charge the debtor with all of its consequences.
Foreseeable harm at the time of contracting
In contractual liability, unless the debtor has committed fraud or gross fault, the debtor is liable only for harm that could ordinarily have been foreseen when the contract was concluded.
The contracting party bears the ordinary and foreseeable consequences of the breach, but does not ordinarily bear exceptional consequences that were unknown at the time of contracting.
For example, if a supplier delays delivery of an ordinary device, the supplier is not necessarily liable for the loss of a major transaction concluded by the buyer with a third party, unless the supplier was informed of that transaction and of the importance of the delivery date when the contract was signed.
If fraud or gross fault is established, however, the scope of compensation may extend to direct harm even if it was not ordinarily foreseeable at the time of contracting.
Compensation for non-pecuniary harm
As a general rule, compensation under Syrian civil law is not confined to financial harm; it may include non-pecuniary harm where it is established, directly connected to the breach, and the conditions for awarding it are met.
Non-pecuniary harm may arise from injury to reputation, dignity, feelings, or social standing, where the harm is established and directly connected to the breach at issue in the claim.
However, compensation for non-pecuniary harm in contractual disputes requires clear proof and is not awarded automatically merely because a dispute exists or performance is delayed.
Must the debtor be put in default?
The general rule is that the debtor must be put in default before compensation for delay is claimed, by serving a notice or formal demand requiring performance of the obligation within a specified period.
The importance of putting the debtor in default lies in that it:
Establishes the creditor's demand for performance.
Sets the date on which delay begins.
Gives the debtor a final opportunity to perform.
Prepares the way for a claim for compensation or rescission.
The creditor may be excused from putting the debtor in default in some cases, such as impossibility of performance, where performance has become pointless, or where the contract or law provides that it is unnecessary.
How does the judge assess compensation?
If compensation is not specified in the contract or by a legal provision, the judge assesses it on the basis of the circumstances of the case and the evidence submitted.
Among other matters, the judge takes into account:
The value of the actual loss.
Provable lost profits.
The seriousness of the breach.
The duration of the delay.
The nature of the contract.
The conduct of the parties.
The creditor's contribution to the occurrence of the harm.
Measures taken by the injured party to mitigate the loss.
Technical or accounting expertise where required.
Civil compensation is intended to redress harm and must therefore be proportionate to it; it must not be a means of enrichment or a financial penalty exceeding the actual loss.
The specialised Syrian Legal Encyclopedia defines compensation as the consequence of civil liability and a means of redressing harm, stressing that its assessment is linked to the extent of harm, not the degree of punishment due from the liable person.
The role of expert evidence in assessing compensation
Expert evidence is among the most important means of proof in contractual compensation claims, especially in:
Construction contracts.
Supply of equipment and machinery.
Engineering works.
Calculation of lost profits.
Assessment of performance defects.
Determining repair or replacement costs.
Examination of accounts and commercial contracts.
An expert report alone does not dispense with proof of liability, but it helps the court objectively assess the harm and its value.
Pre-agreed compensation
The contracting parties may determine in advance the amount of compensation due upon a breach, whether in the original contract or in a subsequent agreement.
This agreement is commonly known as:
The penalty clause.
Agreed compensation.
A delay penalty, depending on the wording and nature of the contract.
Syrian civil law permits contracting parties to determine the value of compensation in advance, subject to the legal provisions governing compensation.
The existence of a penalty clause does not mean that the court is always bound automatically by the amount stated in it; the court may intervene in its assessment according to its conditions and its proportionality to the harm.
The next article in this series will address The penalty clause under Syrian law separately and in detail.
Compensation for delay in payment of monetary sums
Where the obligation is a monetary sum of a known amount and the debtor delays payment, the creditor may be entitled to compensation for delay in the form of statutory or agreed interest, where the conditions for entitlement are met and within the limits prescribed by law.
Syrian civil law provides for delay interest of four per cent in civil matters and five per cent in commercial matters, unless an agreement or commercial custom sets another date or rule within the legal limits.
In some cases, supplementary compensation exceeding interest may also be claimed if the creditor proves separate additional harm and that this harm is attributable to the debtor's bad faith or to a cause that legally permits such an award.
The creditor's contribution to the occurrence of harm
The creditor may themselves contribute to the occurrence or aggravation of the harm.
Examples include:
Delay in providing plans or information.
Unjustified refusal to accept the work.
Failure to cooperate with the debtor.
Failure to take reasonable steps to reduce the loss.
Continuing to perform a project proven to be unviable.
In such cases, the court may reduce the amount of compensation in proportion to the creditor's contribution to the harm.
External cause and force majeure
The debtor is not liable for compensation if they prove that non-performance or delay is attributable to an external cause beyond their control, such as:
Force majeure.
Fortuitous event.
The creditor's fault.
An act of a third party that could not be foreseen or averted.
Mere difficulty of performance or an increase in its cost is not always sufficient to exempt the debtor; the conditions of an external cause must be met according to the nature of the facts and the contract.
Practical examples
First example: delay in supplying equipment
A company agreed with a supplier to deliver operating equipment by a specified date, but the supplier was two months late, resulting in the postponement of the project's opening.
The company may claim such of the following as is proven:
Storage costs.
Workers' wages during the period of interruption.
Costs of hiring substitute equipment.
Expected lost profits, if established with sufficient certainty.
Second example: defective performance
A contractor performed insulation works contrary to the specifications, causing water to leak into the building.
The employer may claim:
The cost of remedying the defects.
The substitute contractor's fees.
The value of damage to the building.
Losses arising from inability to use the property, if established.
Third example: an unknown exceptional loss
A carrier delayed the delivery of materials, and the sender claimed to have lost a major international contract because of the delay.
If the carrier did not know at the time of contracting that the delay would lead to this exceptional loss, the carrier may not bear all of it unless fraud or gross fault is established.
What documents are required to prove compensation?
The prospects of success of a compensation claim increase when it is supported by clear documents, such as:
The contract and its appendices.
Notices and demands.
Electronic correspondence.
Invoices.
Purchase orders.
Delivery records.
Technical reports.
Repair or replacement quotations.
Financial statements.
Contracts whose opportunity was lost because of the breach.
Accounting or engineering expert reports.
Submitting general, undocumented estimates is not usually enough; a strong claim links each head of harm to a specified document, expert report, or financial calculation capable of review.
How should a compensation claim be drafted?
A legal claim should contain a clear statement of the following elements:
The contract from which the obligation arose.
The obligation breached by the debtor.
The form and date of the breach.
The notice of default or prior demand.
The harm incurred.
The relationship between the breach and the harm.
The method of calculating the amount of compensation.
Documents supporting each item.
The final relief sought before the court.
The more detailed the claim and the more it is based on accurate documents, the clearer the assessment of compensation will be before the courts.
Legal advice for individuals and companies
To reduce disputes concerning compensation, the following is recommended:
Define obligations and deadlines precisely.
Provide for a clear notification mechanism.
Specify the consequences of delay and non-performance.
Draft the penalty clause in a balanced manner.
Keep all correspondence.
Document the harm as soon as it occurs.
Take reasonable steps to mitigate the loss.
Avoid overstating compensation.
Seek expert assistance where there is complex technical or financial harm.
Have a lawyer review the claim before filing suit.
Conclusion
Compensation for breach of contract is one of the most important means of protecting contractual rights under Syrian law. Entitlement to it does not arise merely from proof of a violation; it requires proof of the harm, the causal link, and the scope of loss resulting from the breach.
Compensation includes the loss suffered by the creditor and the profit forgone, where the harm is direct, natural, and provable, taking into account its foreseeability at the time of contracting, the parties' conduct, and efforts made to mitigate it.
In practice, the success of a compensation claim depends not only on legal provisions, but also on proper documentation of the contractual relationship, precise proof of the harm, and a clear method for calculating it. Sound legal drafting and document management from the beginning of the contract therefore remain among the most important means of protecting parties when a dispute arises.
Legal references
The Syrian Civil Code, issued by Legislative Decree No. (84) dated 18 May 1949, particularly the provisions concerning specific performance, compensation and its assessment, non-pecuniary harm, agreed compensation, and interest.
The specialised Syrian Legal Encyclopedia, entry on compensation in civil liability.
Note: This article provides general legal information and is not a substitute for examining the contract, facts, and documents in each individual case.