Performance Bonds & Delay Penalties

In a public-procurement works contract, the performance bond (the garanție de bună execuție) looks like a simple safety net for the beneficiary. The harder question is narrower and more expensive: can the beneficiary use it to recover delay penalties — and at what point has it quietly lost the right to do so?

Delay penalties are, in substance, a penalty clause: the parties fix in advance the loss from late performance (Civil Code art. 1538), and the contractor’s fault is generally presumed by the mere fact of non-performance once it is in delay — whether automatically under the contract or after being put in delay (art. 1522). The performance bond, in turn, secures timely and proper completion (art. 154(4) Law 98/2016; HG 395/2016), so in principle it can cover those penalties. The trap is procedural, not substantive.

The cut-off almost everyone underestimates

Under art. 21 of the Works-Reception Regulation, once the works-completion protocol (the proces-verbal de recepție la terminarea lucrărilor, or PVRTL) is signed, the beneficiary can no longer raise penalties, deductions or remediation claims beyond those recorded in it. The PVRTL is therefore both the way the penalty claim is preserved and the deadline for raising it. Sign it without recording the penalties — and without the prior notice to the contractor and the bond issuer that art. 41 of HG 395/2016 requires — and the right is forfeited (decădere): not only against the contractor, but against the bond issuer too.

Why the bond follows the claim

Two further rules tighten the logic. Accepting the works without reservation bars the beneficiary from later invoking apparent defects (art. 1862) and, read with art. 1539, from cumulating performance with the penalty. And art. 154² of Law 98/2016 obliges the authority to return roughly 70% of the bond within 14 days of the PVRTL if no claim has been raised by then. The bond is accessory to the underlying right: if the penalty claim is forfeited or unrecorded, there is nothing left for the bond to secure.

The original note

This brief is drawn from an article I co-authored with Cosmin Iliescu in the Revista de Achiziții Publice (December 2023). The short version first went out on LinkedIn:

General information on Romanian public-procurement law, not legal advice, and no lawyer–client relationship is created. It summarises a co-authored article (with Cosmin Iliescu) published in the Revista de Achiziții Publice, December 2023; statutory references carry their own conditions and any specific matter needs advice on its own facts. More insights.