Court of Appeal 19 June 2026

In a ruling dated June 19, 2026, the Luxembourg Court of Appeal reiterated that a contracting party may unilaterally terminate a commercial contract only under sufficiently serious circumstances. Such a termination is at the party’s own risk and is subject to subsequent judicial review. The Court clearly states that the party terminating the contract bears the burden of proving the alleged breaches as well as their severity.

In this case, a company had canceled, before any performance had begun, a contract for fifteen days of services, citing, in particular, the inability to bill its own clients for those services and excessively long performance deadlines. Since these grounds were not established, the Court ruled that the unilateral termination was unjustified.

Consequence: The company that initiated the termination was ordered to pay 16,530 euros in damages, corresponding to the loss of earnings for the entire fifteen days provided for in the contract. This point is worth noting. Although the contract had not yet been performed, the Court awarded the service provider—the victim of the wrongful termination—the compensation provided for the full fifteen days of services. In principle, compensation for lost profits is intended to restore the victim to the position it would have been in had the contract been performed, which may involve taking into account costs that the victim did not have to bear as a result of the termination. However, in this ruling, the Court made no deduction for such costs and awarded the full amount of the contractual compensation. The scope of this ruling must, however, be assessed in light of the nature of the services in question, which were intellectual services billed on a daily basis and likely to generate few variable costs. The ruling thus provides an interesting illustration of the compensation that may result from the wrongful termination of a contract for the provision of intellectual services.