Claims for damages arising from contract extensions

I. In these times of uncertainty and change, the Supreme Court has consolidated its jurisprudence on a matter of particular interest in the field of public procurement. The recent Judgment No. 372/2026 of the Supreme Court, dated March 25, 2026, Appeal No. 1078/2024, addresses the legal scope of the acceptance of contractual extensions and its impact on the contractor's right to claim compensation for damages arising from the extension of the contract deadline.

The controversy arises from a construction contract initially signed for a period of 26 months. Subsequently, the contract was subject to eight successive extensions; the contractor accepted the first two without raising any objections and, starting from the third, exercised its right to claim compensation for the additional costs arising from the extension of the deadline.

Once the works were completed, the contracting authority approved the final certificate without recognizing compensation for direct and indirect costs or for industrial profits, which led to the filing of an administrative appeal.

II. The appeal in cassation filed by the contractor was admitted, raising the question of whether the acceptance of contractual extensions — in cases where simple acceptance is followed by the formulation of express reservations at the time of subsequent extensions — prevents the contractor from subsequently claiming compensation for damages in relation to the extensions to which it did not expressly object.

In this regard, the High Instance limits the legal debate to the first two extensions, regarding which the right to compensation had been rejected both in the first instance judgement and in the appeal judgement, precisely because they had been accepted by the contractor without any reservations. It is in relation to these extensions that the appeal question arises concerning the legal scope of this acceptance.

In contrast, regarding the remaining extensions, the Supreme Court states that the controversy refers to different sets of circumstances that do not deserve to be considered in the cassation phase.

III. Therefore, the Supreme Court dismisses the appeal, reiterating its consolidated jurisprudence according to which there is no room for automatic solutions or general assumptions regarding contractual extensions and compensation.

Firstly, the High Instance recalls that the acceptance of an extension does not automatically give rise to a right to compensation, but it cannot be claimed generally that acceptance without reservations always implies a tacit waiver of the right to claim. The legal response must be case-by-case, taking into account the specific circumstances of each case.

Applying this criterion to the specific case, the Court finds it relevant that the contractor accepted the first two extensions without making any declaration about possible economic losses, while in the subsequent extensions it expressly stated a reservation of rights. This difference in behaviour allows for the reasonable conclusion that, regarding the first two extensions, there was a mutual agreement to extend the deadline, and it is not arbitrary to conclude that no compensation claim was intended in relation to these.

In this context, the Supreme Court considers that the High Instance made a reasoned and non-arbitrary assessment of the contractor's behaviour, emphasizing the difference between the acceptance of the first extensions without making any reservations and the attitude adopted in the subsequent extensions, in which the right to claim compensation was expressly stated. The High Instance dismisses the notion that it could be simply inferred that the intention expressed at a later stage necessarily reflects that which existed at earlier stages of the execution of the contract, and insists that the evaluation of the right to compensation must be made in light of the circumstances prevailing at the time of each extension and the parties' conduct as a whole, without resorting to automatic presumptions.

IV. Furthermore, although this issue falls outside the specific scope of the appeal, the Supreme Court takes the opportunity to make a conceptual clarification of great legal relevance, pointing out that, although the admission resolution and the rulings issued in the first and second instances seem to equate the extension with a modification of the contract, the two concepts are not equivalent for legal purposes.

In this sense, the Supreme Court recalls that an extension merely extends the duration of the original contract for an additional period, without modifying its conditions and terms, and applies exclusively to the temporal aspect, whereas a contractual modification involves a change in the substantive elements of the contract and is subject to a different legal and procedural regime. However, the Court clarifies that both concepts can coexist in practice, as a contractual modification can also agree to extend the execution deadline, so that the extension is incorporated into the modification and is a consequence of it.

V. Moreover, regarding the calculation of the compensable costs, although the method for calculating indirect costs and general expenses was formally outside the scope of the appeal, the Supreme Court confirms the approach of the National High Court, reiterating that it is not enough to apply theoretical percentages derived from the company's general cost structure.

For the compensation to be justified, it is essential to demonstrate the causal link between the specific extension and the higher costs actually incurred. In the case in question, the reports submitted by the contractor were based on the company's global data, without identifying the real impact of the contract extension on the specific works, which made it impossible to distinguish which costs were attributable to the delay and which would have been incurred in any case.

VI. In conclusion, Judgment 372/2026 consolidates a settled doctrine in the field of public procurement, according to which the acceptance of contractual extensions must always be analyzed in light of the specific circumstances of the case. The Supreme Court emphasizes that not every extension automatically grants the contractor the right to compensation, nor does the acceptance of an extension of the deadline itself imply a tacit waiver of the right to claim; it is essential to evaluate the contractor's conduct in each phase of the execution of the contract.

From a practical perspective, the ruling highlights the importance of contractors expressly documenting their position regarding each extension and recording their reservations when they believe that the extension of the deadline may cause them an economic loss. Moreover, the ruling reinforces the requirement to rigorously and individually demonstrate the claimed damages, especially concerning indirect costs and general expenses, and rejects generic approaches or those based on theoretical percentages unrelated to the object of the contract.

Informative note from the Public Law and Regulatory Department of ECIJA Madrid.