Liability of a Debtor (in Spanish Law)

A misconduct by fault of the debtor can lead to compensation for damages only if there is proof of the existence of damage. However, it is the creditor’s role to prove that misconduct caused such damage.  This compensation for damages is a consequence of any type of misconduct carried out by the debtor.

So, in principle, the compensation for damages aims to leave the creditor in the same position as if the obligation of the contract had been properly fulfilled.

The Civil Code makes a distinction for the extent of the compensation, which depends on the acts of the debtor, such as:

• A debtor who has not consciously breached the obligation
  • This debtor is only liable for damages foreseen or that could have been foreseen as a consequence of his misconduct.
• A debtor who has acted with deceit
  • This debtor is liable to pay all of the damages for his willful misconduct leading to his failure to fulfil the contract.

The compensation for damages consists of the value of loss and the loss of profits or gains, as stated in Article 1.101 CC.

• The value of loss is the estimated value of the incomplete performance, including any other loss that the debtor might have suffered due to the unfulfilled obligation.
• With the loss of profit, the creditor has to demonstrate a clear and objective probability that they have lost profit. This is because Spanish Courts do not grant compensation for doubtful future profits nor low expectations for profit as they are very strict in their requirements for proof of the loss of profit.

Although this article does not mention moral damage, i.e. the distress or nuisance that the creditor may suffer due to the lack of performance, Spanish Courts consider them damages that can be granted in a contract. However, similar to other damages, the creditor has to provide evidence and the extent of the damage.