‘Abuse, Bad Faith or Fraud’. A better standard for the review of unilateral termination without cause clauses. Corte Suprema, March 5, 2024, Rol 137.874-2022

The ruling in question rejects a claim for termination of contract with compensation for damages, on the grounds that the contracting party that exercised its contractual right of early termination without cause did not commit abuse, fraud, or act in bad faith. It is noteworthy that this standard is preferable to the requirement of proving a “just and reasonable cause” for exercising the aforementioned contractual right, which is present in previous case law.