Please find below our new article on the coronavirus pandemic in the light of the Force Majeure within fulfilment of contractual obligations.
A force majeure clause is often part of contracts, especially long term and cross border agreements, between the parties involved and the term force majeure typically refers to circumstances under which the non-performance of contractual obligations may be excused. A force majeure clause may designate natural disasters such as floods and earthquakes as well as political unrest including war, strikes and also occurrences such as dramatic currency devaluation or stock market collapse. All these circumstances are beyond the responsibility and knowledge of the contractual parties and usually cannot be anticipated (foreseen) prior to the conclusion of a contract. Within the force majeure clause, the parties commonly regulate their rights and obligations subject to the length of time, severity of the occurrence and provisions of recourse etc. The question of whether the outbreak of a pandemic, such as the present outbreak of the Covid – 19 virus. can establish a force majeure event will depend upon the interpretation of the terms of the contract in question. in particular the sense and purpose of the agreed force majeure clause.
However, in the event of the failure of the parties to include a force majeure clause in their contractual relationship, this gap should be closed with the help of the law applying to the contract. If Polish law will be applicable, the outbreak of the Covid – 19 virus can justify the application of the so – called “rebus sic stantibus clause” subject to the regulation of Article 3571of the Polish Civil Code stating that if: due to extraordinary change of circumstances the fulfilment of a performance would be connected with too many difficulties or would threaten a party with significant loss which the party could not have foreseen by the conclusion of the contract, a court can after weighting the interests of the parties taking into account principles of social interaction determine the manner in which the contractual obligation can be fulfilled, the amount of the performance or even may decide on the termination of the contract. The aforementioned provision is the legal basis for tailoring contractual obligations of the parties by a judge to specified circumstances caused by a force majeure and thus to the current coronavirus pandemic. Due to this crisis a party can also be released from the performance of his/her contractual obligations entirely under Article 495 of the Polish Civil Code if such a release would be justified in the particular case and the decision on this issue is subject to the evaluation and consideration of a judge. Naturally, an excuse of non-performance of one party cannot lead to the performance of the other party. In other words, in the event of objective impossibility the discharge is mutual, that is, the promisor is released and the promisee is also discharged from his /her corresponding obligation.
Should you seek any further questions on this matter please contact us at the following email address: email@example.com
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