Impact of coronavirus pandemic on contract performance

Publication / 20.03.2020

The concept of “force majeure”, despite the fact that it appears in many legal acts so far has not been defined, however it is considered to be external events that are impossible to predict and prevent. Clauses are used in contracts, under which the parties are not liable if the non-performance or improper performance of an obligation occurs due to force majeure. The occurrence of force majeure can also often be the reason for a party’s withdrawal from the contract, reduction of remuneration or the emergence of other rights established in the contract by its parties.

It should be remembered, however, that the mere occurrence of a specific phenomenon that can be classified as force majeure does not relieve a given entity from the obligation to perform its contractual obligations. This is because it is necessary to establish that the circumstances in question, in this case a coronavirus pandemic, actually make it impossible to fulfill the contractual obligation.

In view of the above, when assessing liability for non-performance, it is first necessary to carefully analyze the provisions of the contract linking the parties, and in particular verify whether the contract provides provisions for force majeure as a circumstance exempting liability. A debtor who wishes to exclude his liability for non-performance or improper performance of an obligation due to the occurrence of force majeure will have to indicate its actual impact on the inability to fulfill his own obligation.