COVID-19 & contract law
Classifying a pandemic as “force majeure” would be uncharted territory for contract law. Yet with the consequences so serious and the countermeasures so severe, a consensus already seems to be emerging on the issue.
If it is not possible to fulfill a contract due to the effects of the crisis surrounding the coronavirus and these effects can be credibly documented, then force majeure can be invoked to suspend or even terminate the contract.
Options available
- Termination of the contract
- Partial performance
- Delayed performance
The key factor is what was agreed in the contract. Of course, it is also necessary to consider the general terms and conditions when assessing such cases.
It is not, however, absolutely necessary for the contract to explicitly set out that force majeure interferes with performance. According to the German Civil Code (BGB), force majeure can generally be invoked if it is not possible to fulfill a contract, i.e. if it is not possible to provide a service or deliver a product given the particular and unavoidable circumstances present.
Ideally, the general terms and conditions will provide guidance on how to deal with the effects of force majeure. But in any case, the legal classification as force majeure and the potential legal implications are always associated with legal uncertainty. Particularly in the case of recently concluded contracts, one needs to consider whether the effects of the pandemic really were “unforeseeable”. That is why we at the commercial law firm MTR Rechtsanwälte advise against providing any kind of performance guarantee at this time wherever possible.
Lawyers with experience in the field of contract law can offer advice.
More information about the crisis surrounding the coronavirus is available here!
