During the coronavirus pandemic, many entrepreneurs are faced with the impossibility of fulfilling their contractual obligations. In this regard, the question arises: can the coronavirus pandemic be regarded as a force majeure event? Is it possible to refuse to fulfill my obligations and avoid liability citing force majeure?
First you need to figure out what force majeure or force majeure is. As a general rule, obligations must be performed properly, and, in the event of their improper performance, the creditor may demand from the debtor not only actual performance, but also compensation for losses incurred. However, the debtor can avoid liability if the failure to fulfill the obligation is caused by circumstances that are beyond his control (force majeure). But in practice, it is not so easy to establish whether this or that circumstance is force majeure.
To answer this question, it is necessary to carefully analyze the force majeure clause in the contract or the general conditions (if any) of the provisions of the applicable law. Also, it is necessary to study the list of restrictive measures introduced in the country of performance of the obligation, and their connection with the impossibility of performance. So, if your company is engaged in organizing holidays and, in connection with the measures taken in the Netherlands to ban events, cannot fulfill its obligations to customers, then the reference to force majeure will most likely be successful. And liability in the form of damages or other penalties can be avoided. In this case, it will be necessary to comply with the procedure for notifying the counterparty established by the contract or by law with references to the relevant provisions.
On the other hand, if your company's activities are not directly banned due to the coronavirus, but your turnover has dropped due to a decrease in purchasing power, and you cannot pay the bills of your suppliers, then most likely the link to force majeure will not help. you avoid paying late fees.
It is also very important to understand that, as a rule, force majeure circumstances release from liability, but not from the need to fulfill the obligation under the contract. That is, if you cannot deliver the goods to the client due to the closure of the borders and successfully refer to force majeure, then after the restrictions are lifted, your obligation to the client for the delivery remains. However, the client has no right to claim damages or penalties from you.
Our recommendations:
If you are unable to fulfill your obligations to partners and customers in connection with the coronavirus, we advise you to take the following steps:
- Carefully analyze the provisions of the concluded agreements or general conditions of force majeure.
- If there are no such provisions in the contract or general conditions, or you have not entered into a written contract, it is necessary to determine the applicable law and analyze its provisions in relation to your situation.
- Draw up an action plan that will help not only avoid responsibility, but also maintain relationships with your partners in the future, since a crisis is a temporary phenomenon, and reliable relationships are built over the years. It should, inter alia, pay attention to the timely notification of counterparties about the impossibility of fulfilling obligations, agree on a delay or offer an alternative fulfillment of obligations.
Nalog.nl lawyers are ready to help you understand the legal intricacies associated with the use of force majeure, analyze your agreement or general conditions, and offer the best solutions to the problem.
Publication Date: 06.04.2020
