COVID-19, an unprecedented global pandemic with gigantic repercussions in so many areas of human life, also poses—evidently—innumerable challenges in the legal field. One of them has to do with contractual breaches.
It is no secret that, as a consequence of the pandemic—or, rather, of the laws and decrees issued to prevent the spread of the virus—a multitude of contracts will not be fulfilled. Thus, in the face of this myriad of breaches, many will go in search of some support that will exempt them from responsibility.
Force majeure and fortuitous event—”Siamese twins of non-responsibility,” in the words of Louis Josserand—are presented as legal remedies suitable for excusing non-compliance in the face of events beyond the debtor’s foresight and capacity to prevent, such as epidemics, earthquakes, etc. Along with them, other concepts will also appear, such as the theory of unforeseen circumstances, the theory of excessive onerousness or the rebus sic stantibus clause, and the theory of frustration.
But one must proceed with caution. Force majeure does not mean a green light to excuse any or all contractual non-compliance, without any boundary.
What are the limits of force majeure as a cause for exoneration? First, the law or the agreement of the parties. If the law, for a specific situation, or the parties themselves in the contract, have provided for the risk of a fortuitous event, that agreement must be adhered to.
In the absence of a legal or contractual provision, the rule is the release from responsibility by virtue of the fact that the damage is due to an unforeseeable or unavoidable event, in which there was no fault.
Force majeure exempts from responsibility, but it does not necessarily absolve from the fulfillment of the obligation if the performance is still possible. In such a case, it must be executed when the force majeure ceases.
Regarding those contracts in which the due performance is the payment of money or the delivery of a generic good, and in which time is not of the essence, repeated jurisprudence establishes that the obligation is not extinguished: the debtor remains obligated, even if the due thing is lost due to force majeure, since in that case, the debtor can replace it with another and fulfill the obligation.
On the other hand, a force majeure event like COVID-19 does not necessarily affect all contracts. Indeed, while government provisions on the occasion of the pandemic may make it temporarily impossible to fulfill certain obligations as a result of border closures, movement restrictions, etc., this does not mean that obligations in all contracts are suspended. There will be certain performances whose observance remains possible because they are not affected by force majeure. As an example—among many—a contract in which the delivery of digital content was agreed upon in exchange for a price: neither the delivery of the product nor the payment of the price becomes impossible due to COVID-19.
The rules of force majeure do not constitute a blank check to stop performing the service and be exonerated from responsibility for the breach. It will be necessary to examine each contract, the due obligation, and whether or not it is affected by the event.