If it is accepted that the effects of Covid-19 cause a case of force majeure for the contract in question, this means that the performance of the service is no longer possible due to the force majeure event. [28] However, it cannot be said that contracts are automatically executed in the event of force majeure. First of all, the consequences of force majeure indicated in the relevant contract must be analysed. Most force majeure clauses are required to inform the relevant party of the unforeseen event in order to begin the suspension period. During the suspension period, the obligations of the parties are suspended, but the contract is still valid, unlike frustrating events. This is the main difference between the consequences of force majeure and the frustrating event, even though these concepts have similar characteristics. However, the force majeure clause itself may limit the period of suspension and stipulate that the parties may be free to terminate the contract if the effects of the force majeure event do not disappear during the period of suspension. The event that makes performance impossible or unenforceable cannot reasonably be foreseeable at the time of conclusion of the contract by the parties. An event is considered foreseeable if the parties have assigned the risk of its occurrence in the contract. When dealing with this type of dispute, a court must consider the conditions of performance according to circumstances that have changed since the original date of conclusion of the contract. To this end, the following measures must have been taken: This is a plea raised in the context of an application for failure to fulfil obligations. For example, if the plaintiff alleges that the defendant breached its contractual obligations, it will bring that action and indicate that it cannot perform in accordance with the contract due to one of the above scenarios. Thus, if the contract involves an owner paying a contractor to renovate his backyard and a hurricane occurs, the contractor cannot be held responsible for the non-performance because performance is impossible during the hurricane period.
In general, the main idea of contracts is the fulfillment of mutual obligations governed in the contract by the parties. Under the principle of pacta sunt servanda, the parties are bound by the contract itself and the provisions of the contract should not be affected by the modified terms resulting from the conclusion of the contract. As a general rule, the parties are obliged to comply with the provisions of the contract as they are regulated. [1] Unenforceability: Sale of goods under the Uniform Commercial Code: Article 2-615 of the Uniform Commercial Code (“UCC”) provides that a seller of goods may excuse his inability to deliver all or part of the goods if performance has been rendered “impracticable”. This section of the CDU is essentially a codification of the doctrine of impossibility. It provides, in the relevant part, that a seller will not breach its obligations under a contract for the purchase of goods if performance “was rendered impracticable in good faith by the occurrence of an event the non-occurrence of which was a fundamental assumption on which the contract was concluded, or by the execution of any applicable foreign or domestic governmental order or order, whether it is subsequently found to be invalid or not.” Section 2-615`s notable note that performance is hampered by good faith compliance with “any applicable regulation or order of a foreign or domestic government” may be of particular importance in the context of the COVID-19 pandemic, which is causing supply chain bottlenecks and disruptions in various industries. Note that Section 2-615(c) requires a seller whose performance has been rendered unenforceable promptly (“seasonally”) to notify Buyer of any delay or non-delivery of the Goods and, if partial performance is possible, allocate production in a fair and reasonable manner. Whether performance is excused often depends on the event that makes performance impossible or impossible and whether that event was provided for in the contract. If the event was so unusual and unexpected that the parties could not reasonably foresee it, and if it is unreasonable to impose the risk of such an event on one of the parties, the court may excuse continued performance of the contract on both parties.
If, on the other hand, the risk that such an event could occur was a risk that the parties should reasonably have expected, or if the contract transfers that risk to one of the parties, the court would not normally excuse continued performance. Known contractual risks do not excuse performance, regardless of the catastrophic consequences of that risk. When performance becomes physically impossible, another performance would almost certainly be excused. For example, a roofer would not be acceptable if he did not finish a roof on a building that was destroyed by fire through no fault of his own. Businesses should also be aware of the common law defence of frustration with the objective that accompanies it. While performance is likely to remain possible or achievable, companies may avoid or limit their contractual obligations if the coronavirus or related government measures have significantly thwarted the primary purpose of the contract. It is not enough for the contract to become less profitable or for the person concerned to suffer harm; The frustration must be so severe that it cannot be considered part of the risks taken as part of the contract. For example, one court found that the primary purpose of a rental car franchise agreement was not affected by a hurricane because the rental cars remained intact and the franchise operated immediately after the hurricane.iii (iii) If the primary purpose of the service no longer exists, performance is accepted as impossible. [23] This does not make the performance of the contract impossible, on the contrary, performance is always possible. However, the receiving party declares that performance does not have the same value as it was at the time of the conclusion of the contract. (II) Physical impossibility is called into question if the performance regulated in the contract becomes physically impossible as a result of a related event. [18] For example; If a seller is unable to deliver the goods because the raw material of the goods is burned in a warehouse, performance becomes physically impossible.
However, if the raw material can still be obtained from a third party through the seller, the impossibility of execution does not exist.
