Situation 1 : What to invoke if you can’t deliver a good or provide a service?
|Execution has become « impossible » Force majeure|
Aim : not to be held liable in the event of nonperformance and/or to invoke suspension or termination of the agreement (with restitution where appropriate).
Definition : contractual or legal, provided that it must be an event :
- beyond the control of the debtor ;
- which could not reasonably have been foreseen at the time of the conclusion of the agreement ;
- the effects of which cannot be avoided by appropriate measures ;
- preventing performance of the contractual obligation.
|Execution has become “unprofitable” Contingency|
Aim : obtain a renegotiation (revision or adaptation of the agreement) or resolution of the agreement.
Definition : contractual or legal, providing three cumulative conditions:
- the need for a change in unforeseeable circumstances at the time of the conclusion of the agreement;
- a change which makes the performance of the contract excessively onerous;
- that the Party affected by the change in circumstances has not agreed to assume the risk.
- Force majeure can be difficult to characterize (complex legal concept);
- The contract may provide for the treatment of force majeure;
- In case of failure to provide this, the legal consequences (suspension or termination of the contract) depend on its effects.
- The possibility of invoking unforeseen circumstances may depend on the date of conclusion of the contract (before or after 1st October 2016);
- Unforeseeability can be difficult to characterize (complex legal concept);
- The contract may provide for the treatment of the unforeseen event or even exclude it;
- Failing this, the treatment of the contingency may, in the absence of amicable renegotiation, require the intervention of a judge who will revise or terminate the contract.
Situation 2 : What to do if you are waiting for the delivery of a good or the performance of a service that does not take place ?
- Either by enforcing the penalty clause of the contract if one is stipulated;
- Or by asking the Court for an injunction, under penalty payment, against the other party, to have to perform;
- Or by having a third party to do so, at the expense of the other party.
Termination of the contract (release from the contract, necessity of a serious breach of contract)
- Either by enforcing the termination clause of the contract if one is stipulated;
- Or by a simple notification to the debtor;
- Or by taking it to Court (longer).
- Either by invoking the penalty clause of the contract if one is stipulated;
- Or by taking the defaulting party to Court (longer).
Suspension of one’s own obligations (plea of nonperformance)
- By refraining from performing for the time of the other party’s default.
- By requesting, after a formal notice, if and when performance has taken place, a change in the price in proportion to the poor performance (delay, quantity or quality).
- Compatible treatment methods may be combined (e.g. resolution + damages, enforcement + price review);
- The choice between the treatment methods depends on different criteria (expectations of the contracting party, prospects of execution by the other party, risks associated with the treatment method, etc.);
- The possibility of invoking certain mechanisms may depend on the date of conclusion of the contract (before or after 1st October 2016).
Conditions to be met
- The implementation of certain mechanisms requires a serious breach ;
- Some mechanisms require prior formal notice (resolution, price review, implementation of liability);
- Certain mechanisms are implemented at the risk of the contracting party (unilateral termination, exception of nonperformance).
- The other party may invoke force majeure or unforeseen circumstances ;
- The co-contractor may also be subject to restructuring and insolvency proceedings likely to paralyse the mechanisms involved.
Avocat au Barreau de Paris. Inscrit au barreau de Paris depuis 1999. Titulaire d’un D.E.A. de droit des contrats de la faculté de droit Jean Monnet (Paris XI)
PAULINE JACQUEMIN - CUNY
Titulaire d’un Master II Droit du Multimédia et de l’Informatique et d’un Master II Droit Européen des Affaires de l’Université Paris II.