France has just moved to stage 3 of the Covid19 epidemic which is currently going through it. Many sectors (tourism, transport, events, hotels, entertainment, culture, etc.) are already impacted by the sharp drop in demand and the cancellations that the measures taken by the public authorities and the behavior of customers are causing.
In terms of public procurement, the Minister of Economy and Finance has publicly announced that the doctrine of the State would be to consider that Covid19 is a case of force majeure intended to exempt the parties from their contractual obligations.
For the private sector, the delay or the impediment in the execution of the contract will have in particular vocation to be apprehended in the light of the concept of force majeure as it is defined by the contract itself (in which case c It is to this definition that reference should be made to determine whether Covid19 indeed constitutes a case of force majeure) or, failing that, by article 1218 paragraph 1 of the civil code according to which "there is force majeure in contractual matters when an event beyond the control of the debtor, which could not reasonably have been foreseen when the contract was concluded and the effects of which cannot be avoided by appropriate measures, prevents the performance of its obligation by the debtor. »
It is recalled that according to paragraph 2 of article 1218, the intensity of the case of force majeure directly influences the scope of its exonerating effect. Thus, “if the impediment is temporary, performance of the obligation is suspended unless the resulting delay justifies termination of the contract. If the impediment is definitive, the contract is automatically terminated and the parties are released from their obligations under the conditions provided for in articles 1351 and 1351-1. ".
In the absence of a contractual definition specifying the case of epidemics, the universality of article 1218 will force lawyers to say whether the phenomenon of Covid19 and/or the events which resulted from it were unforeseeable events at the time of concluding the contract, become irresistible at the time of having to execute the said contract, and will probably turn to case law.
The few decisions that have been rendered on this issue all go in the direction of a refusal to assimilate an epidemic to a case of force majeure liable to exonerate the debtor from his liability from a contractual obligation.
Thus, whether it is Dengue fever, the H1N1 virus, Chikungunya, seasonal flu, avian flu, or even the plague, the decisions published to date have all led to a refusal to recognize the existence of a case of force majeure.
Even if, given the magnitude that the Covid19 epidemic is taking, a paradigm shift cannot be ruled out, particularly with regard to the decisions taken by the executive power which are themselves likely to influence the conditions of performance of contracts, debtors should therefore assume that the impossibility of performing their obligations as a result of this epidemic is not necessarily such as to exonerate them from their contractual liability and rather be encouraged to try, upstream, to negotiate with their creditors an adjustment of their contract.
In the absence of a negotiated solution, they may, if their contract does not prohibit them from doing so, turn to article 1195 of the Civil Code, under which "if a change in circumstances unforeseeable at the time of the conclusion of the contract makes execution excessively onerous for a party who had not agreed to assume the risk, the latter may request a renegotiation of the contract from its co-contracting party (…) In the event of refusal or failure of the renegotiation, the parties may agree to the termination of the contract, on the date and under the conditions that they determine, or request by mutual agreement the judge to proceed with its adaptation. In the absence of an agreement within a reasonable time, the judge may, at the request of a party, revise the contract or terminate it, on the date and under the conditions which he fixes”.
Much criticized when it was adopted because of the cumbersome renegotiation procedure it provides for, article 1195 could today become the best contractual remedy against the misdeeds of Covid19.
For professionals who have taken out “operating loss” insurance cover, the question could finally arise as to whether the losses linked to Covid19 could fall within the scope of the guarantee. However, in the absence of "property damage" at the origin of the operating losses, it is the very existence of a guaranteed loss that is likely to be lacking, if the insurance contract does not does not also provide for a specific exclusion of guarantee for epidemics.
In terms of travel and stays, Article L.211-14 II of the Tourism Code gives the traveler the right to terminate their contract free of charge (but without additional compensation) in the event of "exceptional and unavoidable circumstances occurring at the place destination or nearby" having "significant consequences on the performance of the contract or on the transport of passengers".
Here again, the question will arise as to whether Covid19 meets the legal definition of exceptional circumstances, it being emphasized that judges could have a more flexible assessment of things when individual consumers are concerned.
Given these numerous uncertainties, the most appropriate recommendation is not to wait for the situation to worsen and to try to negotiate, with its customers, sub-suppliers and business partners, a negotiated solution consisting in organizing contractually, by endorsement, postponement or cancellation of services that are impossible to provide.
To do this, Arst Avocats has developed a "Covid19" clause which can serve as a basis for negotiation and must, of course, be adapted and supplemented in order to fit perfectly into the contract that it is intended to integrate.
Do not hesitate to contact us.
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