Does the current corona crisis constitute a (global) force majeure - act of god situation from a legal point of view? Better to prevent than to cure!

The principle of freedom of contract means that, in principle, the parties are free to determine in the agreement which situations can lead to an (early) termination of the agreement (rupture ), without having (too much) economic/financial consequences.

 

The occurrence of a force majeure situation constitutes, in principle, a ground that can be invoked, in accordance with the general principles of contract law.

 

Force majeure stands for an unforeseeable and unavoidable situation, a strange cause that cannot be blamed on the person who invokes it.

 

Reference is often made to the Anglo-Saxon term “act of God” (vs Act of Man), although this does not fully cover the concept of force majeure applicable in non-Anglo-Saxon countries.

 

On the other hand, it is important to note that, in accordance with Belgian law, in a B2B environment (between companies) it is in principle permitted to provide in your agreement that force majeure (to be defined) does not constitute a ground for (early)termination of the legally concluded agreement.

 

The latter is not possible in a B2C environment (with private individuals) where specific consumer legislation exists.

 

A circumstance that can be regarded as force majeure can also be of a temporary nature. In that case, the force majeure situation can at most lead to a (full or partial) suspension of obligations, eg in the event of proven temporary financial difficulties.

 

In short, a lot will depend on:

- firstly, an examination of all the elements of the agreement in question, as well as the nature of the agreement and the parties involved (B2B vs B2C)

- the law applicable to the agreement to define the term “force majeure” in accordance with the applicable law

- the specific circumstances under which the Corona situation must be assessed for the agreement in question

- and the entirety of measures imposed by the government at the time of invocation or time and place of performance of the obligations under the contract entered into.

 

It is therefore not advisable to stop from one day to the other fulfilling the obligations that you have entered into in good faith (and that you need to continue to execute in good faith) under an agreement, even in the current difficult Corona circumstances.

 

The message is to first seek legal advice, and then immediately initiate communication with your counterpart.

 

Requests for temporary suspension of obligations are in the light of the principle of good faith (a principle which is to be respected by both parties) a path to follow.

 

If it turns out that the agreement cannot be complied with due to a prohibition / command imposed by the government, such as a closure, travel ban, the concrete circumstances and the nature of the agreement in question will need to be assessed in order to find a correct legal answer and mediation remains also recommended in these cases.

 

Unfortunately, Corona is becoming a global fact, where knowledge of international law brings added value.

 

A-Law attorneys, with its Belgian and international team attached to our head office in Antwerp, has extensive expertise and knowledge in national and international contractual relationships between parties.

 

We are happy to work with you to find the possible options and determine the correct legal strategy to avoid claims for compensation.

 

Whether it concerns an agreement of (commercial) rent, contracting, services, a sale, research & development, manufacturing, concession, franchise, distribution, license, commercial cooperation, partnership, financing, loan and so on.

 

If you do not have a specific question at this time, it may be THE time to subject your contracts to a legal assessment!

Prevention before cure. And that also applies in the legal sphere. We are happy to make you an offer.

For more information about our services, contact attorney Patricia Leers, Head of the International Department at p.leers@a-law.eu or fill in our online contact form.