#supplycontract – force majeure in times of corona
Is the erupted coronavirus a reason to claim force majeure?
Meaning force majeure: force majeure; usually included as a heading in written agreements, including a summary of situations whereby contractual obligations may be suspended or terminated with impunity (Juridischwoordenboek.nl).
It is relevant whether the claimed force majeure was or could not be known at the time of entering into the agreement and that it is not culpable or attributable to the actions of one of the contracting parties.
The invocation of a force majeure is a very serious means with potentially far-reaching consequences, as it usually concerns suspensive conditions of the contract entered into without one of the parties being culpable. Failure to fulfill the agreed obligations (or no longer) can therefore have very far-reaching economic consequences.
In general, the coronavirus outbreak cannot be classified as a force majeure!
The consequences, such as the declaration of a state of emergency by the competent authority, the closing of the airspace and the closing of borders for people and goods, or a lockdown imposed by the competent authority, may again be a reason for force majeure.
A voluntarily imposed lockdown is no reason for force majeure!
General purchase or sales conditions
There is usually no force majeure clause in these conditions. Usually reference is made to applicable law, in the Netherlands often Dutch law. In this case, there are two articles in the Dutch Civil Code that the party claiming the force majeure must appeal to.
But suppose you do a lot of business with, for example, Chinese customers or suppliers, then Chinese law may apply. If you would like more information about this, we advise you to contact a lawyer.
(Large) specific contracts usually contain a separate article on force majeure, in which the reasons for force majeure are explicitly stated. Outbreaks of epidemics in contracts or contract terms such as FIDIC (Generals), UAV or UAV-GC are no reason for force majeure.
The consequences of the declaration of a state of emergency by the competent authority, the closing of airspace and the closing of borders for people and goods or a lockdown imposed by the competent authority may be a reason for force majeure. However, this may be stated differently in each contract. It is therefore important to properly verify what has been agreed.
Our advice is to identify bottlenecks in a timely manner and – with an understanding of the situation – to jointly find solutions, especially if there are long-term relationships and / or critical processes. In the case of projects, it may be possible to consider temporarily stopping projects and postponing end dates. We recommend that you do this (and communicate this to contractors and suppliers) only if they have claimed (massive) force majeure.
These are very special times, where everyone will experience the consequences.
TOPINC – Supply Innovation Engineers