Coronavirus and force majeure: what does your contract say?

Faced with the worsening of the coronavirus pandemic, whose consequences go far beyond the health aspect, numerous companies are already mobilizing and notifying their partners regarding the impossibility of fulfilling signed contracts, based on force majeure. After all, do these companies have the right to do so?



Firstly, it must be identified whether the parties submit themselves, expressly or tacitly, to national jurisdiction, as the issue will be dealt with here from the perspective of Brazilian legislation.



Based on this, article 393 of the Civil Code establishes that the debtor will not be liable for losses resulting from unforeseeable circumstances or force majeure, if he is not expressly held responsible for them and, in addition, the sole paragraph provides that this institute is only applicable if the resulting effects are unpredictable and unavoidable.



Thus, despite the principle of B2B Lead exoneration, there must be a real and proven impediment that justifies the impossibility of fulfilling the contractually assumed duty and not a generic pretext.



However, if the impediment, although real, is only temporary, compliance with the obligation must, in principle, be suspended, unless the resulting delay justifies termination of the contract. If the impediment is definitive, the contract, as a rule, must be terminated, reestablishing, whenever possible, the status quo ante .



There are contracts in which the parties already foresee the facts that are shaped (or not) as force majeure, almost renouncing the right to be exempt from fulfilling a certain obligation, voluntarily and entirely assuming the risks, which must also be analyzed.



Let's imagine, for example, a contract to supply masks and gloves for the hospital network. Could pandemics and epidemics be justifications for non-compliance with the main obligation, as the objective of the contract is exactly this, to provide basic instruments for the activity even in critical and exceptional situations?



What is certain is that, to identify whether or not a given company can make use of the liability exclusion, it is necessary to evaluate, case by case, the contractual provisions, such as general business conditions; whether the force majeure exemption clause is provided for in the contract and, if so, how it is defined; if in the absence of contractual provision, the coronavirus could be interpreted as a case of force majeure, etc. Such analysis must also be permeated by the social function of the contract and objective good faith, standards of Contract Law.







Furthermore, attention must be paid to the date of signing the contract, as, if signed at the beginning of 2020, it is likely that the pandemic will not be considered a case of force majeure, as the unpredictability requirement would not be met. On the other hand, the radical prevention measures, such as curfews, adopted in certain geographic areas, are also unprecedented, once again bringing to the fore the debate regarding the exclusion of liability.