Article by Urania V.Zervobeakou*
The rapid spread of the corona SARS-CoV worldwide and the resulting pandemic have significant side effects on social and economic life and the business environment in general.
It is therefore certain that in the near future, beyond and regardless of the support measures taken by the State, which notably has no inexhaustible resources and especially after 10 years of crisis and 3 memoranda, will lead many companies to invoke force majeure for the non-fulfillment of their contractual obligations that they had undertaken before the pandemic. The regularity of transactions has been disrupted and the smooth development in most aspects of economic and commercial activity has already been drastically reversed.
The question is whether this pandemic can be justified by force majeure which prevents or suspends the contractual fulfillment of the obligations already assumed or whether other provisions of the law make it possible for the parties to release themselves from their contractual obligations or even if suspension is possible. of their fulfillment for some time.
a.- What is force majeure.
“Force majeure” is a vague legal concept, essentially a rule of Byzantine-Roman law, derived mainly from civil law, based primarily on Article 255 of the Civil Code, and is an expression of the general principle that “no one shall be compelled to do so”. (Impossibilium nulla obligatio est), to do something that is objectively or subjectively impossible, and permeates every branch of Law.
Force majeure, then, constitutes (according to fixed jurisprudence) any event that is extraordinary and unpredictable, which is either objective (eg earthquake) or subjective (eg illness), unable to be predicted or prevented or prevented. even with measures of extreme diligence and consistency, and because of which one is prevented, either by oneself or through a third party, from fulfilling a legal or contractual obligation, or from exercising a right in a timely manner, even if one pays extremely prudent prudence and prudence !.
It is therefore argued that the parties may, on the basis of the principle of freedom of contract, agree on clauses of their choice, such as that of force majeure.
In general, this clause allows the parties to cancel the contract and / or be relieved of certain or all of their obligations for a certain period of time, in the event of any extraordinary or unforeseen events.
However, the Contracting Parties may, in the context of their contractual freedom, specify what constitutes force majeure and what notification process must be followed.
The term force majeure is part of the broader concept of chance. The rule is that there is no responsibility for the lucky ones. The fact that liability for damages presupposes an offense in principle and that it ceases to exist when the damage is due to an accidental event, creates the criticality of the demarcation between negligence and accidental. As an exception, the liability of the person may be extended to include all or some of the lucky ones.
This extension is either in accordance with a legal act or is directly provided by law. When the extension of liability takes place by contract (361 AK), it is a matter of the will of the parties, whether the debtor will be responsible for everything or not and what accidental events. In case of doubt, it is reasonably accepted that the parties did not want to be held accountable for incidents of force majeure, and at the same time, prudent parties do not usually take risks of unforeseen and unforeseen events. When the law extends liability by a provision that introduces an exception to the principle of liability, it constitutes a matter of interpretation of that provision to diagnose to what extent the legislature wanted the liability to extend. In many cases, however, the law, extending the debtor’s liability to occupy the fortunes, excludes from them any incident of force majeure. As in the conventional extension of liability, here too it would be more correct and consistent for the principle of guilt to be accepted that, in doubt, liability does not cover cases of force majeure.
The above fundamental principle is expressly provided for in the provisions of institutional legislation of the current legislation, such as Article 255 of the Civil Code (suspension of statute of limitations), Article 152 and 153 of the ICCPR (loss of time – resumption of proceedings in the previous case), Articles 89 of articles 87 and 92 of Law 2362/1995 “On Public Accounting etc” (suspension of limitation of claims for and against the State) etc. of article 10 par. 6 Law 2690/1999 KDDiad (exceeding deadlines).
A typical case of application of the above clause, which mainly concerns Greece, as a pre-eminent tourist country, is in the contracts concluded by the hotel units with the travel agents in view of the number KYA 18152 / 14-3-2010 (Government Gazette b ‘ 857 / 14-3-2020) which suspended the operation of seasonal tourist accommodation until 30-4-2020. Can the issue of force majeure clause be raised? By invoking this clause, the travel agent will seek to be released from the contract (by denouncing it), but also to take on any advance payment that has already been paid to the hotelier and the hotelier will hardly be able to deny the existence of force majeure. however, it will be able to challenge the possibility of immediate release of the agent, as well as the “obligation” to return the advance payment. All this, of course, will depend on the specific content given to the respective clause and its proper interpretation, the terms of each contract and the time it must be executed, but also on the (still estimated) duration of the pandemic as a reason. suspension or termination of the contractual obligations of both parties.
b.- Ways of release from promising contracts when there is a reason for force majeure.
Inextricably linked to the predisposing principle is also the principle, the basic one of the current law, according to which the adverse legal consequences of the breach of a law recognized by law or by a contract of obligation, usually occur with the assistance of the element of guilt. (deceit or negligence) in the person of the obligor (M. Stathopoulos CC 330, 336, 342, 362, 382, 383 etc).
A classic example is the case of Abnormal Development of Guilt, which means that guilt is not led “normally” to amortization by fulfilling the debtor’s obligations and corresponding satisfaction of the lender’s rights due to Inability to Provide, as the debtor cannot fulfill his provision for reasons for which he is not responsible.
The starting point of the above case is the provision of Article 336 of the Civil Code, according to which the debtor is relieved of any obligation due to inability to fulfill the benefit, if he proves that the weakness is due to an event for which he is not responsible. However, as soon as he learns of the impossibility of fulfillment, he must notify the lender and return to him any “content” in it.
In this case, under Article 380 of the Civil Code, the creditor is also exempt from his own benefit, the “consideration”.
However, the investigation of the question of whether or not a party has a liability will be found as follows:
According to Article 330 of the Civil Code, the debtor is liable, unless otherwise specified, for any breach of his obligation by deceit or negligence, his own or that of his legal representatives. Negligence exists when the diligence required in transactions is not paid.
We are therefore faced with the question of whether the consequences of the COVID-19 pandemic are beyond the debtor’s control of the transaction. In other words, companies under these conditions have the right to refuse to fulfill their contractual obligations (payment of suppliers, provision of services, etc.) or instead have the right to insist on their claims against third parties (delivery of products, payment of claims against customers. them etc)?
As it is understood, with the citizens locked in their homes by order of the Public Authorities, with the widespread threat of transmitting the disease with high mortality rates worldwide in relation to the usual flu diseases, with successive state actions where unilaterally the government imposes a ban operation of businesses and services, suspension of the operation of courts, churches, educational institutions, the prohibition of meetings and intervenes with special regulations in basic contractual relations, ie that of reduction of the paid rent by 40%, the employment relations giving the employers the opportunity to suspend them or to turn them unilaterally into rotating work, since they are unable to accept the work of their employees, as with a state order their operation is interrupted or reduced their turnover due to the pandemic, while suspending the deadline for payment of overdue checks by 75 days from the date of issue (ie their payment), the reasonable question is whether the pandemic that leads the debtor to “financial weakness” due to the closure of his business, is it a reason for his exemption from payment, ie from his contractual obligations?
The answer may be no and it may be accepted that the debtor’s financial weakness is a fact for which he is personally responsible, but undoubtedly under the present unprecedented circumstances, the above answer cannot satisfy anyone.
c.- Bona fide in compliance with contractual obligations.
When economic transactions are “frozen” – with stock markets collapsing, air travel paralyzed, states’ borders closed and fundamental freedoms for the movement of goods and services, unimpeded, temporarily suspended, a “corrective” cut must be found. an expanded interpretation of the relevant provisions of the legislation.
At this point, the principle of good faith must be applied, so that, during the period of “pandemic”, even if it is not due to the debtor’s exemption, it must be accepted that due to the application of the principle of good faith fulfillment of the benefit (288 AK), in its corrective, now, operation, the rigid nature of the prohibition of invoking financial weakness as a reason for debt relief from liability is mitigated and, at least temporarily, it must be accepted that they “inactivate” his rights aneisti if fulfillment of the provision by the debtor is “delayed” or temporarily can not be fulfilled. So that in cases where the parties (debtor and lender) cannot release each other from their contractual obligations, at least to extend for a reasonable period of time the fulfillment of the debtor’s benefit, without being considered overdue and due to arrears or compensation for delay in fulfilling the guilt.
Of course, each case (contract) has its own special characteristics and must be examined in the light of the conditions under which the declarations of intent of the parties, the nature of the contract and the terms contained therein and above all the true will of the parties. so that safe conclusions can be drawn and the legally correct solution can be reached.
Because, it is reiterated that neither the clause of force majeure nor the provision of Article 330 of the Civil Code can be applied under the present circumstances, unless both parties can mutually release themselves from the contract concluded between them. Therefore, in this case only the extension of the time of fulfillment of the provision can be foreseen and legally accepted as a solution under the conditions set by the principle of good faith or its adjustment under the terms of the provision of Article 388 or 288 of the Civil Code where they do not exist. basic conditions for the application of the special provision of Article 388 of the Civil Code.
The principle of bona fide is introduced by various articles of the Civil Code, the main one of which is Article 281 of the Civil Code, which stipulates that the exercise of the right is prohibited if it clearly exceeds the limits imposed by good faith or good morals or social or economic purpose of the right. This provision is the most basic of civil law, since the reason for its establishment is social justice.
The uncontrollable, absolute freedom to exercise the right runs counter to the interests of society as a whole, and for this reason the legislature limits its exercise by subordinating individual interest to the public’s sense of justice and the need for “legal certainty”. necessary for social coexistence and for the smooth development of transactions.
In order for the judge to apply a provision containing a general clause, such as that of Article 281 of the Civil Code, he must formulate a rule of law to judge whether the exercise of a right in the present case is abusive or not. In order for the judge to apply a general clause, such as the principle of good faith, he exercises both judicial and legislative function, since he not only imposes, but also applies a rule of law in each specific case. The formulation of this rule, which allows the “matching” of each individual case with the general clause, is one of the most important aspects of the judicial work.
Regardless of what measures the State has taken or will continue to take, intervening, due to the extraordinary circumstances, in an unprecedented manner in the field of private law and contracts in particular to mitigate the economic consequences, because it is certain that either any measures to suspend the State they will simply postpone the problems in the field of contracts for a later period of time or the relations of private law will remain unregulated, the solution lies in the mutual reform between the contracting parties. The terms of the agreements already concluded with the re-formulation and modification of their terms and in those cases where the mutual concessions do not prevail, the courts will have the necessary say.
In addition to all the other problems it has caused and continues to cause, the so-called Wuhan virus “also contributes to the creation of a large volume of legal claims for the settlement of which may take many years.”…