Contracts

Can a party to a commercial contract escape its obligations because of the economic disruption caused by the Covid-19 pandemic?

The answer to this question, which is of the utmost interest to companies of all sizes, is to be found in the new French contract law introduced by Ordinance of February 10, 2016.

One of the Ordinances adopted in furtherance of the Emergency Law of March 23, 2020 to deal with the Covid-19 epidemic provides – for a limited period of time – for (i) the suspension of the effects of clauses sanctioning contractual non-performance, and (ii) the extension of contractual deadlines for the termination or renewal of contracts.

How long does the suspension period last? Which contracts are concerned? What happens with periodic penalty payments and clauses aimed at sanctioning non-performance?

The current Covid-19 pandemic is affecting many economic operators operating in a variety of industrial sectors and raises questions about their ability to meet their contractual obligations.

While some wonder about the mechanisms that could be invoked to escape or adjust obligations, the performance of which has become difficult, excessively expensive or even impossible, others would like to block the implementation of such mechanisms.

The possibility for an economic operator to evade compliance with any of its obligations, to adapt it and, more generally, to be exposed to the risk of being held liable in the context of the current pandemic must be analyzed in the light of the contractual provisions and the specific features of the relationship.

Tout opérateur économique se pose légitimement la question : la pandémie de coronavirus COVID-19, permet-elle de suspendre ou de mettre fin à ses obligations prévues par un contrat commercial devant s’exécuter en France en invoquant l’existence d’un cas de force majeure ?

In a decision dated February 13, 2019, the Cour de cassation (French Supreme Court) confirmed that a jurisdiction clause stipulated in connection with a sale agreement and included in the general terms of sale may extend to tort disputes likely to arise between the parties.

In November 2018, the Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (General Directorate for Competition, Consumer Protection and Frauds) published the results of its investigation concerning compliance with the rules on economic protection of consumers in the electronic communications industry. The investigation revealed many breaches of French consumer […]