For months now, the world has been under the spell of the corona virus. Intrusive measures are also in place in the Netherlands. These measures may affect contracts already concluded. The situation may arise that you or your contracting party cannot fulfil the contractual agreements; there is a default. In the Netherlands, the prevailing view is that you have to fulfil agreements. This principle is also enshrined in law.
When a contractual agreement is not fulfilled, there may be an obligation to compensate (Art. 6:74 of the Civil Code). However, the compensation obligation does not arise if the failure cannot be attributed to the defaulting party (Art. 6:75 DCC). For example, in case of a force majeure situation (also called "force majeure"). Because the default is not imputable, no performance of the contract or compensation can be demanded. Many entrepreneurs wonder whether the corona virus constitutes a force majeure situation.
The contract or general terms and conditions may contain a provision specifying a force majeure situation. More than once, Dutch contracts contain provisions that define strikes, wars or natural disasters as force majeure situations. Also known are provisions in which transport problems due to government measures qualify as force majeure. Some contracts include a more generally worded force majeure clause, such as, for example, "all external causes beyond the control of the contracting party". For now, it remains to be seen whether corona virus falls under such clauses.
When a Dutch court has to rule on whether a reliance on a force majeure provision succeeds, the court looks at the following factors, among others:
The interpretation of the provision is done using the Haviltex standard. That is, the meaning that the parties, in the given circumstances, could mutually reasonably attribute to the provision to be interpreted and what they could reasonably expect from each other. This takes into account all the circumstances of the case. Nationally, corona virus may have been determined to be a force majeure situation. This is the case in China, among others. Such a circumstance may be taken into account by the court when assessing whether there is a force majeure situation. This also applies when the force majeure clause is drafted more generally. To date, however, this is not the case in the Netherlands.
If a force majeure provision is included in the contract or general terms and conditions, its consequences are often included. The most common consequences are: rights of suspension, postponement of a deadline, right to terminate the contract or lapse of liability.
We therefore advise you to check your contracts and general terms and conditions for the presence of a force majeure provision as well as whether the provision is adequate for the current situation.
If there are no contractual agreements dedicated to force majeure, then the parties rely on the statutory regime. Force majeure based on the law is divided into absolute impossibility to fulfil the agreement and relative impossibility. The latter implies that the agreement can still be fulfilled, but it is so detrimental to that party that fulfilment cannot reasonably be expected. The assessment is always made on the basis of all the circumstances of the case.
If invoking force majeure is not possible, invoking unforeseen circumstances may be an option. A successful invocation of unforeseen circumstances requires that the circumstances in question were still in the future at the time the contract was concluded and that the circumstances make it impossible, by the standards of reasonableness and fairness, for the invoking party to be required to fulfil the agreements. Again, this is assessed by reference to all the circumstances of the case.
If you have any questions following this article, please feel free to contact us.