Exemptions of non-performance in the times of Covid-19

Prompted by the recent global sanitary emergency of covid-19, this study seeks to address contractual issues arising from it. The pandemic and the measures adopted with the aim of limiting the diffusion of the virus in all over the world will inevitably have repercussions to the execution of the contractual obligations to the end that some will not be able to perform their assumed obligations. In such a situation it becomes essential to know whether one can be exonerated from contractual responsibility due to the covid-19 crisis and in what measure one can take advantage of the clauses of force majeure or hardship or in the absence of the clause, what legal provisions there are available that may exempt the nonperformance. The legal doctrine of changed circumstances is universally recognised in most legal systems, but its forms and conditions vary from one legal system to another. Therefore, the conditions for the exoneration from the contractual responsibility and its consequences depend on the law applicable to the case. The study takes primarily comparative approach in assessing the exemptions of non-performance available both in several civil and common law jurisdictions as well as in the most common international instruments of the United Nations Convention on Contracts for International Sale of Goods and the UNIDROIT Principles of International Commercial Contracts in the light of the covid-19 crisis. The study found that there are significant differences in civil and common law approaches to the excused non-performance to the effect that the outcome of the case may vary depending on whether the legal instrument of civil or common law and which national law is applied. Yet, the study found a general trend towards recognising hardship. It is also noted that there are some issues of clarity with the provisions of the CISG in relation to excused non-performance, whereas on the other hand, the UNIDROIT Principles seem well-received by the courts and international community, therefore it probably provides needed clarity and addresses the needs of business life. Two sets of practical guidelines on what to do to reduce legal risks when encountering unexpected circumstances and how to be better prepared in the future can be found at the end of this study. These guidelines are not covid-19 specific but can be well applied to any unforeseen circumstances. At the time of this study, not yet much covid-19 specific case law existed so its eventual consequences will remain to be seen