The outbreak of the CoViD-19 Pandemic and the development of the measures that have been implemented, either by decision of the Public Administration or at the initiative of families and businesses determined the beginning of a state of exception, with obvious implications for daily life and for the development of the most minute legal-business relationships.
In particular, growing doubts are to be expected, with enormous implications for the very sustainability of the economic and social fabric, in terms of fulfilling obligations in the context of contracts of a lasting nature, whether regarding continued execution contracts, such as supply contracts and lease agreements, and contracts with deferred execution moments.
The emergency regulations that in the most recent days have been published do not contain any discipline that derogates the existing regime, which is based on the principle of compliance with assumed obligations (pacta sunt servanda).
Nevertheless, the basic discipline of contracts, which we find in the Civil Code, does not fail to contain instructions on the procedures and consequences of situations which call into question, objectively and in addition to the powers of the Contracting Parties, the regular execution of contractual obligations.
First of all, if the circumstances in which the parties grounded the decision to enter into contract have undergone an abnormal change (which seems to be the case with the epidemic), the injured party (i.e. the party who is harmed by the modification of the circumstances) is entitled to terminate the contract, or to amend it according to fairness judgments, provided that the requirement of the obligations assumed by it seriously affects the principles of good faith and is not covered by the risks of the contract itself.
If the termination is requested, the other party may oppose the request by declaring that she accepts the modification of the contract in accordance with the terms intended by the former, injured, party.
However, the injured party does not enjoy the right to terminate or amend the contract if it was in arrears at the time the change in circumstances occurred, which is consistent with the need for a causal link between the abnormal change and the breach of the just Expectations.
There is therefore a legal basis for triggering a proposal to modify the contractual terms, which if not accepted, may lead to the termination of the contract itself, with the consequent annulment of all contractual terms.
For more extreme cases, our Civil Code provides for the very impossibility of fulfilling the obligations, whether this impossibility is definitive or temporary.
In fact, the obligation assumed is extinguished when the execution of the obligations becomes impossible by no fault of the debtor. The impossibility regarding debtor's person also falls within the exception of the obligation if the debtor cannot be replaced by a third party (which may be because the obligation can only be fulfilled personally by that debtor or because there are no third parties who replace him, by being in the same circumstances).
The impossibility of compliance may be temporary or definitive, and the loss of interest in the provision by your creditor, will turn temporary into definitive. That is, if, although the supply may be carried out at a future date, certain or uncertain, one concludes that the creditor will no longer have an interest in it at that future moment - because it will take away the usefulness that underpinned the contract - then we will face a definitive impossibility.
Being the impossibility merely temporary, however, there is no extinction of the obligation, but the debtor will not be liable for the default, that is, he will not pay interest, he will not have to compensate for the consequences of his delay.
Being the impossibility merely partial, then the debtor will duly fulfill her obligation, by performing to the measure of possibility, and the consideration that must be made in exchange (or that has already been made) is to be reduced proportionally. However, this will not be the case if the creditor has no interest in this partial compliance, and then, when only full compliance serves the creditor, the creditor can terminate the contract.
The difficulties in interpreting these rules is undeniable, and the existence of contractual forecasts for circumstances of force majeure will contribute greatly to the concrete delimitation of the prerogatives of the parties.
It should be borne in mind that the effect of the impossibility and the relevant change of circumstances is the resolution, that is to say, the annulment of the contracts by unilateral exercise of one of the parties, with the consequence of the refund or devolution of all that has already been provided and the exemption of what was to be provided.
The impossibility of restitution of what has already been provided (for example, because the contracted service has already been rendered) conditions the exercise of the aforementioned faculties, since the resolution cannot result in an undue enrichment of the party that is now unable to comply, at the expense of the other party.
In abstract, it is possible, under the invocation of the change of circumstances (e.g. the price fixed for the service has become ruinous by the changes in the distribution chain caused by the epidemic), to lay claim that the provision of one of the parties has become too costly as a way of releasing that obligation. However, the validity of that claim depends both on the weighting of the actual relevance of the event for the performance of the contract, its own risks, its specific stipulations and the very fairness of the solution.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.