First of all, the consequence of this absence of liability, is that the creditor of the obligation cannot invoke the remedies in case of default: he cannot claim late payment interest, penalty interest or contractual compensation for the delay in performance during the entire period of the impediment. Once the impediment is lifted, the contract should take its normal course. If the impediment becomes final and irrevocable, the contract can be terminated but without the right to claim compensation from the non-performing party.
The following cases could illustrate what situation arises in relation to the Coronavirus outbreak:
- The cause of the hindrance was foreseeable at the time the contract was entered into
If at the time the obligation was entered into, the impediment was such that a normal, prudent debtor with the same knowledge and experience as contracting party would have taken this into account, Force Majeure cannot be invoked.
Insolvency does not in itself justify invoking Force Majeure, even if entirely beyond the control of the debtor, as this is an event which prudent risk management and contingency planning should take into account. Only a very exceptional and unforeseeable event of insolvency or multiple insolvencies might qualify for Force Majeure.
Unless the debtor is the only one that is able to perform (e.g. in case of an intuitu personae contract), illness would not have to constitute Force Majeure as it only hinders one of the possible ways of performance.
This is different in the circumstances of the Coronavirus, where illness is becoming a systemic problem which over time reduces a workforce to a critical low. Especially where employees are obliged to remain absent and be confined to their homes in case of minor symptoms, entire industries may not be able to guarantee their normal activities when the presence of a critical number of employees cannot be guaranteed. These circumstances could justify Force Majeure.
- Risk to life, health, freedom, etc.:
If a debtor by performing the obligation, would expose himself or his family to danger to life, health, freedom or subsistence, then the question arises if this would qualify as Force Majeure. While Force Majeure exonerates a party from its non-performance, so does a “foreign cause”, being an extraneous overriding reason justifying the non-performance.
- The debtor’s inexperience
Inexperience, how understandable it may be in the face of these extreme circumstances, shall not be an excuse for non-performance of an obligation. We recall that the failure to fulfil a contractual obligation shall not be due to the fault on the part of the debtor. The liability test shall remain the normally careful and professional debtor placed in similar circumstances.