Force Majeure is defined in the Estonian law as circumstances which are beyond the control of the obligor and which, at the time the contract was entered into or the noncontractual obligation arose, the obligor could not reasonably have been expected to take into account, avoid or overcome the impediment or the consequences thereof which the obligor could not reasonably have been expected to overcome.
Force Majeure pursuant to Estonian law can be divided into four parts:
- the existence of an impediment;
- the impediment must not have been caused by the debtor’s own conduct or inactivity;
- the unforseeability of the circumstance; and
- the inevitability and insurmountability of the circumstance.
The existence of an impediment – the first criteria which shall be met for a person to be exempted from a contractual liability. The impediment should actually prevent the fulfillment of a specific obligation.
The impediment must not have been caused by the debtor’s own conduct or inactivity – only such circumstance which was beyond the control of the obligor may be considered as Force Majeure. Thus, the occurrence of the circumstance shall be objective, i.e. the obligor has not caused it by its own conduct or inactivity.
The unforeseeability of a circumstance – not every circumstance impeding the performance of an obligation and which is beyond the control of an obligor may be considered as Force Majeure. The occurrence of the circumstance needs to be unexpected and it cannot be reasonably expected from the obligor to have taken the circumstance into account. The circumstance which was reasonably foreseeable by the obligor cannot be considered as Force Majeure
The inevitability and insurmountability of the circumstance – the obligor cannot be reasonably expected to be able to avoid the influence of the circumstance on the performance of an obligation or surpass the circumstance or its consequence.
As such, the spread of Coronavirus and the emergency situation followed can be considered as an impediment (the impediment should actually prevent the fulfillment of a specific obligation). The coronavirus outbreak by itself checks also all of the other prerequisites of the Force Majeure e clause pursuant to the Estonian law. As Force Majeure comes from the law, a separate clause regarding Force Majeure does not have to be added to the agreement.
Hardship is not a term that is used in the Law of Obligations Act of Estonia but it resembles under Estonian law the possibility of “Alteration of balance of contractual obligations”. Due to the mentioned possibility of alteration, the amendment of the agreement may be demanded if:
- at the time of entry into the contract, the injured party could not have reasonably expected that the circumstances might change; and
- the injured party could not influence the change in the circumstances; and
- the risk of a change in the circumstances is not borne by the injured party pursuant to the law or the contract; and
- the injured party would not have entered into the contract or would have entered into the contract under significantly different terms if the party had known of the change in the circumstances.
If the bases for amendment of a contract exist but due to the circumstances amendment of the contract is not possible or would not be reasonable with respect to the other party, the party aggrieved by alteration of the balance of the obligations may withdraw from the contract or, in the case of a long-term contract, cancel the contract.