Under Italian law pursuant to article 1218 c.c. a party to a contract who does not perform exactly its obligations shall be held liable to pay damages if it fails to demonstrate that the non-performance or the delay were due to the impossibility of performance resulting from non-attributable causes.
Having put forward the overall principle, one should investigate what does it mean “a non-attributable cause” which is corresponding in general terms to the tenet of Force Majeure.
The principle of Force Majeure which under Italian is intimately accompanied by the notion of Fortuitous Event are not clearly defined by the Italian Legislator.
In other words, under Italian law, there is no precise definition of Force Majeure or Fortuitous Event since there is no provision explicitly describing the cases at hand.
The expressions Fortuitous Event and Force Majeure are nonetheless mentioned throughout the c.c. for instance at article 1693 c.c. regarding the responsibility of the carrier or at article 1785 c.c. concerning the boundaries of the innkeeper’s liability. Because of the inadequacy of the description of their characteristics, the scholars have made converge those two notions in the unifying concept of “non-attributable causes”. Moreover, the notion of “non-attributable causes” should not be construed as a mere absence of fault but should be considered as a positively identifiable fact (better impediment) capable of preventing liability in case of non-performance.
The events/impediments in which the Force Majeure and Fortuitous Event can be exemplified in a sort of troika:
- of the natural fact (Force Majeure), as for the impediment consisting in a natural fact; in order to exempt from liability, the impediment must be unpredictable at the time the contractual obligation has been undertaken and unavoidable (see Cassation Court (“”) n. 09/23412);
- the so-called Factum Principis, as for the impediment consisting in an order or in a prohibition issued by the administrative, judicial or governmental authorities (see C. n.14/18880). For instance, in this respect, the embargo declared by the United Nations against Iraq has been considered as a Factum Principis preventing the fulfillment of contractual obligations towards subjects having their headquarters or premises in that country.
- of the fact of the third such as, for example, the abandonment of dangerous objects on the road (see C. n. 783/2013).
Clauses of Force Majeure or Fortuitous Event, both at national and international level, are invariably inserted in contracts especially with continuous, periodic or deferred performance, commonly as boilerplate. The most standard clauses provide that the nonfulfilling party in case of exceptional and unforeseeable events is discharged from liability for non-performance and may suspend performance and, if such events persist, may eventually terminate the contract.
“Hardship” under Italian law the notion of Hardship is akin the “disproportionate overcoming onerousness” doctrine. Art. 1467 c.c. states that in contracts with continuous, periodic or deferred performance, if performance of one of the parties has become excessively burdensome due to the occurrence of extraordinary and unforeseeable events, the party who owes such performance may terminate the contract.
Furthermore, the said provision specifies that termination may not be required if the onerousness of the contract falls within the normal scope of the contract.
The party against whom termination is sought may avoid such termination by offering to modify the terms of the contract in an equitable manner.
The excessive burden incurred is due to extraordinary and unforeseeable events. Economic burdens that fall within the normal risk of the contract, e.g. ordinary and foreseeable market fluctuations, cannot be invoked by the debtor. Those normally excluded by insurance policies are typical extraordinary events.
A specific application of the tenet under question is the one regarding construction contracts. Art. 1664 c.c. provides that if as a result of unforeseeable circumstances, there has been an increase or decrease in the cost of materials or labor force such as to result in an increase or decrease of more than one tenth of the agreed total price, the contractor or the client may request an adjustment of the price. The adjustment may be granted only for that difference exceeding one tenth. Furthermore, the provision at stake provides that if, in the course of the work, due to geological, water and similar causes not foreseen by the parties, performance difficulties arise which make the contractor’s performance considerably more expensive, the contractor is entitled to fair compensation. Even article 1672 c.c., always regarding construction contracts, is an application of the principle of Force Majeure.
Additionally, the principle of good faith and fair dealings encompassed in articles 1175 c.c. and 1375 c.c. which permeate our legal system suggests that the parties should renegotiate the clauses which have become excessively burdensome, regardless the provisions inserted into the contract.
At the international level contrary to what happens in the national sphere, Force Majeure is generally defined. For instance Article 79(1) of the Convention on the International Sale of Goods (the so-called Vienna Convention of 1980 or “CISG”) provides that a party is not liable for a failure to perform the obligations undertaken if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.
In the international context Force Majeure clauses are aimed at excusing a party from liability if some unanticipated event beyond the control of that party prevents it from fulfilling its obligations. Hardship Clauses, on the other side, essentially mandate a re-negotiation of the original conditions of the agreement if the performance of one of the parties has become excessively burdensome due to unpredictable and unavoidable circumstances.
The International Chamber of Commerce (“ICC”) has developed in 2003 a Force Majeure Clause and a Hardship Clause, Force Majeure is defined in the opening formula of the template clause as an impediment beyond the reasonable control that it could not reasonably have been expected to occur at the time of the conclusion of the contract and be avoided or overcome.
The template caluse is rather interesting since it itemizes the impediments commonly accepted in the international context as causes of Force Majeure.