What makes something classified as impossible

Obligation to fulfill the contract in the event of "Corona-related" obstacles to performance?

With a large number of contracts, the question currently arises of how to deal with performance barriers that are based on the effects of the corona pandemic. Does the contractually agreed performance obligation still exist or can fulfillment of the contractual obligation still be required? A general answer is out of the question. Here, too, the wisdom of lawyers applies: It depends, in other words: you have to distinguish and each individual case must be examined.

Contracts without specific regulations on barriers to performance

If the contracts concerned do not contain any specific provisions, the general statutory provisions of the law applicable to the contract must be used.

Whether the coronavirus is an obstacle to performance that leads to the cessation of the contractual obligation to perform or a right to refuse performance is to be assessed under German law with the help of the impossibility regulations of Section 275 BGB: According to Section 275 (1) BGB, the debtor's obligation to perform does not apply if for it is impossible for him or for anyone to provide the service. The debtor can refuse performance in accordance with Section 275 (2) of the German Civil Code (BGB) insofar as this requires an effort that is grossly disproportionate to the performance interests of the obligee, taking into account the content of the contractual obligation and the principles of good faith. Furthermore, the debtor can refuse performance in accordance with Section 275 (3) of the German Civil Code (BGB) if he has to provide the performance personally and it cannot be expected of him, taking into account the obstacle opposing his performance with the performance interests of the obligee. So if there is impossibility, the debtor is released from his obligation to perform. The obligee can then withdraw from the contract and withdraw from it.

Whether the consequences of the corona pandemic justify a case of impossibility cannot be answered across the board. It depends on the specific form of the contract and the specific performance obligation, the impossibility of which is in question. It plays an important role here whether the agreed service can still be made up or whether there is a fixed deal. The latter is likely to be the case, for example, with the trade fair organizer who was officially prohibited from holding the trade fair. It can be assumed here that the exhibitor has been released from his obligation to perform due to a legal impossibility towards the exhibitor who has concluded a corresponding contract with the trade fair organizer.

Another question is what the consequences of an impossibility for the agreed consideration are, e.g. whether the trade fair organizer is nevertheless entitled to the agreed fee (or has to repay it) from the exhibitor. The answer can be found in § 326 BGB. Thereafter, in the event of impossibility, there is no entitlement to consideration; Any consideration already received must be repaid (Section 326 Paragraph 1, 4 BGB). This is different, of course, if the contractual partner is solely or jointly responsible for the impossibility.

A separate consideration is required as to whether the contractual partner is liable for damages through non-performance of the contract. The decisive factor here is the extent to which the contractual partner is responsible for the impossibility. In the case of actual or legal obstacles to performance such as entry bans, official coercive measures or force majeure, this is usually not the case.

In other constellations, the provision of services may not be impossible. Due to the consequences of the corona pandemic, however, circumstances that have become the basis of the contract may have changed so severely after the conclusion of the contract that the parties would not have concluded the contract or would only have concluded the contract with a different content if they had foreseen this change. In this respect, the question arises as to the discontinuation of the business basis according to § 313 BGB. This standard grants a right to contract adjustment in the case of significant equivalence disorder, for example. On the other hand, a contract can only be terminated if an adjustment is not possible or unreasonable. In relation to Section 275 BGB, Section 313 BGB is subsidiary. A contract adjustment is excluded if the disruptive event falls within the risk sphere of one of the parties.

Contracts with regulations on obstacles to performance, in particular force majeure clauses

The situation is different if the contracts contain provisions that (also) apply in the event of a pandemic.

In particular, a clause on the existence of force majeure should be considered here. Many contracts, be it with consumers or in corporate legal transactions, contain such so-called force majeure clauses (or "force majeure clauses"). These clauses regularly provide the user with various rights to withdraw from the contract if the provision of the service is permanently or temporarily impossible or unreasonable for him. The user would like to exclude the fulfillment of his contractual obligations through such clauses if he is prevented from fulfilling the contract by unexpected external circumstances. Typical cases of force majeure are war, natural disasters, strikes or fires in many general terms and conditions. In some cases, terms and conditions explicitly cite epidemics or pandemics as examples of force majeure.

German jurisprudence defines force majeure as an "external event, brought about from the outside by elementary natural forces or by actions of third parties, which is unpredictable according to human understanding and experience, with economically viable means not even through the utmost care that can reasonably be expected from the circumstances can be prevented or rendered harmless and is not to be accepted by the entrepreneur because of its frequency. ”(BGH, judgment of October 16, 2007 - VI ZR 173/06).

Whether there is a case of force majeure is always a decision on a case-by-case basis. Taking into account the case law on previously recognized cases of force majeure, there are many reasons why the coronavirus should also be regarded as force majeure. For example, in travel law a few years ago, the development of the SARS virus in China was assessed as a case of force majeure (AG Augsburg, judgment of November 9, 2004, Az .: 14 C 4608/03). The aspects of the unpredictability of the rapid spread of COVID-19 and its classification as a pandemic by the WHO are weighty indicators for the classification of COVID-19 as an application of force majeure.

The contracting party that wishes to withdraw from its contractual obligations and invokes force majeure must also prove this. The decisive factor is whether the coronavirus makes the fulfillment of the specific contractual obligation impossible or unreasonable.

Force majeure clauses are subject to the effectiveness control according to §§ 309, 308, 307 BGB. The yardstick used to check the effectiveness of the specific clause depends on whether it is against an entrepreneur (then §§ 310 Paragraph 1, 307 BGB) or against a consumer (then §§ 310 Paragraph 3 BGB, 308, 309 BGB) is used. In any case, the clause must be formulated in a clear and unambiguous manner. If force majeure clauses name examples of force majeure but do not explicitly mention a pandemic or epidemic, it is a matter of interpretation whether the examples given are exhaustive and COVID-19 should therefore not be regarded as force majeure.

If there is an effective force majeure clause, the legal consequences are based on its content. The contracting party whose contractual obligation has become impossible or unreasonable can regularly withdraw from the contract without incurring any liability for damages. The right to the consideration then also lapses. A deviating regulation in the general terms and conditions would be ineffective according to § 307 paragraph 2 BGB. Expenses incurred in preparation for the service that has become impossible or unreasonable cannot be reclaimed as a rule.

It should be noted that an obligation to notify may be stipulated in contracts. Failure to comply with this obligation can result in the clause not being applicable. Even without an agreed reporting obligation, the party who wishes to invoke the occurrence of the Force Majeure event should inform their contractual partner immediately, preferably in writing. With a view to Section 241 (2) of the German Civil Code (BGB), there is also the risk that the contracting party will be liable for any resulting damage due to delayed notification.

Options for drafting / adapting contracts

With a view to future contracts, it is advisable to include contractual clauses that explicitly name pandemics and epidemics as cases of force majeure. As with all general terms and conditions, it is important to ensure that the wording is unambiguous. With a view to the actual development of the coronavirus that is already in place, it may be questionable whether one can still speak of an "unpredictable event". In view of the fact that what applies today may already be overtaken tomorrow by current dynamic developments, e.g. by new types of official requirements or other restrictions, a comprehensive force majeure clause is always advisable.

Even with existing contracts, e.g. in the context of permanent business relationships, a contract adjustment can be considered, but this requires the consent of the contractual partner. Of course, this cannot have any retroactive effect, unless the contractual partner would agree, which is, of course, unlikely.

Dr. Julia Christine Pohl

Dr. Julia Christine Pohl

is a lawyer at GvW Graf von Westphalen in Frankfurt am Main. She specializes in litigation.