Contract Law in the Corona Crisis
Greater security of action in the event of service disruptions in national
and international contractual relationships
The Corona Crisis disrupts contractual relations
The corona crisis, however, is considerably impairing these processes and has a profound impact on business relations, including the frequent breach of contractual obligations:
Failure to deliver
Interruption of services of any kind
Lateness of payments
Production stops with their consequences
Failure to meet contractual objectives
Which contractual regulations apply now?
at all, but foreign law is?
The corona crisis has prompted legislators at home and abroad to develop special regulations to mitigate the consequences of the pandemic, particularly for the economy. The current COVID-19 special legislation, in Germany as well as in other European countries, creates numerous exceptions, which create a new and complex legal situation. Thus the corona follow-up law raises legal questions in many contractual relationships. Each case must be considered individually, but we would like to address questions that every company faces.
Cancel the contract?
Adjust the contract?
How can and how should your company act?
What happens if you cannot reach an agreement with your contractual partner?
Contractual relationship in Germany
If the contractual service can no longer be provided due to the corona crisis then the debtor is released from the obligation to perform due to impossibility (§ 275 BGB), but the obligation to provide consideration also ceases to apply (§ 326 BGB).
In the case of a so-called relative transaction for delivery by a fixed date, in which compliance with the time for performance is so essential that the transaction should stand or fall with the timely performance, the creditor can withdraw without setting a deadline (§ 323 para. 2 no. 2 BGB).
There is the possibility of adjusting the contract according to § 313 BGB (disturbance of the business basis).
In cases in which both parties to the contract are interested in establishing long-term business relationships, the possible adaptation of contracts according to § 313 BGB should take precedence.
International contractual relations
Does German law apply? If so, the above-mentioned regulations of the BGB are to be applied.
Does foreign law apply? If so, it must be examined which regulations have been issued in the respective foreign legal system over the course of the corona crisis.
Attention: Almost every European country has issued special regulations over the course of the corona crisis. These regulations are often similar (e.g. suspension of limitation periods and other time limits), but the regulations are country-specific and may differ considerably in detail.This examination must therefore be carried out on a country-specific basis and under no circumstances should one be subject to the presumption that the situation is ‘probably similar’ to that in Germany.
Even if German law is applicable to the contractual relationship, it is possible that mandatory provisions have been enacted in foreign legal systems that contradict German law.
In this case, it may be that your company‘s legal claim exists, but its en- forcement before the foreign court becomes problematic or even impossible. Numerous special situations must be taken into account, which can only be assessed in an individual audit.
We give you security of action
We check for you in the respective legal systems (Germany or abroad):
Termination and adjustment rules in contracts and laws
Avoidance of interest obligations
Negotiation and drafting of moratorium agreements for creditors and debtors
Adaptation of grant agreements
Development of solutions for your business in consumer business
Formulation of general conditions for several similar transactions
Support in negotiations with contractual partners and authorities in the B2B sector
If necessary, litigious enforcement of your legitimate claims, Europe-wide, with German, English or locallanguage communication
Your lawyers for the Corona crisis
DIRO is one of the largest, independent law firm alliances in Europe and has bundled its consulting services in the area of commercial law with a view to internationally active medium-sized companies under DIRO BUSINESS for entrepreneurs. DIRO BUSINESS thus offers the owners of medium-sized companies access to a Europe-wide portfolio of established business law firms.
Serving medium-sized companies is our Business. Europe-wide.