COVID-19 and Greece. Pandemic. Contracts. Rights and Obligations. Force Majeure.

If these words seem familiar, this article is useful for you. See details.

In a period when a large part of the population is unable to meet its financial obligations, or obligations of other nature, which it has contractually undertaken, it is frequently asked whether it is possible to deviate from these obligations through the existing legal framework due to the extremely significant situation

Generally, in accordance with the existing legal framework, every legal person must fulfill the legal obligations that has undertaken and they are responsible for the breach of them for any misconduct or negligence.

Deviation from the above rule is introduced in the case of force majeure, i.e. in case the fulfillment of obligations turns impossible due to occurrence of events that could not be foreseen and which are not caused by fraudulent or even negligent behavior of the contractual party.

Some classic examples of events that make the fulfillment of the contractual obligations impossible are phenomena such floods and earthquakes. Pandemic is also included in the above events. On the contrary, it is widely accepted that economic crisis and individual economic hardship are not included in the events of force majeure.

It is clear that this current unprecedented situation is a case of force majeure that affects contractual relations, something that it also proved by the measures taken by the Greek state to support the affected companies and employees financially.

Regarding the effects of force majeure upon contractual relations, it should be noted that force majeure results in release from or suspension of the obligations, yet neither generally nor indiscriminately. The right to release or suspend any obligation is directly related to the nature of the right and therefore there is no general rule. It is also very likely that force majeure will affect only a part rather than all contractual obligations.

The possibilities provided should be considered on a case-by-case basis to draw safe conclusions, as it is accepted that in case the obligations of the counterparty have been fulfilled, the occurrence of a force majeure event does not justify the non-fulfillment of financial obligations by the other counterparty but only the suspension. In addition, the rights provided under the legal framework should always be exercised on the basis of good faith and transactional ethics, because it is common that rights provided by law to be exercised abusively.

Finally, force majeure clauses are often included in contracts, which determine the consequences of the occurrence of force majeure events in contractual obligations. Even in these cases, force majeure events may have consequences upon the rest contractual obligations or force majeure clauses may result in abusive obligations to the parties

In conclusion, it is difficult to draw a general framework as the occurrence of force majeure events may lead to a variety of modifications upon the contractual obligations of the parties depending on the nature of the obligations and the existing circumstances. These are cases where legal flexibility is required as any ancillaries cause more problems than they solve.

Our main concern, as lawyers, is to advise our client individually as each case has its own parameters and values. We remain always on the side of our clients, following the new reality.

We remain at your disposal for any clarification and/or information.

Please contact is at info@vaplaw.eu or +30 210 32 54 237.

Note: It is pointed out that the above outline of provisions is suggestive and summarizing and aims at providing a quick update in relation to the legal framework. Any subjection of your company to the above provisions and the conditions of this subjection constitute the object of a more complete analysis for which the provision of specialized legal advices is required. The contents of this newsletter do not constitute legal or tax advice and cannot be used as such. In case you require advice for your personal needs, please do not hesitate to contact us. Reproduction and translation for non-commercial purposes of this newsletter is permitted, provided that reference of the source is made and the editor (Vicky Athanassoglou & Associates) is informed and a copy is communicated to it (info@vaplaw.eu).