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#Tax & Legal #Business Legal #Corona #Event #Force Majeure

Cancellations as a result of Coronavirus: what is the current situation?

Monday 16/03/2020
Annulaties door Corona

The Coronavirus is all over the news.In addition to its impact on us personally, COVID-19 also has economic consequences, perhaps also for your business.

After all, many companies depend on suppliers in affected areas.Because necessary supplies are stopped, they in turn have to disappoint their customers.Event organisers are also debating whether the virus is a valid reason for cancellation.

We would like to answer two specific questions:

1. Can you invoke force majeure with respect to your own customers if your supplier no longer delivers as a result of the Coronavirus?

Your contract is unambiguous

To begin with, check your contract conditions (contract, general terms and conditions, etc.) in detail.They often stipulate that you cannot be held liable for matters for which you are dependent upon a third party.A stipulation of this kind will prevent you from having to pay compensation to your customer for late, or even no, delivery or service provision.

Your contract does not provide for this

If there is no relevant stipulation in your contract, the question arises as to whether the default of your suppliers means that you can invoke force majeure with respect to your customers.

Under Belgian law compensation is payable in the event of non compliance with, or a delay in the implementation of obligations.Unless this is the result of extraneous events/causes that are not attributable to the debtor and there is no question of bad faith.If the debtor is prevented by force majeure, no damages shall be due.

What is force majeure?

Force majeure is an insurmountable obstacle to the fulfilment of an obligation,i.e. an external circumstance outside the debtor’s control which makes it impossible for him to comply with his obligations.

Two conditions must be met:

  1. It must be (temporarily) impossible to deliver on your commitment.
  2. This impossibility should not be attributable to you.This second condition is often understood to mean that the impossibility must be unforeseeable and unavoidable.

Interpretation of force majeure

The interpretation of this 'impossibility' is a subject for discussion.According to some it must be 'absolute', whilst others assume that it must be 'reasonably' impossible to comply with commitments.We believe that the latter is preferable.

If you can demonstrate that it was not reasonably possible to comply with your commitment, you can invoke force majeure.This may be the case, for example, if it was impossible to find a new supplier at short notice and subject to normal conditions.

What are the consequences of force majeure?

Does force majeure completely release you from your obligations to deliver the goods or provide the proposed services?That depends.

  • In the event of definitive force majeure, you are permanently released from your obligations.
  • If the force majeure is only temporary, your obligations will be suspended as long as the force majeure applies, providing the nature of your obligations and the agreement with your customer allow it.As soon as it becomes possible to meet your obligations again, you must fulfil them without delay.

2. Can an event be cancelled at any time because of the Coronavirus?

 

Situation before 12 March

Until 12 March there was no legal obligation in Belgium to cancel events.Does that mean that the Coronavirus is a valid argument to cancel an event as an organizer or as a customer?

Again, always check what your contract stipulates first.If a situation of this nature is anticipated, then you must apply the contract.In such cases compensation may still be due in the event of cancellation.If your contract does not include any relevant stipulations, you must check whether the double condition for force majeure has been met (see above).

Bearing in mind the advice provided by the government and by experts who have advised not to allow (larger) events to take place, there are arguments in favour of the fact that it could no longer be reasonably expected that a planned event would still take place.

Situation after 12 March

Since the Federal Government’s communication on 12 March, it has become clear that from 13 March a situation of force majeure does apply with regard to the organisation of events.Once again, the contract will determine the actual consequences in each individual case.

This exceptional situation undoubtedly raises many questions,but it goes without saying that you can count on our experts to advise and assist you.

 

CONTACT ONE OF OUR EXPERTS
Bert Lutin
Bert Lutin
Partner Tax & Legal Services