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The ABC Of Force Majeure
The COVID-19 or SARS-CoV-2, the Government Acts and the promotion of the #Quedateencasa strongly inserted in the brain of the inhabitants, has generated countless queries about the possibility of breaching obligations during the Pandemic.
Force Majeure (FM) -certainly- can be alleged as defense against breach of a contract. However, for it to be applicable as an exemption from liability (non-payment of damages and losses), the following 3 elements must be demonstrated and concur, each one in its own timeframe:
- A = Existence of an extraordinary and non-fault event (oblivious to the obligated party)
- B = Unpredictable for the parties when the obligation was contracted.
- C = Impossible compliance (irresistible) in the agreed time.
Element A can be the Pandemic or the Government Acts. For this reason, the application of the formula is not universal and must be analyzed in each specific case, along with other vital elements such as: good faith, viable options, mitigation of damage (without being an exhaustive list).
The party that breaches a contract, in whole or in part, must demonstrate that it faced an event beyond reasonable control that caused an impossibility of performance.
In Costa Rica, FM is mainly regulated in article 702 of the Civil Code. The elements described may vary if the parties have drafted their own FM clause in the contract.
* This is a very brief and merely illustrative note. The topic requires an important study in a specific case, but the objective is to leave the reader with a general idea of the meaning of Force Majeure.
Mrs. Hulbert has 25 years of professional practice in commercial dispute resolution. She is the founding partner and director of Hulbert Volio Montero Law Firm; with vast experience on national and international law, with special emphasis on complex cases.
Specialist in Civil and Commercial Liability, International expert in Oral Litigation, and anticorruption, Arbitrator and Mediator. With more than 100 training courses and conferences in different areas of the law, with special emphasis on domestic and international commercial arbitration, international judicial cooperation and international commercial contracts.