Business leaders and owners are asking lawyers whether companies could invoke force majeure, an overriding obstacle that would relieve them of contractual obligations if the interest rate shock significantly interferes with their business.
”As a former industrial lawyer, I have put together an information pack on invoking force majeure. I'm used to the idea that a lawyer's briefing has to be quick enough for management to read on the elevator ride. Here you go!”
Invoking force majeure
Force majeure in contracts refers to exceptional, force majeure circumstances beyond the control of the parties, which prevent the performance of contractual obligations and are beyond the control of the party. These situations have traditionally included war, natural disasters, disruption of public transport and epidemics.
The existence of force majeure is always assessed on a case-by-case basis. The existence of a coronavirus does not in itself automatically imply the existence of force majeure. The party invoking it must always be able to demonstrate the concrete way in which the virus prevented the contractual performance.
”A contract may list the situations in which force majeure applies, but there is also a general principle that the force majeure conditions apply even if there is no express provision in the contract. On the other hand, even if there is a force majeure clause in the contract, the interest rate may not be invoked.”
In this situation, it is necessary to be able to assess whether the interest flow would create obstacles that would prevent the company from fulfilling its obligations or whether the company would have the means to fulfil its obligations under the contract despite the interest.
”A force majeure-type obstacle can occur if the supply of raw materials is blocked, staff falls ill or it becomes significantly more difficult to deliver own products to a contract partner.”
” Please note the form of the claim, to whom the claim is addressed and the deadline within which the claim must be made!”
The force majeure obstacle must be notified to the other contracting party as soon as possible and the party must also invoke the force majeure obstacle in the notification.
”If force majeure is invoked, the parties must have an understanding of how the interest rate virus will affect the contractual obligations of the contract in question.”
Article written by a lawyer Tuula Rainto, Amos Law Office, tel. 045 111 5577. You can always call him free of charge. You can consult our price list Here
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[avatar user=”amoslaki” size=”352″ align=”left” link=”https://amoslaki.fi/ajanvarauskalenteri/” target=”_blank” ]Attorney Tuula Rainto, Amos Attorneys at Law. You can always call her free of charge, tel.010 299 5090[/avatar]