COVID-19: 4 Issues of Contract Law
Analysis
From the effects of the outbreak on corporate governance and employment relationships to its impact on arbitral proceedings and procedural deadlines, numerous articles discussing the legal issues raised by the global spread of the new coronavirus (COVID-19) have been published over the past few weeks.
One of the main issues that has been raised is whether the recent Coronavirus outbreak and the implementation of a series of governmental restrictions that aim to contain it affect the contractual obligations of the parties.
Here are four issues of contract law raised by Covid-19:
1. IS COVID-19 A FORCE MAJEURE EVENT?
Answer: It depends.
Force majeure is an event that prevents the performance of the obligations of the debtor and that presents 4 characteristics*[1]:
It is an event beyond the control of the debtor*[2].
It is an event which could not have been reasonably foreseen at the time of conclusion of the contract*[3].
It is an event whose effects could not be avoided by appropriate measures.
It is an event that renders the performance of the obligations of the debtor impossible and not just more onerous.
Should an event be characterized as Force Majeure in Lebanese law, the debtor ceases to be liable for non-performance of his obligations*[4] and the contract will either be suspended (if performance is temporarily prevented) or terminated (if performance is permanently prevented)*[5].
Covid-19 and the implemented governmental restrictions can be characterized as a Force Majeure in case it is established that: