In our legal practice we have seen a rise of questions on Force Majeure due to the COVID -19 situation, both from a supplier as from a buyer perspective. Can one simply invoke Force Majeure and discard its contractual obligations?
Supplier perspective – Force majeure
From a supplier perspective, if a company is unable to deliver to its buyer due to constraints in the supply chain related to the COVID-19, a Force Majeure situation is likely to be accepted. However, the supplier is bound to inform the buyer within a reasonable time after the supplier knew or ought to have known of the impediment (art. 79, 4° United Nations Convention on Contracts for the International Sale of Goods), unless expressly agreed otherwise.
Buying perspective – order cancellations
From a buying perspective, order cancellations are rising due to the uncertainties in the market. Whereas suppliers are shielding with a valid Force Majeure situation, buyers are, unless expressly agreed otherwise, bound to their contractual obligations. In other words, if suppliers can deliver on time and fulfill their obligations, buyers are not able to cancel their orders based on COVID-19.
Author: Maxime Ampe