The virus is raging, but deadlines do not pause. What to do?

The Polish Civil Code does not offer a regulation that would allow for an automatic or an easy extension of a contractual deadline for a payment or a specific performance in cases such as the coronavirus epidemic. The Polish Civil Code does not provide the right to modify the contract or a tool to seek […]

The Polish Civil Code does not offer a regulation that would allow for an automatic or an easy extension of a contractual deadline for a payment or a specific performance in cases such as the coronavirus epidemic. The Polish Civil Code does not provide the right to modify the contract or a tool to seek exemption from contractual liability under the “force majeure” (with a minor exception in the area of hotel services). A “force majeure” provision must be independently regulated in a contract.

The actions of the Government of the Republic of Poland to date do not address the issue of performance of contracts in times of epidemiological hazard or an epidemic.

It would be a challenge to claim that the limitation periods are suspended due to force majeure (art. 121 sec. 4) of the Polish Civil Code) because – at least today – it is still possible to file a lawsuit. The rebus sic stantibus clause is also not helpful – it requires the intervention from the court, and even before the outbreak of the epidemic the nearest hearings in our cases were scheduled for the “next year”.

Insurance? I suggest checking the force majeure clause before a businessperson would base their hopes on getting paid out from the insurance.

What can you do to protect yourself against uneasy claim settlements when the epidemic is over?

We propose two solutions: (i) active and (ii) passive. Both are based on the regulation contained in the article 471 of the Polish Civil Code. According to this standard, the debtor is obliged to redress the damage resulting from the non-performance of an obligation, unless the damage is a consequence of circumstances for which the debtor is not responsible. Therefore, if the fact that one cannot fulfil the obligation (pay, deliver products, provide a service) results from circumstances directly tied to the coronavirus or its consequences, e.g. due to restrictions imposed by the Regulation of the Minister of Health of 13 March 2020 declaring a state of the epidemiological hazard in the territory of the Republic of Poland, it is most likely that we will be able to use this standard to avoid liability towards the contracting party.

However, we cannot leave this statutory provision without attention. It requires taking action, i.e. taking care of our own interest today.

The active solution is an attempt to reach an agreement with the counterparty on the rules of performance of a contract during the period of epidemiological hazard and the epidemic itself. I have attached to this post a draft letter with a proposal to renegotiate the terms of the contract, i.e. postpone the deadlines for the performance of obligations in a period of epidemiological hazard. The letter is in two languages: Polish and English and is attached to this post in the form of a MS Word file. I encourage you to adapt it and use it to your needs. The letters will not harm you, but may give one of two results:

  1. An agreement with the contractor on how to deal with this unusual situation.
  2. In the worst case, it will be an argument in a future dispute.

On the other hand, if today’s situation related to the epidemiological hazard do not negatively impact the contract yet, but you anticipate that they may soon have such an impact – it will not hurt to inform the contracting parties about it, confirming the good faith in attempts to resolve the situation and a contact channel aimed at providing information about the impact of this extraordinary situation on the performance of contracts.

The passive solution aims at collecting the evidence. As litigation lawyers, we have no illusions that a significant number of cases, the prisoner’s dilemma caused by an epidemiological hazard will be resolved to the benefit of the lack of cooperation, which is detrimental to both parties. A dispute will then arise which will be settled on the evidence. This evidence should be collected now. After the epidemic is over, there will be more important things to do than evidencing the evidence of non-performance. To facilitate this, we will publish a second file in two days, which will contain a checklist for collecting the evidence. The document will also be prepared in two languages: Polish and English.

In case of questions related to the documents, the dispute resolution team of Maruta Wachta law firm is happy to help.