Force Majeure in Contracts
Events beyond the reasonable control of a party, more commonly known as “force majeure”, are events that allow a party to a contract not to be held liable for non-performance or improper performance of obligations. Such possibility is directly provided for in the Civil Code of the Russian Federation, but in reality, it is not so often used and correctly spelled out in the terms of the contract.
Over the past year, the question turned out to be the most relevant, and discussions about the legality and procedure for using the conditions on force majeure still keep going. In this regard, we suggest paying attention to the most important points related to the correct use of such conditions and the procedure for their application.
- The list of events that can be attributed to force majeure is open and can be established by the parties at their own discretion, but in the event of disputes in this regard, the validity of each case is established by the court.
The most common examples included in the agreement are natural disasters (fires, floods, earthquakes), military actions, epidemics, strikes. Please note that such force majeure does not include violation of obligations by the counterparties of the debtor, lack of necessary goods on the market, the other party’s lack of money.
2. The key characteristics of force majeure are:
- extraordinary, that is, the unusualness of the event in specific conditions;
- independence from the will of the parties;
- unavoidability, that is, the parties could not have foreseen and / or prevented it before or during the execution of the contract.
- Force majeure should not be confused with contract waiver. Force majeure may relieve from liability if all conditions are met (forfeits, fines, losses).
For the correct use of force majeure in their own interests, a party must strictly follow the procedure provided for by law.
For contracts between Russian legal entities and sole entrepreneurs:
- immediately inform the counterparty about the occurrence of the relevant circumstances. We recommend that you set out the specific notice period in the contract.
- indicate the causal relationship between the circumstances and the inability to fulfill a specific obligation. If the other party disagrees, the case can be brought to the court which in its turn will decide under the weight of evidence.
- to receive official documents confirming the occurrence of force majeure circumstances. At the same time, this is not a prerequisite for Russian contracts: if not expressly provided for by the contract, however, it can serve as decisive evidence in court.
Meanwhile, in July, a new procedure for the issuance of opinions by the chambers of commerce and industry, testifying to the circumstances of force majeure, came into force. Now such opinions are issued on a territorial basis and for a fee:
- for 13,500 rubles you can get the original opinion plus one certified copy;
- for 2,600 rubles you will get an additional certified copy. At the same cost, mistakes made through the fault of the applicant can be corrected.
For international contracts:
Confirmation of force majeure circumstances is necessarily carried out by obtaining an opinion from the Chamber of Commerce and Industry of Russia.
Make sure to contact TEAM for detailed advice on the procedure for applying and certifying force majeure circumstances!