France COVID-19 - Hardship, Force Majeure and Anticipatory Breach Provoked by the Health Emergency

The covid-19 pandemic has generated an unprecedented crisis, throwing companies into uncertainty as to the fate of their contractual commitments. In response to the legitimate questions raised by such situation, many articles have presented the force majeure and revision for unforeseen circumstances as the main remedies. However, while these two mechanisms could rightly be mentioned, an alternative should not be overlooked: the plea of non-performance.

The hypotheses qualifying the current pandemic as force majeure have been inspired by recent statements on the subject: WHO¹ has stated that covid-19 is "the major global health crisis of our time", or French Minister of the Economy, Bruno Le Maire, who promptly referred to a "case of force majeure". While it is tempting to analyse the situation created by the coronavirus as an event characterising force majeure, the conditions of Article 1218 of the French Civil Code are in practice extremely difficult to meet. It is for the judges in their sovereign appreciation², to settle the debate. It should be recalled that although the WHO had declared a state of emergency for the Ebola virus, French case law had considered that the causal link between the epidemic and the non-performance had not been established³. Thus, although on 12 March 2020, the Court of Appeal of Colmar⁴ ruled that the current circumstances had the characteristics of force majeure, this is only a first decision of a court of law, which does not in any way prejudge what other courts might judge.

Assuming the criteria are met, force majeure is not necessarily appropriate for the purpose pursued. According to article 1218 of the French Civil Code, if force majeure is temporary, performance of the obligation is suspended, but if it is definitive, the contract is terminated by operation of law. In the event of disagreement as to the duration of the impediment, the parties must refer the matter to the courts to determine whether the contract is merely suspended or terminated. However, bringing the matter before a judge is a long and costly process. The difficulties created by restitutions following termination are such that it may sometimes be preferable to exclude this remedy, in particular for contracts with successive performances or a group of contracts.

Revision of the contract for unforeseen circumstances⁵ may also be considered, but it must be kept in mind that its conditions are restrictive.  Only cases where the change of circumstances, unforeseeable at the time of the conclusion of the contract, makes its performance excessively onerous for one of the parties are concerned. If the unforeseeability is proven, the first step is renegotiation between the parties. However, this is not suspensive and the obligations will have to continue to be performed. Only if the renegotiation is refused or fails can the co-contracting parties bring an action before the courts to adapt the contract or, failing agreement, terminate it. This solution has the same disadvantages as those underlined for force majeure. Legal proceedings imply uncertainty and slowness that are not compatible with business life.

Another remedy is too rarely upheld to deal with the consequences of the covid-19 crisis: plea of non-performance. A party to a contract can cease to perform his or her obligation, even though it is due, if the other party does not perform its obligation and if this non-performance is sufficiently serious⁶. The origin of the debtor's non-performance is not taken into account, whether it results from force majeure, an act of God or the creditor's fault. Thus, in a supply contract, if the production site is closed, it will be possible to suspend payments until it is reopened. In the case of covid-19, plea of non-performance has the advantage of cutting short all questions concerning the qualification of force majeure. It may, however, only be raised as a means of putting pressure on the debtor in a proportionate manner⁷. The seriousness must therefore be assessed in relative terms, having regard to the importance of the suspended obligation. In practice, it is the essential reciprocal obligations that may give rise to a suspension of enforcement.

Article 1220 of the French Civil Code has introduced a specific mechanism for the exception of non-performance by anticipation. A party may suspend performance of its obligation where it is clear that his contractual partner will not perform by the due date and the consequences of such non-performance are sufficiently serious. Due to the renewal of quarantine and recent government measures, it is clear that some companies will not be able to perform their obligations on time. The implementation of the early suspension of enforcement remains very straightforward. There is no need to bring the matter before a court beforehand, nor is it necessary to send a formal notice. It is only necessary that the suspension is notified as soon as possible.

Plea of non-performance has the advantage that it only suspends the performance of the person who claims it temporarily. The contract is not terminated; it remains valid. Also, strategically, the plea of non-performance has a twofold interest. On the one hand, it can be used unilaterally without resorting to a judge. On the other hand, it makes it possible to suspend the obligations without ending the business relationship. Obviously, the creditor will have an interest in claiming the plea of non-performance only as long as the debtor's performance of its obligations remains in his interest. The plea of non-performance is not, however, free from risk. The court may intervene to verify whether the non-performance is sufficiently serious. If one of the parties wrongly suspends the performance of its obligations, it would be likely to be sanctioned itself.

The best solution is undoubtedly renegotiation between the parties. Failing that, several options are available to them. The choice of procedure will have to be guided not only by the contractual circumstances but also by the objective pursued in the longer term. While force majeure and revision for unforeseen circumstances remain appropriate solutions in certain cases, plea of non-performance should not be neglected. The flexibility of its conditions of application and the immediacy of its effects make it undeniably appealing.

1. World Health Organization

2. Civ. 1re, 9 juill. 2015, n°14-13.423

3. CA., Paris , 17 mars 2016, n°15/04263

4. CA., Colmar, 6e chambre, 12 Mars 2020, n° 20/01098

5. Article 1195 of the French Civil Code

6. Article 1219 of the French Civil Code

7. Report to the President relating to Order n°2016-131 of February 10, 2016, modifying the French Civil Code provisions on contract law and the general regime and proof of obligations