Labour Law

The COVID-19 crisis and superior force: it is urgent to review your rights and obligations

Mar 16th, 2020

By Laurent Debrun

In Quebec, superior force is defined at article 1470 of the Civil Code of Quebec (“CCQ”):

  1. A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it.

Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.

According to the second paragraph of article 1470, CCQ, an incident or a crisis must simultaneously be unforeseeable and irresistible to be considered a case of superior force.

If at the time of making a contract the parties were unable to foresee a particular event, that event will probably be considered unforeseeable. However, the test is: would a reasonable person have been able to foresee the event.

The irresistible nature of an event refers to the issue of the skill of a person to take reasonable measures to avoid an event occurring. The notion of “irresistible” means that the event in question makes it absolutely impossible for the debtor to execute its obligations. Where the debtor can still execute its obligations, but it is more onerous or difficult to do so, the condition of irresistibility is not met.

Article 1693 CCQ deals with the consequences of superior force in connection with the execution of contracts.

  1. Where an obligation can no longer be performed by the debtor, by reason of superior force and before he is in default, the debtor is released from the obligation; he is also released from it, even though he was in default, where the creditor could not, in any case, have benefited from the performance of the obligation by reason of that superior force, unless, in either case, the debtor has expressly assumed the risk of superior force. The burden of proof of superior force is on the debtor.

Article 1693 CCQ provides that the debtor of a contractual obligation can be relieved of its obligations as a result of superior force and can also be relieved of its obligations where the creditor could not in any case have benefited from the performance of the obligation as a result of the superior force. The burden of proof that the COVID-19 crisis is a “superior force” falls on the debtor.

For example are the government pronouncements that we are experiencing a manifestation of superior force? Can they excuse contractual non-performance?

  • You may wish to review your contracts or insurance policy to determine if they do or do not contain:
  • a superior force clause dealing with a reduction in obligations or suspension of obligations and if so, if the contract contains any requirement regarding notice or delays. If so, it would be essential to give the appropriate notice without delay and to conserve proof of giving notice if needed for future legal purposes;
  • other contractual terms dealing with suspension or cancelation which may be triggered by the COVID-19 event?
  • representations or warranties which may be compromised by the COVID-19 event?
  • Clauses which require one contractual party to provide information to the other which are triggered by the COVID-19 event.

Did the COVID-19 event:

  • Interfere with, delay or unfavourably impact contractual performance?
  • Increase the costs connected with performance of the contract?
  • Cause a potential contract violation and if yes, what are the consequences of such a violation?
  • Render the execution of a contract radically different from what was foreseeable when the contract was made?
  • Render execution of one or more contractual obligations impossible?

Parties to a contract affected by the COVID-19 outbreak should also verify to see if they have an insurance policy covering potential losses arising out of their inability to perform their contractual obligations due to superior force. If so, it may be important to respect contractual delays to give notice and any conditions of form or substance in connection with giving such appropriate notice.

Businesses are touched by the COVID-19 outbreak in many ways and to varying degrees. It is therefore very important to analyze the actual or potential repercussions that this pandemic may have on your activities, your contractual relations, your labour relations and the rights of your employees. In order to assess if a contracting party may be excused from performing its contractual obligations as a result of the COVID-19 crisis, each case has to be analyzed having due regard to the facts relevant to that particular case, In light of the fact that the risk is very real and that governments have adopted and will enact more coercive measures, the time has come to review your rights and contractual obligations, your financing arrangements and your insurance policies. Also, bear in mind that your obligation to inform your co-contracting party is increased as a result of the current crisis.

We are here to help.