Force majeure and new contracts - what to bear in mind when concluding contracts during the COVID-19-pandemic

The COVID-19 pandemic is having and will continue to have serious consequences for companies and their contractual relationships with suppliers and customers. This applies not only to existing contracts , but also and especially to new contracts to be concluded now and in the future. This inevitably raises the question of whether the risks for your company are adequately reflected in the contract or whether inpidual adjustments need to be made.

The following points will therefore be particularly important in the future when it comes to drafting contracts:

Increased use of force majeure clauses

Force majeure clauses were certainly not among the absolute "must haves" in (international) contracts in the past. In contracts that were deliberately designed to be brief, there was often no place for provisions considered superfluous. The current crisis has spotlighted that lean contracts must nevertheless always achieve the desired results. Unlike just a few months ago, recent developments may ensure force majeure clauses will be a permanent feature of contracts in the future.

For new contracts to be concluded: inclusion of a tailor-made "corona clause"

Admittedly, including a force majeure clause when drafting contracts does not in itself achieve much in the current situation. This is mainly due to the definition of the term "force majeure" ("höherer Gewalt") in German case law but also in most foreign legal jurisdictions and also in the UN Convention on Contracts for the International Sale of Goods (CISG). In this respect, in addition to the requirement that this is an

• external event caused from outside the company that
• cannot be prevented or rendered harmless by economically acceptable means, even by the utmost care that can reasonably be expected in the circumstances

it is also required that the event

• is unforeseeable and unusual.

For (future) contracts, which will necessarily be concluded in full knowledge of the current – and possibly dynamically evolving – circumstances, it will not be possible (any longer) to rely on the fact that the contracting parties could not foresee the occurrence of the force majeure event. For this reason, there is no way to avoid complementing the force majeure clause that has been regularly used in contractual practice to date by adding a "corona clause" tailored to the inpidual case and – if possible – inpidually negotiated with the other contracting party.

The primary objective of such a tailor-made corona clause is to ensure that the current known or foreseeable adverse effects of the outbreak of the COVID-19 pandemic, the measures taken by the authorities and the consequences thereof do not give rise to any liability on the part of the affected contracting party.

Keeping an eye on legal hurdles relating to general terms and conditions when drafting contracts

When drafting such "corona clauses", however, the limits of contract design must be borne in mind. Barriers are established here primarily by mandatory requirements under the German law governing general terms and conditions and the associated control of contractual content (test of reasonableness of contents). It must therefore be carefully examined in each inpidual case whether the provision does unilaterally transfer a risk of one contracting party solely to the other contracting party in a manner that is impermissible under the law governing general terms and conditions.

It must then be considered whether the provision should actually be incorporated into the actual contract or whether it should rather be reserved for a supplementary agreement – i.e. as a temporary transitional arrangement – and signed separately. From the point of view of the person drafting the contract, it is important to avoid the appearance of general terms and conditions – which in practice, of course, usually presupposes that the clause is actually negotiated inpidually with the other contracting party and that its content is therefore open to debate. Ultimately, this also shows that in the current situation it is more important than ever to develop consensual solutions together with the other contracting party when drafting contracts.