Law and regulation of force majeure in the Czech Republic

1. Is there legislation on force majeure in your law system?

Yes, Section 2913 of the Czech Civil Code. 

2. If so, what is the text of the force majeure clause in your civil code?

Force majeure is regulated in the chapter of the Civil Code on liability for damage. The wording of Section 2913 is:

Breach of a contractual obligation

  1. If a party breaches a contractual obligation, it must provide compensation for the resulting damage to the other party or the person who was evidently intended to benefit from the fulfilment of the obligation.  
  2. A tortfeasor is released from the duty to provide compensation if it proves that it was temporarily or permanently prevented from fulfilling its contractual obligation due to an extraordinary, unforeseeable and insurmountable obstacle created independently of its will. However, an obstacle arising from the tortfeasor’s circumstances or arising when the tortfeasor was in default of performing its contractual obligation, or an obstacle which the tortfeasor was contractually required to overcome, will not release it from the obligation to provide compensation.

3. Is this mandatory or are parties free to regulate force majeure clauses?

Parties are free to regulate force majeure clauses.

4. If it is regulatory, to what extent are parties free to regulate such clauses (e.g. do parties have to take principles of reasonableness and fairness into account) and if so, in what way?

There are no specific principles applicable to the modification of force majeure clauses. General principles of good faith, reasonableness and fairness apply as in any other legal relationship. 

5. If a contract just says you can terminate for “force majeure” is there any guidance/case law as to what this means (in the absence of it being defined in the relevant contract)?

Force Majeure clauses do not typically entitle parties to terminate a contract without stipulating specific reasons. Such general stipulation would be rather unclear and give rise to significant potential for dispute. The affected party would need to prove the circumstances described in the aforementioned Section 2913 of the Civil Code.

6. Is there a difference in all of this in B2B transactions versus B2C transactions?

There is no difference by default. However, consumers would likely receive more preferential treatment and protection based on consumer law and relevant case law.

7. Is there a difference in judgement when the force majeure clause is laid down in a contract or in T&C’s?

A stipulation in a contract always creates a stronger position and avoids possible risks such as a dispute over forms, proving that the other party accepted the T&Cs, etc.

However, if general T&Cs are duly accepted by both parties, there should be no difference, at least not in B2B transactions. In B2C, it would depend on further circumstances, such as whether the party relying on the force majeure clause is a customer (consumer) or a business professional or whether the general T&Cs were duly introduced and explained to the consumer, etc. For example, if a force majeure clause in general T&Cs provided by a professional was drafted in the professional’s favour, it could be seen as unfair or even surprising to the customer and thus inapplicable. 

8. Do you have examples of force majeure clauses which you think (would) work well in practice?

A force majeure clause should always be tailored to the relevant transaction. 

Force Majeure Event. If and to the extent that either party’s performance of any of its obligations under this agreement is delayed by revolution or other civil disorders, wars, acts of terrorists or enemies, fires, floods, acts of God, pandemic [NOTE: THIS MAY BE FURTHER DEFINED OR DETAILED], federal, state or municipal action, statute, ordinance or regulation, or any other cause beyond the control of such party (each, a “Force Majeure Event”), and such non-performance could not have been prevented by reasonable precautions, then the non-performing party will be excused from any further performance of those obligations for as long as such Force Majeure Event continues, and the non-performing party continues to use commercially reasonable efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of temporary alternate sources, temporary work around plans, or other means. The non-performing party must immediately notify the other party by telephone or other expeditious means of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event, the steps they expect to take to mitigate the impact of such Force Majeure Event on their performance and the expected duration of the delay. Notwithstanding anything else in the foregoing, the following events will not cause a Force Majeure Event: server failures; software glitches; disputes with copyright holders or patent holders; and any strike or labour dispute involving Supplier or Suppliers’ Personnel [NOTE: OF COURSE, A PANDEMIC MAY ALSO BE SPECIFICALLY EXCLUDED]. On receipt of a notice from the Supplier regarding the existence of a Force Majeure Event, the Purchaser may require the Supplier to demonstrate the existence of the Force Majeure Event in order for the event to be considered a Force Majeure Event and excuse the Supplier’s obligations pursuant to this Section.

9. Do you (already) have an example of a force majeure clause which is “corona future proof” or “virus proof” and you willing to share that with us?

Please see above.

10. Are there any alternative remedies that a party could consider based on being unable to perform a contract due to the corona virus?

Apart from the force majeure regulation, Czech law also recognises situations when performance becomes impossible. In such a situation, a contract may be frustrated. However, the practical applicability of this section is questionable. A contract does not become frustrated if the liable party is able to fulfil its obligation later, within an additional period provided by the creditor, despite having to make extra efforts or incur additional costs, etc.

Portrait ofTomáš Matĕjovský
Tomáš Matĕjovský
Partner
Prague
Portrait ofPetr Beneš
Petr Beneš
Senior Associate
Prague