1. Is there legislation on force majeure in your law system?
Under Italian law, there is no statutory definition of “force majeure”, however, Section 1256 of the Italian Civil Code provides a general rule relating to the parties’ obligations.
In the context of obligations, a general rule is provided by section 1256 of Civil Code: “The obligation is extinguished when performance becomes impossible for a reason not attributable to the debtor.
If the impossibility is temporary, the debtor is not responsible for the delay in performance as long as the impossibility lasts. However, the debtor is relieved from its obligation if the impossibility persists until, in relation to the title of the obligation or the nature of its subject, the debtor can no longer be considered to be obliged to perform or the creditor no longer has an interest in performing”.
With specific reference to COVID-19 emergency, an implicit reference to force majeure has now been introduced by the Law Decree 18/2020 which provides as follows: “the respect of the measures for containment of COVID-19 is always evaluated for the purpose of the exclusion, pursuant to Articles 1218 and 1223 c.c., of the debtor's liability, even with regard to any waivers or penalties related to delayed or omitted performance”.
2. If so, what is the text of the force majeure clause in your civil code?
3. Is this mandatory or are parties free to regulate force majeure clauses?
According to the principle of freedom of negotiation, 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?
Contracting parties may adapt the content of force majeure clauses to their specific needs. However, general principles of reasonableness and good faith in performing the contract, must always be taken into account.
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)?
According to relevant case law, “force majeure” is defined as an extraordinary and unpredictable event, which prevents the debtor from performing its obligations and cannot be remediated through action.
6. Is there a difference in all of this in B2B transactions versus B2C transactions?
Article 33 of the Italian Consumer Code, protects consumers from clauses which “even if in good faith, lead to a significant imbalance in the rights and obligations arising from the contract for the consumer”.
As a consequence, if a force majeure clause:
- is provided only in favour of the business, or
- is provided in favour of both a business and a consumer, but leads to a significant imbalance which is detrimental to the consumer as above, such clause is considered null and void, regardless of the fact that it might have been negotiated. However, the contract as a whole is not affected by the nullity of the force majeure clause.
7. Is there a difference in judgement when the force majeure clause is laid down in a contract or in T&C’s?
A force majeure clause laid down in general terms and conditions, must be expressly accepted in writing for it to be valid and binding. This is not necessary when the clause is laid down in a contract negotiated between the parties.
8. Do you have examples of force majeure clauses which you think (would) work well in practice?
Neither party shall be liable for any delay or inability to perform any obligation under this Agreement to the extent that delay or inability to perform such obligation is due to an Act of God, fire, flood, earthquake, explosion, war, riots, military conflicts, strikes or locks-outs, epidemic, orders or restrictions issued by the government or local authorities, and any other unforeseeable event outside a party’s control.
If the performance of this Agreement has become impossible for one or both parties due to force majeure, this Agreement shall be terminated by law and the party released from the performance of its obligation shall return what it has received as a down payment under this Agreement.
In no event shall either party be responsible for any liability under any provision of this Agreement, for any incidental or consequential damages, losses of profits, or other losses of any kind incurred by the other party or any third party in connection with such party’s performance.
If the order cannot be fulfilled due to force majeure (including but not limited to an Act of God, fire, flood, earthquake, explosion, war, riots, military conflicts, strikes or locks-outs, epidemic outbreaks, orders or restrictions issued by the government or local authorities), delivery terms shall be deemed to be postponed and a new delivery term shall be agreed upon by the parties taking into account the specific situation.
The application of the above provision is conditional upon the Supplier having promptly notified the Purchaser of the force majeure event and having taken all the reasonable steps to limit the effects thereof.
If, due to force majeure, the Supplier is delayed or unable to substantially perform its obligations under this Agreement for a period exceeding [*] days, the Purchaser may terminate this Agreement upon written notice to the Supplier and without any liability or obligation on the part of either party.
If force majeure causes such a delay in the delivery of the products so as to prevent the Purchaser from complying with its production needs (such as production interruption), the Purchaser shall be free to purchase products from third parties without limitation whatsoever.
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?
10. Are there any alternative remedies that a party could consider based on being unable to perform a contract due to the corona virus?
If the performance of the contract has become more burdensome than expected due to the COVID-19 pandemic (or even impossible), Section 1467 of the Italian Civil Code could be invoked. This provides the right to renegotiate or terminate the contract for hardship.
11. Is there anything else we should know or you would like to share on this topic?
If a force majeure event occurs, parties are relieved from their obligations automatically, without the need to make a statement or declaration to this effect. Nevertheless, we would still advise the parties to issue a notification relating to the event and declare the termination of the contract as soon as possible.