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COVID-19 | Contract law soon to be adapted?

A new bill governing contractual obligations is close to be voted

08/04/2020

The National Council (Monaco Parliament) is considering voting a bill to govern contract performance during the COVID-19 crisis.

The following derogatory provisions shall become applicable to all types of contracts:

  • a suspension of the execution of certain contractual clauses applicable in the event of non-performance by the contracting party (penalty clauses, termination clauses, forfeiture clauses);
  • a suspension of the time limit affecting the fulfilment of a suspensive condition;
  • a curative mechanism aimed, in essence, at postponing and/or adjusting the performance of the contract for contracts of sale or provision of services that cannot be performed in the state of the restrictive travel measures taken by the Government.

These exceptional derogatory provisions would apply retroactively to 18 March 2020 for a period of three months from that date, which may, as the case may be, be extended.

This draft bill has been transmitted to the Monegasque Government, which should soon table a bill that is still to be debated by the National Council.

That said, the retroactive scope attached to this bill now calls for the utmost vigilance when executing a contract.

In our view, it also requires to identify all the penalty, resolutory or forfeiture clauses that have been brought forward since 18 March 2020 in response to a contractual default, in order to analyse their validity and effects in the current state of the provisions of this bill.

Authors

Olivier Marquet
Olivier Marquet
Avocat Associé | Managing Partner
Monaco
The picture of Michael Dearden
Michaël Dearden
Middle Associate
Monaco