February 17, 2021 6 min read
There are situations that make it impossible to fulfill a contractual obligation and that due to their nature cannot be attributed to the debtor, since they are out of his will and therefore he could not foresee or avoid them.
In view of this, civil and commercial contracts have a fortuitous event clause, it is a section that “establishes that in a scenario where a fortuitous event or force majeure occurs, the legal relationship that exists derived from it will be interrupted” , says the lawyer Yisroel Cimet, from the Cimet & Almazán law firm, specialized in civil, commercial, financial, real estate, insurance and surety law.
These unforeseen events are classified into two types:
- Events caused by nature
- Those caused by man or authority
According to the isolated thesis of the Federal Judicial Weekly with Registration No. 341341, for this clause to be fulfilled, two conditions must exist: unpredictability and generality. The first is necessary, since “when the event can be foreseen, the debtor must take the corresponding precautions to avoid it and if this is not done, there is no fortuitous event or force majeure”.
While the character of generality “implies that the execution of the act is impossible for any person”; In other words, it is not enough for the execution to be more difficult, more onerous or that it leads to an imbalance in reciprocal benefits, the document refers.
A pandemic like the one we are experiencing today “is reason enough for the supplier of a material that is in China and that has to bring it to Mexico and sell it here, does not meet the delivery deadlines due to this unforeseeable event”, Cimet states.
According to the litigant, the fortuitous event clause is relevant in all contracts, since it “seeks to provide fairness and justice to the parties, according to new situations created in an unpredictable way for man.”
Therefore, according to the Cimet & Almazán law firm, these are 5 facts about this clause and how it operates in accordance with Mexican law:
What is the difference between a fortuitous event and force majeure?
Although both clauses refer to exceptional situations in which an obligation, a contract can be terminated or that justify the breach of one of the parties, the fortuitous event refers to events produced by nature; For its part, force majeure is used to name events produced by man or, where appropriate, by authority.
How did the COVID-19 pandemic affect this clause?
Said clause and its regulations were modified as a result of the previous Mexican epidemic (Influenza AH1N1 in 2010), says the lawyer, as the laws are being modified to adjust to new situations. Therefore, it is not surprising that after COVID-19 these types of regulations are modified and more specific.
Nowadays it is possible to determine in a contract what type of situations are considered fortuitous events or force majeure, including what would be the actions to be taken in such scenarios, such as the termination of the contract or the suspension of some obligations.
Despite the fact that the pandemic was an unpredictable event worldwide and that also had important consequences in the markets with the suspension of some economic activities, to know with certainty in which cases it is valid it will be necessary to review each contract, since the wording the scope and effect of the clause will depend on these documents.
The fortuitous event clause is contained in the Civil Code. Article 1847 specifies that in the event of non-compliance by one of the parties “the penalty may not be enforced when the party obligated to it has not been able to fulfill the contract due to the creditor’s act, fortuitous event or insurmountable force.”
How does it work?
It is always advisable to try to negotiate between the parties; However, if this is not possible, to apply it one of the parties must go before a civil judge to request the adjustment of contractual obligations or, failing that, the termination of the contract. The judge will seek that both parties reach a conciliation, will summon them, giving them a hearing so that they can express their position.
Based on this, the judge will determine if indeed what corresponds is an adjustment to adapt and level the agreed conditions, or in case of not reaching an agreement, the termination of the contract is declared.
It should be noted that this clause is solely and exclusively applicable to clients or relationships that are up to date and in compliance with their obligations; In other words, if any of the parties has a history of non-compliance and later requests the application of this legal figure, this cannot be carried out.
The law determines that the duration of this clause is 30 days from the date of knowledge of the affectation that gave rise to the imbalance of the obligations.
Therefore, it is important that any company, regardless of its line of business or its size, knows this clause, stipulates it in their contracts and, where appropriate, enforces it. It is important that, initially, conciliation is always sought and only in the scenario in which this possibility does not exist, do you go before a judge, since the main thing is “that the relationship and its conditions are as fair and consistent with what was originally agreed ”, says the lawyer.