PRINCIPLE OF THE “REBUS SIC STANTIBUS” IN VIEW OF CORONAVIRUS

In our opinion, the declaration of an epidemic emergency in connection with the coronavirus COVID-19 allows to invoke the principle of an extraordinary change of relations (rebus sic stantibus).

The extraordinary change of relations cannot be of an individual nature, but it should concern a change in social relations, and in particular a change in economic conditions of a general nature and independent of the parties.

According to the Article 357(1) of the Polish Civil Code, the court may (i) redefine the manner in which the obligation is to be performed, (ii) indicate otherwise the amount of the benefit or (iii) – as a last resort – terminate the contract.

Irrespective of the possibility to use the rebus sic stantibus clause, the contracting parties may settle the dispute out of court by renegotiating the contract provisions on the basis of the principle of contractual freedom as defined in the Article 353(1) of the Polish Civil Code.

In the current situation, the time horizon beyond the next weeks or months of the epidemic must be taken into account. Renegotiation of contractual terms, agreed suspension or limitation of contractual obligations resulting from bona fide contractual relations between the parties may bring greater benefits in further business cooperation than temporary benefits achieved by imposing one’s position on the contractor.

2020-03-23 10:30

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