Given the extreme measures taken by the country's authorities in an attempt to stop the spread of COVID-19, extending an absolute curfew to the entire national territory until next Sunday, March 29, there is no doubt that these measures will impact - as indeed they are already doing it and as it is happening in the rest of the world - in basically all the aspects of our lives and our professional activities.
As expected, trade will suffer various effects, for which the government has announced that it will take a series of measures to help the country's producing sectors to alleviate the effects of the situation caused by the state of emergency.
However, the foregoing, in situations such as this in which business relationships may be affected, an important aspect that companies must face is the responsibility for the obligations acquired in the contracts that they may have. In contractual matters and in international law, known is the adage, apothegm and Latin aphorism "pacta sunt servanda", that is, agreements must be kept.
For such purposes, article 1348 of the Honduran Civil Code establishes that "[t]he obligations arising from contracts have the force of law between the contracting parties, and must be fulfilled pursuant to the same." For this reason, in the current situation with regard to COVID-19, it is important to determine whether the parties negotiated a force majeure clause in the contracts.
Force majeure - or fortuitous event - can be described as an unforeseen event that cannot be resisted. This means that it is due to an event that the parties have not been able to foresee, so it must meet some requirements, namely:
- 1. That the fact comes from a cause entirely alien to the will of the debtor;
- 2. Make it an unforeseen event; and,
- 3. That it is an insurmountable fact.
In general terms, it can be said that the events that could occur due to the measures taken to confront COVID-19 fall into this category. The need to determine the existence of a force majeure clause is that if these elements exist, the debtor could be exempted from his contractual responsibilities - of course, it will depend on the specific case. Also, it should be noted that this applies to contracts that are contained in the Commercial Code, under article 715 of that legal body.
As for the contractual relations between a national and a foreign party, it applies in the same way as described above. However, in the absence of the mentioned clause, the possible application of the United Nations Convention on Contracts for the International Sale of Goods -of which Honduras is a party- is highly relevant; and that, on the other hand, it is also in force in Costa Rica, El Salvador-, since the measures taken by the international community to confront COVID-19 are global in scope.
Pursuant to Article 1, numeral 1) of said Convention, it shall apply to contracts for the sale of goods between parties whose places of business are in different States: a) when the States are Contracting States; or, b) when the rules of private international law lead to the application of the Law of a Contracting State.
The Convention recognizes force majeure as a protection mechanism against events or situations that are beyond the control of the parties. Article 79, numeral 1), establishes that: “[A] party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it, or its consequences. "
In summary, the foregoing shows that an examination of the contracts of companies whose activities and obligations have been affected is of utmost importance. On the other hand, it is also necessary for companies to have the necessary advice for the drafting, negotiation, interpretation and application of their contracts, especially in an emergency situation such as the one we are currently experiencing.