In the last few days, you turned to us for advice on some of the consequences of the COVID-19 pandemic, the state of emergency and the anti-epidemic measures. We hope that you can find some of the answers to your questions below.
How may the anti-epidemic measures affect your business?
- Your shops, restaurants, bars, beauty salons, gyms etc. may be closed.
- Your goods and services could not be delivered to and from other countries.
- Your goods could not be produced due to the lack of some of the supplies delivered from abroad.
- All of the above may cause your inability to fulfill your obligations, e.g. inability to meet deadlines or to pay your rent, the instalments for your credit, the price for the services or goods of your suppliers etc.
What could you do if you could not perform your obligations?
If you have to close your shop, bar, restaurant etc., or you could not produce or deliver your goods and services due to the anti-epidemic measures, this will be caused by circumstances out of your control. In this case, you may temporarily excuse your inability to fulfil your obligations on the grounds of force majeure.
The force majeure is an unpredicted, unavoidable and exceptional event which occurs after an agreement has already been concluded.
The COVID-19 pandemic and the anti-epidemic measures represent an unpredicted, unavoidable and exceptional event. However, the respective circumstances have to meet several other requirements in order to be classified as force majeure.
What are the other requirements to qualify an event as a force majeure?
The following requirements have to be at stake in order to qualify an event as a force majeure:
- The unpredicted, unexpected and exceptional circumstances have occurred after the respective agreement has been concluded.
- These circumstances represent an obstacle for you to perform your obligations and there is no other way to fulfill them.
- You have not been in default before the respective event occurred.
- You have duly notified your creditor for the respective circumstances.
You are not obliged to have a force majeure clause in your agreement in order to argue that your default is caused by force majeure.
What shall you do in the event of force majeure?
If you are unable to perform your obligations due to force majeure, you have to notify your creditor within a reasonable time. Your notice shall include:
- A description of the circumstances representing force majeure;
- How these circumstances would affect the execution of the respective agreement.
If you fail to notify your creditor, you shall be liable for the damages it incurs.
You could also apply for a force majeure certificate before the Bulgarian Chamber of Commerce and Industry (“The BCCI”). According to the instructions of the BCCI`s website it represents a document for relieving of responsibility for failure to perform one’s obligations or delay in the performance of obligations under a transaction caused by some unpredictable circumstance.
What are the possible consequences of a force majeure?
If you have duly notified your creditor that your default is caused by force majeure, the execution of the respective agreement shall be suspended until it is over.
If the force majeure lasts for so long that one of the parties to the agreement in no longer interested in its executions, the respective party shall be entitled to terminate it.
You shall bear in mind that not all of the consequences of COVID-19 pandemic, the state of emergency and the anti-epidemic measures could be classified as force majeure. Some of them may not cause your inability to perform your obligations. Nevertheless, the execution of the respective agreement may contradict equity and good faith. You can read more about your possibilities in the latter case in our article on hardship clauses.