Force Majeure and loss of the basis for business in Poland

When does the obligation to perform the contract cease to apply?

There are no legal provisions that allow the automatic cancellation of the performance of the contract (VE) in the event of circumstances that one party could not foresee. “Force majeure” is not precisely defined in Polish law; the case law only provides for conditions under which a best situation qualifies as force majeure. Contractual provisions are of central importance in difficulties with VE. Contracts often provide that a party's liability for non-performance or improper VE due to force majeure is waived or limited. In addition, these often also grant the right to withdraw from the contract if the VE is essential for one party within a certain period but proves impossible due to downtime caused by the existence of force majeure. Consequently, contractual provisions determine the consequences for the debtor and the possible "fate" of the contract in the event of force majeure. There are also provisions of the Polish ZGB according to which, under certain conditions, the contract can be dissolved by a court decision.

When may a withdrawal or an adjustment of the contractual relationship be considered?

It is possible to obtain in court not only the dissolution of the concluded contract, but also the modification of its terms, such as the manner of performance of obligations or the extent of the scope of performance. The following requirements must be met:

  • an exceptional change in circumstances, understood as a rarely occurring, unusual, usually uncommon event, such as an epidemic or war;
  • undue difficulty in performance or threat of gross loss to either party;
  • a causal link between the change in circumstances and the difficulty in meeting the obligation or the impending loss;
  • the inability to foresee, at the time of concluding the contract, the effects of the change in circumstances on performance of the obligation.

How can future contractual relationships be optimally structured?

In order to enable all parties to safeguard their interests in the event of extraordinary circumstances and to optimise their relations with their contractual partners, it is necessary to regulate risk sharing, liability and the effects of the above-mentioned special events as precisely as possible in the contract, both for the parties involved and for the contract itself. Under existing contracts, if both parties are surprised by special circumstances that they could not have foreseen, they should first enter into negotiations to amend the contract to take into account the interests of both parties in the situation that has arisen.

Autor: Kinga Słomka