As a continuation of our previous LegalNews related to the COVID-19 issued by this firm, we inform you that the Catalan Government has announced a modification of the Catalan Civil Code with the intention of including a legislative regulation of the rebus sic stantibus clause.
According to what has already been stated in previous LegalNews, such a clause is a general principle of law (not a rule) that can come into play when there is: 1) an extraordinary alteration of circumstances between the time of signature of the contract and the time of performance of the contract; 2) there is an exorbitant disproportion between the performances of the parties; 3) the cause is radically unforeseeable; 4) there are no other means to save the damage.
The purpose of this clause is to make the compliance of contracts more flexible in the event of a later, radical and unforeseeable change from the circumstances existing at the time the contract was signed.
However, since the rebus sic stantibus clause is not currently provided for by law, the party to which the clause is invoked is not obliged to accept it. However, the party invoking may go to court, and there is a growing case law that considers the application of the clause appropriate and consequently opts for flexibility in the performance of the contract.
At present, in the context of the COVID-19 crisis, the rebus sic stantibus clause is particularly relevant, as it has been invoked in several legal areas, especially in the field of lease contracts.
Many tenants, both in residential and business premises, have had and have difficulty paying the rent. Some of them have suffered a sharp drop in income and are asking their landlords/landladies for special conditions for paying the rent. Such disputes are not always resolved by amical agreements.
Therefore, in view of this situation, the Catalan Government has considered it necessary to establish by law the duty to be able to renegotiate contracts in exceptional situations, such as the current crisis caused by the pandemic that we are suffering at a global level.
However, we emphasise that this is a proposal by the Government that has not yet materialised, but will have to be approved, if necessary, by Parliament at a date yet to be determined.
We will keep you informed of any new legislation related to the effects of COVID-19.
If you have any questions regarding the effects of COVID-19, please do not hesitate to contact this firm by e-mail at info@busquets-abogados.com.