While the concept of force majeure has recently shot to prominence in commercial law due to the coronavirus pandemic and the war in Ukraine, it does not release those concerned from liability in all circumstances.
It is not surprising, however, given the profound impact these crises have had on the economy and the various other problems that are contributing to supply bottlenecks and the failure of supply chains, that many businesses are finding it increasingly difficult to fulfil their contractual obligations. This is often justified with reference to force majeure, but, as noted by Michael Rainer – managing partner at the commercial law firm MTR Rechtsanwälte – not every supply shortage can be attributed to force majeure.
Indeed, the term is generally only applicable to unforeseeable and unavoidable events that are beyond the control of the relevant contractual partner and which could not have been prevented even with access to reasonable and appropriate resources. This in no way amounts to a free pass for the parties not to fulfill their contractual obligations. Case in point: a ruling of Berlin’s court of appeals – the Kammergericht (KG) Berlin – from May 24, 2022 (case ref.: 21 U 156/21).
The defendant in this case was a property developer that had committed themselves in a notarized contract to handing over an apartment which the buyer ought to have been able to move into by June 30, 2018. Unfortunately, it would be about another two years – on July 6, 2020 – before the property was handed over to the buyer, who was forced to move into rental accommodation due to the delay and consequently demanded compensation for the costs incurred.
The developer refused to take full responsibility for the delayed handover of the apartment, citing as a justification that foreign construction workers were not able to enter Germany between March and July of 2020 due to the COVID-19 pandemic, and that during this time there were supply shortages and building materials could not be delivered.
Rejecting this line of reasoning, the KG Berlin ruled that the developer was required to set out specifically which serious and unforeseeable circumstance had impacted the building project such that it led to the delay. They were required to explain in what manner and over what duration the workflow was disrupted. In addition, it was necessary for them to take into account circumstances that had a positive impact on the construction time, such as services being brought forward. A blanket appeal to force majeure was not going to cut it. Because of the failure to fulfill these requirements, the developer was ordered by the Court to pay compensation.
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