Greenland is now also affected by the corona virus, quarantines and other restrictions, and consequently activities are closed down. Contractually, this gives rise to questions on who shall bear the risk and be liable for the failing performance of contract?
If a party fails to fulfil its contractual obligations, the remedies for breach under Greenland law will be available to the other party. However, exception may apply in case of ”force majeure” to the effect that the obligations of the party in breach are suspended until the force majeure impediment stops.
What is force majeure under Greenlandic law?
Force majeure may be relied on, if an unforeseeable event (which could not be foreseen at the conclusion of contract) beyond the control of the parties is an impediment to the performance of the contractual obligations.
An assessment shall be made on a case-by-case basis with due regard to the merits of the case and all relevant circumstances. In actual fact, performance shall be rendered impossible. Notwithstanding the serious socio-economic situation, the corona virus may have tricked, corona as such cannot be relied on as ”force majeure” on a general basis – even though the performance will be more burdensome and expensive. Corona shall be the specific hindrance for non-delivery of certain goods or services.
What are the consequenses?
The agreement of the parties may provide for contractual regulation of force majeure – including the consequences thereof.
As a starting point, force majeure has the consequence that the obligation to perform the contract is suspended, until the force majeure impediment disappears.
However, it is often seen that contractual regulation provides for a right of the other party to terminate the agreement, if force majeure hinders the performance of the agreement for a certain period. Moreover, it is highly relevant to assess the choice of law, i.e. whether the agreement shall be governed by the laws of another jurisdiction than Greenlandic (or Danish) law, as the force majeure principles differ from country to country.
If no written agreement has been entered into, if the agreement does not provide for provisions on force majeure – or if a force majeure clause does not include epidemics, pandemics or public measures in this respect, a party may still be in a position to rely on force majeure under (unwritten) general principles of Greenlandic law.
It is the party claiming force majeure, who has the burden of proof and must demonstrate that specific circumstances do constitute force majeure as the basis for exemption of liability. Thus, it also implies a certain risk, if the coronavirus is relied on as force majeure.
What can you do now?
It is important to relate to force majeure on a case-by-case basis, including the consequences it may lead to;
- Make an assessment of each contract, especially with regard to the contract provisions on force majeure and choice of law – and do also check whether you have business partners with whom you do not have a written contract – and the possible consequences of force majeure.
- If the other party relies on force majeure in relation to its non-performance, you should consider to require an explanation to verify the specific impediments which make it impossible for the other party to deliver the specific goods or services.
If you are affected or expects to be affected by force majeure, it is important to consider to inform the other party thereof. Each party has an obligation to mitigate loses by such actions which reasonably may be required.
Finally, it should be considered to enter into a dialogue with the other party for the purpose of making a mutual solution which also minimizes the contractual risks and create foreseeability with regard to the consequences of the corona outbreak in the interest of both parties.
Nuna Law is at your service for advice and guidance on the various Covid-19 related matters.
(+299) 55 17 70