epidemic situation sealing and control affect the performance of enterprises? Can it be exempted from liability due to “force majeure”
At the moment when the epidemic situation continues to be sealed and controlled, how can small, medium-sized and micro enterprises in Shanghai face problems such as the inability to perform contracts? Yicai reporter consulted a number of lawyers for detailed analysis and answers.
Shanghai enterprises are unable to perform due to the epidemic
“At present, the execution of the company’s contract is not smooth, including blocked product delivery, delayed payment and so on.” On the “anti epidemic and enterprise assistance platform” launched by China first finance on the 16th, the relevant person in charge of the technology-based enterprise “Shanghai okosay General Aviation Co., Ltd.” located near the port wrote.
In the subsequent follow-up interview with Yicai reporter, the person in charge told reporters that the company independently developed and manufactured aircraft, and the R & D expenses accounted for more than 70% of the revenue. Among them, the “Fengling” amphibious light sports aircraft has won a number of awards in the field of aviation outside China, which can realize search and rescue, positioning and other functions.
“We have accumulated about 70 orders for ‘Fengling’ in the early stage, and some of them have paid the deposit. We plan to deliver 10 in a small scale this year, and now there is great uncertainty.” The person in charge said that under such circumstances, the company has been insisting and hopes to resume production as soon as possible.
The person in charge of a manufacturing enterprise located in Jinshan also left a message on the platform that “the mechanical and electrical equipment in the company’s warehouse is an order that needs to be supplied to overseas construction projects. Due to the obstruction of logistics and transportation channels, it has been delayed in delivery, and now faces the risk of default.”
The reporter called the person in charge and learned that at present, the enterprise factory has been closed for nearly two months, and all employees are in a sealed and controlled home state. Many orders have been overstocked in the early stage, so they can only work in a hurry. “In addition, the epidemic also slows down the payment collection and the capital turnover is ineffective. We hope to resume work and production as soon as possible, and we can also reduce various losses.”
The above-mentioned “anti epidemic enterprise assistance platform” is a help platform opened by first finance for small, medium-sized and micro enterprises in Shanghai in the epidemic situation. It is intended to solve their urgent problems. You can click the “anti epidemic enterprise assistance platform” of first finance and fill in the situation. The reporter will try his best to interview experts from relevant departments or joint service institutions, answer questions and solve doubts, or transmit the situation to relevant departments.
In the help information received, many enterprise leaders raised this thorny question: what if the enterprise cannot deliver goods normally and perform the contract on time due to the sealing and control of the epidemic? What they urgently want to know is: affected by the epidemic, what obligations do the parties to the sales contract have when they fail to perform on time? Can it be exempted from liability due to “force majeure”?
obligations of the parties to the contract
This situation has been covered in the third series of questions and answers on the application of law in cases involving covid-19 pneumonia (hereinafter referred to as the third series of questions and answers) issued by the Shanghai High Court on April 5, “If a party to a contract is unable to perform the contract due to the impact of the epidemic, it shall abide by the principle of good faith and perform the obligations of notification and assistance according to the nature, purpose and trading habits of the contract. The party who has difficulty in performing the contract due to the impact of the epidemic shall notify the other party in time and provide proof within a reasonable period of time; the other party shall also take necessary measures in time to prevent the expansion of losses.”
To this end, Zhang Junqiang, a lawyer of Shanghai The Pacific Securities Co.Ltd(601099) law firm and a joint service organization of “anti epidemic and enterprise assistance platform”, said that at the specific operation level, it is recommended that the enterprise timely notify the other party of the relevant situation through e-mail, telephone, SMS, wechat and other forms, and retain such notices and contents.
Qiu maobo, a lawyer of Shanghai Haihua Yongtai law firm and a joint service organization of “anti epidemic and enterprise assistance platform”, said that both parties have the obligation to take positive measures as soon as possible to avoid the expansion of losses, “If the loss is expanded due to the failure to take measures, it may bear the corresponding liability for the expanded part of the loss. The guiding opinions of the Supreme Court on Several Issues concerning the proper trial of civil cases involving covid-19 pneumonia (I) stipulates that the parties shall bear the corresponding liability according to law if they have causes for the failure to perform the contract or the expansion of the loss”.
As for the application of “force majeure”, the third part of the series of questions and answers mentioned that “in case of delay in performance during the epidemic, the party claiming exemption based on Force Majeure shall distinguish the specific circumstances, consider the specific impact of the epidemic or epidemic prevention and control measures on the performance of obligations, and make different treatment. The party claiming exemption based on Force Majeure shall bear the corresponding burden of proof.”
For the performance of non monetary debts, for example, the seller of the goods sales contract is unable to normally perform the delivery obligations due to the epidemic or epidemic prevention and control measures, isolation measures, government expropriation, etc., it can generally claim exemption or partial exemption from liability on the grounds of force majeure.
can be exempted from liability due to “force majeure”
Then, how should the parties to the above sales contract operate?
Qian Qian, a lawyer at Shanghai Haihua Yongtai law firm, said that the handling of the sales contract involves two ways: liquidated damages and delivery date. First, the parties to the contract can claim partial or total exemption, which can avoid liquidated damages. Second, the parties may also claim to change the time limit for performance. After the time limit is changed, there will be no problem of delayed delivery.
Qian Qian further said that, for example, when claiming partial or total exemption, the party concerned should bear the burden of proof for the fact that part or all of the civil obligations cannot be performed directly due to force majeure, and the party concerned should notify the other party in time to reduce the possible losses to the party. In addition, the party concerned should provide proof within a reasonable period of time. The other party shall also take appropriate measures to prevent the expansion of losses.
“For another example, when changing the time limit for performance, the parties can claim to change the time limit for performance, the method of performance and the amount of price of the contract on the basis of ‘obviously unfair continuous performance of the contract’. The court will decide whether to support it in combination with the actual situation of the case. After the contract is changed, the parties may not claim partial or total exemption from liability.” Qian Qian said that if the purpose of the contract cannot be achieved due to the epidemic or epidemic prevention and control measures, the contract can be terminated.
As for the “claim exemption based on force majeure” mentioned in the third series of questions and answers, Qian Qian said that the enterprise can issue a certificate of force majeure, and whether it can apply to force majeure needs specific analysis.
According to the articles of association of the China Council for the promotion of international trade approved by the State Council, the China Council for the promotion of international trade may issue a certificate of force majeure. Affected by covid-19 epidemic, if it is unable to perform the international trade contract on time or cannot perform the international trade contract, the enterprise can apply to CCPIT for handling the factual proof related to force majeure, and claim partial or total exemption from liability on the basis of force majeure.
Qian Qian reminded that if it is determined according to the contract agreement or the applicable rules of law that the applicable foreign law or foreign-related commercial contract has clear and strict scope provisions on the “force majeure” clause, it needs to be judged separately according to the applicable foreign legal rules.
For the slow capital turnover and customer loss caused by the delay of contract performance, Zhang Junqiang suggested that on the one hand, enterprises can increase the frequency of urging the opposite party of the contract to pay as soon as possible and urge the other party to pay as soon as possible; On the other hand, it is also necessary to timely consult the location of the enterprise about the preferential policies such as tax, social security reduction, return and capital support given to the enterprise due to the covid-19 epidemic.
As for the labor cost of employees, both lawyers said that if the company is unable to pay all the wages affected by the epidemic, it is suggested to negotiate with the employees to deal with the payment of wages and bonuses, and seek a proper plan for the enterprise to tide over the difficulties with the employees.
