The COVID-19 pandemic and the enactment of legislation to slow the spread of the virus are affecting large parts of the economy, including contractual relationships. This contribution examines the legal situation and possible remedies, according to Swiss and Austrian general contract law while taking account of the developments in European contract law. Both jurisdictions allow for contractual force majeure clauses to allocate risks in connection with unforeseeable or changing circumstances. As there is no statutory definition of force majeure, the individual contracts need to be examined, and COVID-19-specific clauses for newly concluded contracts should be introduced. In the absence of a contractual agreement, the concepts of delay of performance or impossibility might be applicable for adaptation or termination of the contract. If the contractual equilibrium is severely disrupted by the changing circumstances, the doctrine of clausula rebus sic stantibus could apply.

INTRODUCTION

The COVID-19 pandemic led to the enactment of strict and far-reaching measures (COVID-19 Measures) to slow the spread of the virus. Switzerland, as well as Austria, passed laws that comprise, inter alia, limitations on cross-border travel, the closure of educational institutions and non-essential businesses, the prohibition of events and new rules in export controls. These legal acts will expire at a given date unless they are extended or revoked earlier. Contract law is not directly governed within these measures but is affected directly or indirectly nevertheless: the performance of existing contracts may be delayed, impossible or unduly burdensome for one of the parties. This contribution examines the remedies for such situations under Swiss and Austrian general contract law, while also situating these approaches within the broader context of European contract law.

CONTRACTUAL FORCE MAJEURE CLAUSES

Swiss and Austrian general contract law are based on the principles of freedom of contract and pacta sunt servanda. Under these principles, if the parties agree on a later fulfilment of their respective obligations, each party bears a certain risk for future events and the behaviour of the counterparty. To a certain extent, every contract is based on a risk assessment and risk decision.