The COVID-19 Pandemic – an Impediment in Performance of Contracts

Abstract

The COVID-19 pandemic has created unprecedented situation all over the world, compelled the governments to declare lockdown, closing of businesses, industries, commercial activities, ban on certain imports and exports. Under these circumstances, an obligor may not be able to perform his contractual obligations, consequently may result in breach of contract. In case of claim of damages by the obligee for breach of contract, the obligor may seek exemption from damages under the law of impediment or force majeure. According to Article 79 of the UN Convention on Contracts for the International Sale of Goods 1980 (CISG), a party is not liable for damages due to non-performance, delay or defect in performance, if he can prove that the failure was due to an impediment beyond his control. The COVID-19 situations are beyond the control of the parties to the contract, must be considered as an impediment or force majeure and the non-performing party is entitled for exemption from damages under Article 79 of CISG.