Italian breach of contract and Coronavirus
The outbreak of coronavirus caused disruption across the world. In connection with this, local and worldwide governments have imposed a series of containment measures including self-quarantine, lockdown of certain cities, extension of public holidays, and international travel restrictions.
The global concern toward an intangible threat also influences practice area of law such as employment law, contract law, dispute resolution, contract law et cetera.
In the context of Italian contract law, virus outbreak may lead to the increased risk of breach of contract or contract negligence. In particular, commercial contracts obligations might be voided due to the virus outbreak: which has suspensive effect over contracts terms and conditions.
According to the art. 1218 Civil Code, contract negligence entails non-performance of contract obligation due to lack of care and cooperation required. Therefore, even though an external element prevents the contractual performance, the counterparty is required to overcome the obstacle. In order to avoid contractual negligence legal consequences, the counterparty shall demonstrate that the cause of the infringement is not imputable to him/her.
The article. 1256 Civil Code, the contract is settled in the event the obligation – for reasons beyond counterparty’s control – is impossible to perform. Between all the reasons that make an obligation impossible to perform, administrative authorities orders may prevent the performance of a contract beyond counterparty’s control.
One last contract negligence provision is given by the article 1467 Civil Code. A contract might be settled due to excessive burden of the contractual performance. The excessive burden need two conditions: a clear unbalance between contractual performances and the connection with extraordinary or unexpected events.
However, any contractual negligence case shall be assessed on case by case basis due to the plurality of factors it is possible to encounter.