COVID -19 French health emergency orders and adaptation of contracts

27/03/20
COVID -19 French health emergency orders and adaptation of contracts

War legislation?

Among the ordinances adopted by the Council of Ministers on 25 March and published in the OJ of 26 March, taken on the basis of the authorisation granted by Act No. 2020-290 of 23 March 2020 on health emergencies to deal with the covid-19 epidemic (JORF No. 72, 24 March 2020, text No. 2), five of them should be of interest to us in that they bring about a modification of the current contracts. These orders are as follows:
  • Order No. 2020-306 of 25 March 2020 on the extension of time limits during the period of health emergency and the adaptation of procedures during the same period (preceded by its report to the President of the Republic, hereinafter "order extending the time limits");
  • Order No. 2020-315 of 25 March 2020 on the financial conditions for terminating certain tourist travel and holiday contracts in the event of exceptional and unavoidable circumstances or force majeure (preceded by its report to the President of the Republic, hereinafter the " cancellation of package travel order");
  • Order no. 2020-316 of 25 March 2020 relating to the payment of rent, water, gas and electricity bills for the business premises of companies whose activity is affected by the spread of the covid-19 epidemic (preceded by its report to the President of the Republic, hereinafter the "rent, water, gas and electricity order");
  • Order no. 2020-317 of 25 March 2020 creating a solidarity fund for companies particularly affected by the economic, financial and social consequences of the spread of the covid-19 epidemic and the measures taken to limit this spread (preceded by its report to the President of the Republic, hereinafter the "solidarity fund order");
  • Order No. 2020-319 of 25 March 2020 on various measures for adapting the rules for the award, procedure or execution of contracts subject to the public procurement code and public contracts that do not fall under it during the health crisis caused by the covid-19 epidemic (preceded by its report to the President of the Republic, hereinafter the "public contracts" order).
  Suspension, extension of penalty payments, penalty clauses, termination and forfeiture clauses. Article 1, I of Order No. 2020-306 "Extension of time limits" (see above) imposes an extension of "time limits and measures which have expired or which expire between 12 March 2020 and the expiry of a period of one month from the date of cessation of the state of health emergency". When the state of public health emergency, the duration and term of which are set by decree, has ceased, a number of deadlines and measures will resume after the expiry of a period of one month from the end of the state of public health emergency. Thus, article 4 of this ordinance provides, first of all, that "penalty payments, penalty clauses, resolution clauses as well as clauses providing for default, when their purpose is to punish the non-performance of an obligation within a specified period" did not take effect or did not take effect when this period expired between 12 March 2020 and one month after the end of the state of public health emergency. Paragraph 2 specifies that these periodic penalty payments and time limits take effect one month after the expiry of the time limit mentioned in Article 1 of this order, i.e. two months after the end of the state of public health emergency. Finally, paragraph 3 of article 4 of the ordinance "extension of time limits" specifies that "the course of the periodic penalty payments and the application of the penal clauses which took effect before 12 March 2020 are suspended" as from 12 March 2020 for the duration of the state of health emergency increased by one month after its cessation.   Termination and tacit renewal. Article 5 of the "extension of time limits" order (see above) provides: "when an agreement can only be terminated during a specified period or is renewed in the absence of denunciation within a specified period, this period or time limit shall be extended, if it expires during the period defined in I of Article 1, by two months after the end of this period". When the period for terminating or refusing the tacit renewal expires between 12 March 2020 and the duration of the state of health emergency + one month, the party to the contract wishing to exercise its right to terminate or denounce the tacit renewal shall have two months to do so. Thus, the period of termination or denunciation of a tacit renewal which would fall between 12 March 2020 and the end of the state of health emergency plus one month is extended by two months at the end of this period.   Contracts subject to the public procurement code and public contracts. In addition to the temporary amendments to the rules governing the awarding of public orders or the extension of current contracts, article 6 of the "public contracts" ordinance (see above) regulates contracts subject to the public order code and public contracts in force during the period of a state of health emergency. Indeed, Article 6, 1°, introduces a kind of adaptation for unforeseen circumstances. The holder of the contract who is unable to perform or for whom performance would be too onerous may request a period of at least two months to perform. Article 6, 2° prohibits the sanctioning of the debtor of the obligation arising from the public contract when he is unable to perform during this period; on the other hand, the public purchaser may exercise an option of substitution whatever the terms of the contract. Article 6, 3rd provides for compensation for the holder of the public contract if the purchaser is obliged to cancel an order because of a state of health emergency. In the event of suspension of an ongoing lump-sum contract, the purchaser must pay the amount provided for in the contract. Finally, the 5° and 6° of Article 6 of the Ordinance on Public Contracts allow adaptation of the contract of concession, always in a spirit of adaptation for unforeseen circumstances.   Solidarity fund for the companies most affected and suspension of the payment of their rents, supplies, electricity, gas and water. Order No. 2020-317 of 25 March 2020 (see above) establishes a solidarity fund for the natural or legal person companies most affected by the COVID -19 epidemic, which will be able to receive financial aid. The conditions of eligibility for this aid and the terms and conditions for its payment will be determined by decree. Companies eligible for this fund will be able to benefit from the provisions of Order No. 2020-316 of 25 March 2020 (see above), Article 2 of which stipulates that gas and electricity, water suppliers will not be able to terminate supply contracts for non-payment of bills during the state of health emergency that began on 20 March. Unpaid instalments will be postponed and rescheduled at the end of this period (Article 3). Finally, article 4 paralyses the resolution penal, forfeiture or implementation clauses of guarantee or security in the event of non-payment of their professional rent by one of these companies during the period of the state of health emergency increased by two months.   Resolution of package travel contracts: amendments to the Tourism Code. The ordinance relating to the "cancellation of package travel contract" (see above) derogates from the existing rules on the cancellation by customers of their package travel contracts (transport + accommodation and/or other tourist services, art. L. 211-2, C. Tourism). The rules on the cancellation of these contracts in Article L. 211-14 of the Tourism Code are amended for cancellations notified between 1 March and 15 September 2020. The tour operator may either proceed with the refund as provided for by the applicable law or, thanks to the derogation introduced by this order, issue a credit note for the amount of the sums paid at the time of cancellation. The tour operator must then, within three months of the request for cancellation, offer a service equivalent to that cancelled and for the same price. This offer should be valid for eighteen months.   Exceptional legislation. This set of ordinances (we have only set out here those directly concerning contracts) recalls the exceptional measures that were adopted during the two World Wars and the economic crisis of 1929. These exceptional legislations had put an end to the myth of the intangibility of the contract. However, it will be observed that today the health character of this war is new and that the legislator is concerned with contracts for tourism, which was not, in the past, an industry.   [interne id="43647"]
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