Slovakia: Delayed supplies and unused office space. Is the pandemic fatal for contractual relationships?


The second coronavirus wave is spreading across the globe and its negative economic implications are felt – once again – in the business environment. Although we all hoped that the end of 2020 would bring some relief in terms of the pandemic situation, the opposite is true.

Customer and supplier relationships, financial arrangements and the real estate sector are again affected by the pandemic. Employers are now frequently using home-office arrangements and try to decrease the area of leased or owned premises. Some businesses experience decrease in their revenues, by which supplier relationships are also affected. Constraints in the cross-border movement of goods and people affect business as well.  

What should we do now?

If you have not already done so, then now is the time to review your contractual arrangements. Assess your possibilities together with your trusted attorney at law. Contact your contractual partner and potentially start negotiations.

The effects of the first wave of the Covid-19 pandemic were already significant. These will be even worsened by the second wave. For some businesses it might be cumbersome or almost impossible to perform their contractual obligations, whether financial or other ones. 

Other businesses might use the second wave in order to implement cost-cutting measures (e.g. decrease of lease costs). Therefore, it is of utmost importance to understand your entitlements under the contracts.

Can we use the second wave and the introduced public measures as an excuse for not performing?

Before assessing the possibility to use a force majeure event as an excuse for the non-performance of contractual obligations, it is necessary to review the existing contract in detail in order to establish if it includes a so-called force majeure event clause. If so, the consequences for invoking such clause should be checked. 

Usually, when negotiating contracts, not much attention is paid to this clause, but in these difficult times, these are becoming increasingly important. 

Even if the contract does not include a force majeure event clause, the Slovak Commercial Code regulates the exemption of liability in case of unforeseeable, unavoidable and insurmountable obstacles that occurred independently of the will of the respective contractual party, i.e. an event of force majeure. If the party can prove that its non-performance was caused by a force majeure event, it will not be obliged to compensate damages of the other party. 

Can our contractual obligations be cancelled as a result of the Covid-19 pandemic?

The occurrence of a force majeure event does not mean that the defaulting party’s obligation to perform is cancelled. The above mentioned exemption from the defaulting party’s liability lasts for the duration of the force majeure event. After this event no longer lasts, the defaulting party needs to perform. 

However, if the force majeure event has more of a permanent nature (which currently is not the case, as the measures imposed in Slovakia are time-limited), the defaulting party’s non-performance could be considered as a so-called impossibility to perform and, in such case, the obligation of the defaulting party to perform is cancelled. It is not impossible to perform if the performance is possible under harder conditions, with increased costs or after the agreed time.  

The considerations above are based on the applicable law and do not take into account the contractual agreements between the parties. These need to be reviewed on a case-by-case basis in order to assess the rights and obligations of the parties.


Corona Task Force