Contractual Penalty and the Right to Payment for Delays Caused by Force Majeure in Czech Civil Law under the New Civil Code

Abstract

In the context of the conclusion of contracts between entrepreneurs under the Czech Civil Code, it is a relatively common arrangement that the parties disclaim any and all liability for damage arising from non-compliance with contractual obligations, if they can prove that this failure was due to an obstacle independent of their will. This circumstance excluding liability for the damage is called force majeure by the theory. In many countries this circumstance is ruled upon directly by the legislation (höhere Gewalt, vis major). The Czech regulations represented by the new Civil Code of 2012 (CivC), however, contains only a framework provision that mentions discharging reasons. The paper deals with the -rather disputable -issue that the force majeure does not affect the obligation to pay a contractual penalty under the new rules of the CivC. It should be therefore reflected in the arrangements for contractual penalties inter partes. To this effect the paper analyses the concepts of contractual penalties and force majeure in civil law legislation. Afterwards it compares their mutual relationship and impact on the obligations of the Contracting Parties. Finally, it draws recommendations for practice from the perspective of the contracting process.

A Systematic Method to Analyze Force Majeure in Construction Claims

“…Thus, ignoring the real reason for its occurrence raised interesting and complex issues when preparing or analyzing the force majeure claim [14][15][16][17][18]. In this regard, very little improvements have been reported in construction claims for force majeure delay analysis [40][41][42], which have not helped with reducing force majeure disputes in the construction industry.…”

“…In both scenarios, FMDs have occurred on the schedule and caused a delay to the project performance due to different reasons, as follows. improvements have been reported in construction claims for force majeure delay analysis [40][41][42], which have not helped with reducing force majeure disputes in the construction industry. Although there is no place for recovering any damages when the force majeure delay meets the above criteria, the occurrence time for the force majeure event during the contractual periods is however an important criterion that should not be neglected when determining the entitlements that ought to be granted to the affected parties.…”