Subsequent impossibility

If fulfilment of the contract has become impossible due to a circumstance for which neither party is responsible ("force majeure") and the occurrence of which could not be prevented despite due care, the contract is automatically terminated. None of the contracting parties must fulfil their obligations.

Example: You are a musician and live in Spain. You sign a contract with the Wiener Konzerthaus (Vienna Concert House) for a performance in Vienna. Your flight is cancelled due to a heavy thunderstorm, and you miss your performance. The contract is automatically cancelled. As you are not responsible for the subsequent impossibility, you are not liable for damages, but you do not receive any compensation.

Force majeure refers to extraordinary events or circumstances that are beyond the control of the contracting parties. For an event or circumstance to be considered force majeure, it must be unforeseeable, unavoidable, and not the fault of either party. Many contracts provide a precise definition of force majeure in order to avoid possible misunderstandings. In the following list, you will find some typical examples of force majeure:

• Natural disasters (e.g. storms, floods, earthquakes)

• War, terrorism, civil war-like conditions

• Strikes, lockouts, and other labour disputes

• Pandemics or epidemics

• Legal prohibitions (e.g. official closures, curfews, or assembly bans)

• Technical disruptions (e.g. blackouts, server failures, or transport failures)

• Traffic disruptions (e.g. train cancellations or flight cancellations due to weather conditions)

Attention: The rules on subsequent impossibility only apply if the event is unforeseeable. It becomes more complicated if the contract has already been concluded with knowledge of jeopardising events (e.g. a spreading pandemic). Assessments of whether or not the impossibility was foreseeable are made on a case-by-case basis.

The legal consequences of subsequent impossibility depend on the contractual agreements and the circumstances of the individual case:

• No contractual provisions on subsequent impossibility: If you and your contractual partner have not agreed on any other provisions and force majeure has led to the subsequent impossibility to fulfil the contract, each contracting party is released from its obligation to perform. The contract is cancelled—it "disintegrates". No one is liable for damages or has to pay a contractual penalty due to their failure to fulfil the contract. Anything already paid must be returned under the law of enrichment. Alternatively, your contractual partner can organise a substitute performance and demand the return of the benefit (so-called "vicarious commodum"), e.g. in the form of an insurance benefit. 

• Contractual precautions: You and your contractual partner can agree in advance how you would like to deal with subsequent impossibility. For example, you can provide for advance payments in case one party is unable to fulfil the contract due to subsequent impossibility. The amount of the advance payment to be made can be staggered depending on when a contracting party announces that they are unable to fulfil the contract (e.g. 10% advance payment for a cancellation eight weeks before the performance date, 25% for a cancellation four weeks before, and 40% advance payment for a cancellation closer to the performance date).

• Subsequent adjustment of the contract: In some cases, it may be possible to adjust the contract to take account of force majeure circumstances (e.g. by extending the performance period, changing the agreed remuneration, or changing the place of delivery).

 

Possible Covid-19 clauses

The Covid-19 pandemic was a force majeure event. Many contracts were therefore cancelled due to subsequent impossibility.

Example: A planned exhibition of your artwork has to be cancelled due to official lockdowns to contain the pandemic.

In order to be contractually prepared in the future in the event of a pandemic, it may be useful to include the following contractual clauses:

• "Should one of the parties be prevented from fulfilling its contractual obligations due to Covid-19 or similar epidemics or pandemics, the party shall immediately inform the other party and shall immediately endeavour to take alternative measures to fulfil the contractual obligations. If this is not possible, the party shall be released from the fulfilment of the contractual obligations for the duration of the impediment."

• "In the event of cancellation of an event due to official measures concerning Covid-19 or similar epidemics or pandemics, the organiser is entitled to postpone or cancel the event. In this case, the participants are obliged to accept a postponement and will make every effort to arrange an alternative date. The organiser shall not be liable for any consequential damages incurred by the participants or third parties as a result of the postponement or cancellation."

• "This agreement is concluded subject to the proviso that Covid-19 or similar epidemics or pandemics may significantly impair or render impossible the contractual provision of services. Should this occur, this agreement will be suspended by both parties for the duration of the impediment and the contractual obligations will be suspended. As soon as the impediment has been removed, both parties will resume fulfilment of their contractual obligations."

Attention: The respective clauses should be discussed with a legal advisor in each individual case. 

If the creditor is responsible for the debtor's inability to perform, the contract remains in force. The creditor must still provide consideration.

If the creditor has deliberately and intentionally caused the subsequent impossibility (wilfully) or has caused it by their careless behaviour (negligently), they may be liable to pay damages to the other contracting party.

Example: You are an actor and have signed a contract with a theatre to take part in a performance. You are contractually obliged to attend rehearsals and the performance. However, the theatre has forgotten to inform you about an important change in the schedule. You arrive at the theatre at the originally agreed time. The theatre informs you that the performance will take place on a different day due to the change in schedule. You have already committed to appearing in another production on that day and are therefore unable to attend the performance. The theatre is still obliged to pay you the fee for the date that you cannot attend. However, you must take what you have saved by not attending the performance into account.