THE IMPACT OF COVID-19 ON THE PERFORMANCE OF INTERNATIONAL COMMERCIAL CONTRACTS FOR THE SALE OF GOODS – FORCE MAJEURE AND HARDSHIP

Abstract

The outbreak of COVID-19 has had massive negative impact across all industries and fields in the entire world. While the negative health impact is slowly stabilizing, the economic impact is in full effect and the harm is yet to be evaluated. On macroeconomic level, the necessary measures for combating the pandemic which were undertaken by governments have significantly restricted international trade. On microeconomic level, merchants and businesses are faced with inability or extreme obstacles in their daily operations and particularly in performing their international sales contracts. Failure to perform results in contractual breach and unwanted claims for damages. The paper addresses the impact which COVID-19 has on the performance of international commercial contracts for the sale of goods. The paper considers the impediments which may arise due to the pandemic outbreak and evaluates them from a legal perspective under the UN Convention on Contracts for the International Sale of Goods from 1980 (CISG), which is the main legal instrument governing international sales contracts. Particularly, the paper focuses on the question of exemption from liability in a situation where either of the contractual parties fails to perform and breaches an obligation. The evaluation is conducted through interpretation of the concepts of force majeure and hardship, as grounds for non-performance or contract renegotiation in light of the current situation.