Could the Coronavirus pandemic be deemed as force majeure grounds to dismiss compliance of a contractual obligations in Mexico?

In different ways we are all facing the Coronavirus pandemic in Mexico as well as in the rest of the world (https://news.un. org/en/story/2020/03/1471472), and personal and business challenges are diverse. For the time being and from the legal standpoint, I would like to share with you a reflection on cases that, due to breach of contract, will surely come about in Quintana Roo in Cozumel, Playa del Carmen (Mayan Riviera), Cancun and Tulum whether it be commercial leases, mortgage loans, bank loans, self-financing, etc. when the debtor declares or considers himself unable to meet his/her obligation to pay given the health contingency now in phase 3 decreed on April 21 as enacted by the government.

In some cases in Quintana Roo, the debtor might be the one wishing the early termination of the contract as a consequence of COVID19; and in some cases the creditor will demand termination, return of the property, fulfillment of obligations and, in some cases, demand harm and damages for non-performance.

COVID pandemic may be considered force majeure grounds by which contractual liability could be dismissed in Cozumel, Playa del Carmen (Riviera Maya), Cancun and Tulum.

The obligations theory prevents exceptions to the binding nature of contracts such as unforeseeable events, force majeure and the theory of risks. In this case we will refer only to the first two.

The Civil Code in force for Quintana Roo does not include a provision defining what should be understood as unforeseeable event or force majeure; hence, we will address the doctrine.

In his book Teoría General de las Obligaciones (General Theory of Obligations), Javier Martínez Alarcón implies that both concepts are identified in terms of their effects, but their origin is different, as the unforeseeable event is an unpredictable force of nature, whereas force majeure applies to cases that, although predictable by man, they are unavoidable.

The author quotes Ernesto Gutiérrez y González who defines unforeseeable event and force majeure in the following terms:

“… a future event whose accomplishment is beyond the scope of the will, for it cannot be foreseen or even if foreseen, cannot be prevented.

Its effects prevent a person from observing the conduct that should have been observed in accordance with the law, or a lato sensu obligation, consequently causing damage.

This other concept can also be considered valid: A general, absolute and definitive event, unforeseeable or unavoidable, caused by nature or by men and which produces in a person a harmful conduct, contrary to a legal duty or an obligation…”

In my opinion, the global health emergency situation and the phase 3 dictated in the country and in the State of Quintana Roo by COVID19, may be deemed a force majeure circumstance for certain types of contracts, therefore, if need be, each particular case must be individually analyzed.

The unforeseeable event or force majeure, in general, take away debtor’s responsibility to meet the due obligation, except when parties agree that despite the occurrence of the unforeseen event, the debtor will assume the responsibility fulfillment or pay damages. This means that there could be contractual exceptions, and even if the force majeure grounds can be demonstrated due to CORNAVIRUS COVID-19 as it is a matter of public domain and public health in general, there may be cases where the contract provides that commitments remain.

As a result of the Coronavirus pandemic in phase 3 there will be many individuals who are unable to meet their contractual obligations because they have been forced to close their businesses, have lost their selling capability, and yet are responsible for their labor and contractual obligations. Some use the “#stayathome” hashtag as advertising means.

It is therefore advisable to have the contract reviewed by a lawyer who will help you determine the cases in which the contract can be terminated on an earlier date without penalty, or if an obligation adjustment or reduction (e.g. reduction in rent) can be agreed upon or negotiated for a certain period of time, or defense can be made against the claim and payment of harm and damages.

We offer legal services in Cozumel, Playa del Carmen (Riviera Maya), Cancun and Tulum, so you can refer your inquires to info@playalegal.com.

Atty. Gisela Rodriguez González

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