Service contracts during the COVID-19 pandemic
2020-03-31 22:11

Covid-19, Coronavirus, Lawyer

Service contracts are commonly concluded in everyday life. We may include in this type of contracts, contracts for the organization of sports, educational or childcare activities.

Such agreements are usually concluded for a specified period (for example, one year in the case of admission to sports or ‘term’ in relation to educational activities) and should generally not be terminated before the end of the period for which they were concluded.

However, the current situation is extraordinary, which is often the reason why service providers are unable to perform contracts (even for reasons articulated in the regulations limiting the effects of an epidemic).

In such a situation, the provisions on the consequential impossibility of performance may apply, i.e. article 475 of the Civil Code. According to it, “if a performance becomes impossible due to circumstances for which the debtor is not liable, the obligation expires.”.

What about the situation, when the payment was made in advance for the entire contract period?

In many cases it will be possible to apply article 495 § 1 of the Civil Code, according to which “the party which was to make the performance cannot demand the reciprocal performance, and, if it had already received it, it is obliged to return it according to the provisions on unjust enrichment.”.

To simplify a bit – in many cases, the provider not only cannot demand payment from the consumer, but is obliged to refund the sum, which was already paid in advance. However, it should be consulted that each case should be assessed individually.