Covid-19 Pandemic’s Impact on the Execution of Contracts

Dr. Yassir Al iftaihat
Associate Professor of Private Law – Al Ghurair University – Dubai – UAE


A pandemic – especially Covid-19- is considered a main reason to affect the execution of contracts, especially on the principle of pacta sunt servanda, which is considered one of the firm foundations of jurisprudence and law and compatible with the values of justice. Otherwise, what is the value of contracts if their parties are not obligated?
However, the binding force granted by this rule to the contract is not absolute. The legal legislation which gives obligation to a contract or contracts, gives exception to this obligation. This exception is on the condition that it must be limited in a way make the basic legislations remain the original framework. In an attempt to discuss the effects of the Covid-19 pandemic that caused the economic losses of many commercial companies, and the companies’ attempt to consider them excused for the amendment of the employment contracts or even terminate them, we try to shed light on the concept of the pandemic as indicated by Islamic jurisprudence and the theories of force majeure and emergency circumstances as stipulated in the French civil law, along with the position of the French Court of Cassation toward these two theories.
In addition to that, we will discuss the legal, social, health and especially the economical effects of Covid – 19 and the principles to be adopted if the pacta sunt servanda principle is violated. The huge impact of Covid-19 raises the possibility that companies may take an action to amend or to breach terms of the contract. We also try to analyze pandemic’s impact from Islamic jurisprudence view and from French judicial system rules on execution of contracts. The conclusion is that the pandemic’s effects are taken into consideration according to criteria bounded with the economical side of the contract which is violated due to the pandemic and grants the judge the authority to make amendments that lift the burden of the debtor, if required by the latter, unless the termination of the contract is ruled due to force majeure. The most important recommendation is that each contract must be taken into consideration according into its own circumstances and terms.

Keywords: binding force to contract, pandemic, termination, contract dissolution, contingency contracts

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