Acts of God or Force Majeure. Acts of god and force majeure require that the nature acts or human acts be insurmountable, irresistible or unavoidable.
The general rule is that the parties will not be required to the fulfilment of their contractual obligations, unless (i) they have contributed to the act of god or force majeure event; (ii) they have accepted such liability; or (iii) the law imposes such liability on them.
In the event of an act of god or force majeure, there are legal mechanisms to ensure that the obligations are extinguished without liability to the parties, both in civil and commercial matters. It is vital to identify whether the obligations are civil or commercial and if they arise from the application of an international contract or treaty. Likewise, each state civil law of the states of Mexico (including that of Mexico City) establish procedures and formalities that must be complied with or exhausted.
The analysis of the specific case must be made according to the context, the nature of the contract and the parties involved, in order to being able to distinguish the acts that may reduce or minimize the contractual liability, seeking to avoid the interruption in the usual business traffic.
Theory of unforeseen events. This theory, also known as rebus sic stantibus, provides for the possibility of modifying civil contract obligations to restore the balance between the parties in the event of extraordinary events that cause the obligations of one of the parties to become significantly more onerous. This theory can only be invoked in a restrictive manner in certain agreements and must take into account both the factual and legal situations that authorize it.
In recent days, the Federal Public Administration has issued a series of agreements and resolutions that will have a significant impact on various industries and productive sectors of Mexico, of which we will be informing you in due course. On the other hand, different local executive powers have done the same. We believe that official action to mitigate this health contingency should be harmonized and ordered from the federal level, based on the Constitution and general laws in force.
Please note that there are many problems that our clients currently face. Safeguarding the commercial activity is a priority, as well as adequately weighing the various legal risks that financial stress has caused with the advent of this health contingency.
At Hogan Lovells we are available to review your strategic contracts, as well as to contribute to the evaluation of risks and responsibilities due to the present and future contingencies you may face.
The information contained in this document is for information purposes only and does not constitute legal advice.
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