Legal Updates

A force majeure contention requires showing of actions in advance and after materialization of circumstances to prevent and reduce the damage

August 31, 2023

Apartment buyers demanded compensation from the contractor due to a delay in handing over the apartment to them, where the delay was due to a delay in receiving the city's permit to start work, and even though the contract between the buyers and the contractor stipulated an exemption from paying compensation in the event that the delay was caused by circumstances beyond the contractor's control.

The Court accepted the buyers’ claims and ordered the contractor to compensate them for the delay in handing over of the apartment. Contending for exemption from liability due to force majeure imposes on the contender an obligation to prevent the occurrence of these circumstances both in advance and following the materialization of such circumstances. Therefore, the party contending it would to be exempted from liability due to force majeure or circumstances beyond its control only subject to a double test: it shall must demonstrate that these are exceptional circumstances, otherwise it should have anticipated and prepared for in advance, and it should stipulate the actions it took in retrospect in order to minimize the damage. Here, it is a delay in receiving regulatory approval, which is not an unusual or unexpected matter. Furthermore, this is a delay caused due to non-payment of municipal fees by the contractor. Thus, not only did the contractor not prepare in advance, for example by setting a later delivery date, (thereby failing the first test), or that it did not work tirelessly to obtain the approval when he learned of the delay in receiving it (thereby failing the second test), but that failure to pay the municipal fees on time is what caused the delay in the first place.