Cancelling contracts and obligations – is COVID-19 a “Force Majeure” situation?
March 20, 2020 By: Hazem Mehrez and Lanise Hayes Read Time: 4 minutes
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With the COVID-19 pandemic and preventive measures being implemented by Canadian authorities, many are are worried about how contracts and obligations will be impacted.

For the March break, I had booked day camps for my kids. With the current situation, and before the Ontario government declared a state of emergency, I called to cancel their registration and ask for a refund. The question that came to mind is : Is this a force majeure situation? Would the possible remedies be the same in Gatineau and Ottawa?

In this summary we will discuss how the Quebec courts have dealt with the question of force majeure or superior force, the English term used in the Civil Code of Quebec, and how that may apply to the current pandemic and public health emergency declared by Quebec.

A similar situation was seen during the H1N1 “Swine flu”. The court dealt with the issue of contractual obligations in Lebrun c. Voyages à rabais (9129-2367 Québec inc.)[1]. In this case the plaintiffs sought reimbursement of the costs of their all-inclusive vacation plus damages on the grounds that the defendants had failed to advise them about the presence of the swine flu in Mexico. The defendant argued that it was a question of superior force that would exempt them from their obligation to ensure a safe vacation destination.

The court decided that the defendants’ brochure explaining superior force did not apply. In fact, the Consumer Protection Act prevents travel agents from deciding unilaterally what constitutes superior force. In addition, the court found that the agency used what is known as an adhesion contract which does not allow the customer to negotiate the terms and therefore must be interpreted in a manner that favours the customer.

The notion of superior force is not considered public order. As such, parties to a contract are free to agree on what will constitute a superior force. Nonetheless, such contractual clauses remain subject to control by courts when they are stipulated in an adhesion contract or a consumer contract.

What is considered as superior force?

Article 1470 of the Civil Code of Quebec reads as follow:

Is COVID-19 a force majeure situation? If so, would the possible remedies be the same in Gatineau and Ottawa?

“A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it. Superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.”

The constitutive elements of superior force are, therefore, unpredictability and irresistibility.

The debtor must demonstrate not only that he did not actually foresee the event, but also that it was not objectively foreseeable. The court, in evaluating these situations, will generally refer to the notion of a reasonably prudent and diligent person to decide if the event would have been foreseeable for such a person placed in the same circumstances.

More importantly though, the event must prevent the performance of the debtor’s obligation in an absolute and permanent manner.

But what are the consequences in case of superior force?

If the performance of an obligation is made impossible by the superior force, that the person is released from the obligation unless the contract expressly provided that the person will assume the risk of superior force. If released from the performance of an obligation, that person cannot demand that the other party fulfill their side of the deal. And if one of the parties has already performed their obligation, they will be entitled to restitution or performance to a similar degree if the other party has partly fulfilled their obligation.

In the H1N1 case mentioned above, the plaintiffs argued that the flu raging through Mexico was not an unforeseeable event on the day they purchased their vacation packages because cases had already been declared in Mexico. The court determined that while some websites indicated, shortly before the plaintiffs’ departure on April 23, 2009, that the situation was considered serious the Canadian health warnings were not published until after the plaintiffs’ departure and that even though the travel agency had an obligation to inform the plaintiffs, it was only required to rely on information issued by official governmental agencies, which did not warn against travel to Mexico.

Contracts formed prior to the travel advisories issued in relation to Covid-19 and the closure of boarders will satisfy the criteria of a superior force, because no one could imagine that boarders and international flights would be closed on such a large scale around the world. However, in many cases, the airlines and hotels have fulfilled at least part of their obligation and customers may only be entitled to a partial reimbursement or a credit or deferral to the next available flight. Those who chose to travel to areas for which advisories had already been issued will likely be deemed to have accepted the risks and be required to assume the costs they incur while stranded and to return home.

Courts will continue to play a role in assessing the facts and interpreting the superior force clauses stipulated by the parties. Consumer contracts and adhesion contracts will receive added protection under the Consumer Protection Act, but only up to a certain point.

As for my kids’ March Break camp, thankfully I was given a credit for future events!

However, given the uncertainty of COVID-19 legal consequences, for both individuals and businesses, it’s important to take inventory of upcoming activities or obligations you may have, from travel, camps, reservations, service to provide and registrations. Set reminders to cancel activities well in advance and be ready for slower than usual responses as companies deal with large volumes of cancellations.

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[1] Lebrun c. Voyages à rabais (9129-2367 Québec inc.), 2010 QCCQ 1877 (CanLII), http://canlii.ca/t/28rf1

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2020 Nelligan O’Brien Payne LLP.

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