Tips on Legal Risks for Enterprises during Epidemic Prevention and Control
The epidemic in Shanghai is rapid, large-scale and widespread, and with the upgrading and continuation of the prevention and control measures, the risk of internal or external conflicts and disputes arising from the epidemic is also accumulating. In order to help enterprises identify and prevent legal risks related to the epidemic, Guotai Law Firm will successively send "Legal Risk Tips for Enterprises during the Epidemic Prevention and Control Period" to enterprises for reference in business decision-making and to promote the healthy and orderly development of enterprises. This article focuses on the legal risk tips for commercial contracts during the epidemic prevention and control period.
一、The force majeure clause may be invoked to claim partial or total exemption from liability for disputes arising from the failure to perform a contract as a direct result of administrative measures taken by the Government and relevant authorities to combat an epidemic, or the failure to perform a contract due to the effects of an epidemic.
During the period of epidemic prevention and control, there may be regulatory blockades and quarantine of personnel, and the operation of enterprises may be restricted and the normal performance of various contracts limited. Under such circumstances, the party unable to perform the contract needs to postpone the performance or change or terminate the contract, while the other party has the need to protect its rights and interests and stop losses in time. As a performing party, if it is impossible to perform the contract due to the epidemic, the enterprise can invoke the legal provisions of force majeure to claim the cancellation of the contract, exemption of part of the contractual responsibility or continue to perform the contract after the force majeure has passed; as a contractual party, the enterprise should pay attention to the abuse of force majeure by the other party to the contract and maliciously evade and shirk the contract or debt, and require the other party to provide relevant proof that the contract can not be normally performed due to the reason of the epidemic prevention and control. Normal performance.
Of course, whether the final exemption from liability should need to be strictly confirmed according to the purpose of the contract between the two parties, the contract performance. If the contract can not be performed, and the reason can not be attributed to the parties to the contract, according to the impact of this epidemic, partially or completely exempted from liability; but if this epidemic is in the parties delayed performance after the occurrence, can not be exempted from liability. If it is not due to the epidemic causes the contract can not be performed, the same can not be exempted from liability. At the same time, due to force majeure is a legal exemption, even if the parties did not agree in the contract force majeure clause or agreed to exclude force majeure in the exemption, in accordance with the conditions of the situation, do not affect the direct invocation of the provisions of the law, force majeure claim exemption.
二、If the contract can continue to be performed, but the continuation of the performance will result in obvious unfairness, the principle of change of circumstances can be invoked to negotiate with the other party to change or terminate the contract, or to request the court or arbitration institution to deal with the matter in accordance with the principle of fairness.
As a result of the Xinguang epidemic, there may be situations where a contract can be performed but the result is unfair. In this case, the parties may negotiate to change or rescind the contract, or may resort to the law to request that it be dealt with in accordance with the principle of fairness. After the establishment of the contract, the objective situation has occurred in the parties in the conclusion of the contract could not have foreseen, not force majeure caused by the major changes do not belong to the business risk, continue to perform the contract for a party is obviously unfair or can not achieve the purpose of the contract, the parties request the people's court to change or rescind the contract, the people's court shall be based on the principle of fairness, and the actual situation of the case to determine whether to change or rescind the contract. The People's Court shall, in accordance with the principle of equity and taking into account the actual circumstances of the case, determine whether to change or rescind the contract.
The Supreme Court has also made specific provisions in the Guidelines on New Crown Pneumonia on the circumstances of an epidemic as a cause for a change of circumstances: "Where the continued performance of a contract is manifestly unfair to one of the parties, and the party requests a change in the period of time for the performance of the contract, the manner of performance, the amount of the price, etc., the People's Court shall decide whether or not to support it in the light of the actual circumstances of the case. Where the purpose of the contract cannot be achieved due to an epidemic or epidemic prevention and control measures, the people's court shall support the party's request to rescind the contract." ; "Where a sales contract can continue to be performed, but the epidemic or epidemic prevention and control measures lead to a significant increase in the cost of performance such as labour, raw materials, logistics, etc., or lead to a significant reduction in the price of the products, and it is obviously unfair to one of the parties to continue the performance of the contract, and the party adversely affected requests for an adjustment in the price, the people's court shall take into account the actual circumstances of the case and adjust the price according to the principle of fairness. Where an epidemic or epidemic prevention and control measures result in the seller being unable to deliver the goods in accordance with the agreed period of time or in the buyer being unable to make payment in accordance with the agreed period of time, and the party requests that the period of time for performance be altered, the people's court shall, taking into account the actual circumstances of the case, alter the period of time for performance on the basis of the principle of fairness."
三、As a result of the impact of the epidemic or preventive and control measures directly lead to the lessee commercial tenants can not resume work and business on time, can not use the leased shop, according to the original lease contract, unfair, the lessee can be negotiated with the lessor, to reduce the rent or change the way of payment of rent, to extend the term of the lease, the negotiation does not work, you can request the People's Court to terminate the lease contract.
Enterprises themselves need a fixed place of business, and many of them have taken to renting office space. For buildings that have ceased operations due to the Xin Guan epidemic, because the lessee is unable to continue to use the premises, it can assert the defence of force majeure and apply for a reduction or waiver of rent. For buildings still in operation, there is objectively no legal impediment to the performance of the leasing contract and no defence of force majeure can be raised. We also note that during previous epidemics, many local governments introduced policies to support tenants. For example, Beijing has issued a policy to encourage operators of large commercial buildings, shopping malls, and markets to reduce or waive rents for small, medium, and micro tenants during the epidemic period, and to provide moderate financial subsidies to leasing enterprises that take measures to reduce or waive rents. Taking into account the judicial practice during previous epidemic periods, if a tenant is significantly affected by the new crown epidemic, it may also request the People's Court in litigation to grant discretionary reductions or exemptions based on the principle of fairness. In addition, enterprises will also be heavily involved in leasing contracts in the course of providing products and performing services. For example, the enterprise leased plant, if the new crown epidemic does not lead to plant can not be used, there is no force majeure applicable space, but if the formation of the "contract impasse", the enterprise can be in line with the conditions based on the "National Court Civil and Commercial Trial Work Conference Summary" Article 48, that is, (1) the defaulting party does not exist in bad faith breach of contract; (2) the defaulting party to continue to perform the contract, the defaulting party will not have any adverse effect on the performance of the contract, and the defaulting party will have to pay for the contract. (2) the defaulting party continues to perform the contract, which is manifestly unfair to it; (3) the defending party refuses to terminate the contract, which violates the principle of honesty and good faith, and is subject to litigation to terminate the contract.
四、If construction work cannot be carried out as a direct result of the impact of the epidemic or preventive and control measures, the construction contract or the renovation and construction contract cannot be fulfilled or cannot be fulfilled on schedule, force majeure may be applied, and the work period will be postponed. The loss of costs resulting from the contractor's stoppage of work shall be reasonably shared by the contractor and the contractor through negotiation. If labour costs and material prices rise as a result of the epidemic, which constitutes a greater impact on the performance of the contract and is manifestly unfair, the people's court may be requested to adjust the price of the work.
Force majeure that occurs during the period of delay should be confirmed in advance as the person responsible for the delay. If the delay is caused by the contractor, the force majeure during the period of delay cannot be exempted from liability; if the contractor and the contractor jointly cause the delay, the delay should be reasonably shared according to the proportion of the responsibility for the delay, and the contractor should be exempted from liability if it is the contractor that causes the delay. The Contractor should have full awareness of claiming compensation for this epidemic, do a good job of claim management, strictly follow the claim procedure, make records and reports of work stoppage losses, and at the same time, it should keep evidence of the cost of additional expenditure to cope with this epidemic, such as proof of expenditure, invoices, photos of on-site disinfection, and letters to and from the Contractor. Expansion of losses should be avoided. Any party to the construction contract should actively take remedial measures to eliminate the impact. At the present time of the epidemic, all parties should try to negotiate with the owner on the basis of the principle of negotiation on the date of resumption of work, the conditions of resumption of work, and fix them in writing, and consider the details of the rise in materials, the inability of labour to be in place on time, and the slow progress of the construction due to the epidemic, etc., in place, and negotiate the negotiations.
五、If the policyholder has purchased employer's liability insurance and the employee is unfortunately infected with Croup due to the prevention and control of an epidemic, the insurance company shall pay out the death compensation, disability compensation, lost wages, medical expenses and other financial liabilities incurred by the employer to the employee within the agreed indemnity limit.
Employer's Liability Insurance means that the insured shall be liable for the medical expenses and financial compensation liabilities, including litigation costs, incurred by the insurer up to the limit of indemnity in accordance with the Labour Law of the People's Republic of China and the employment contract, if the insured's employees suffer from accidents or suffer from occupational diseases related to the business of the insured as stipulated by the State in the course of their employment. The insurer will be responsible for compensating the insured for the medical expenses and financial compensation liabilities, including litigation costs, within the stipulated compensation limit. After the outbreak of the current round of C.N.C.P. epidemic in Shanghai, the attendance rate of employees has been reduced. Theoretically, the probability of an employee contracting C.N.C.P. due to his/her performance of business-related duties has been reduced; however, special industries, such as medical and healthcare, property services, social work departments and other public service industries, have experienced a steep increase in the workload of prevention and control, resulting in a steep increase in the chances of infection of their employees. If an employer is financially liable for the death or disability of an employee infected with CKP as a result of the employee's performance of duties, the insurance company should pay the compensation within the agreed compensation limit. However, if an employee is infected with CKP other than in the course of his/her duties, it is not considered an "occupational disease" or a "work-related injury" and is not covered by the employer's liability insurance.
六、If the invocation of force majeure or a change of circumstances requires suspension of performance, delay in performance or rescission of the contract, the obligation to give notice shall be fulfilled in a timely manner in accordance with the provisions of the law.
If one of the parties is unable to perform the contract due to force majeure, it shall promptly notify the other party in order to mitigate the loss that may be caused to the other party and shall provide proof within a reasonable period of time. When the contract cannot be performed due to force majeure, the parties to the contract shall do the following according to the law:
1. Collect evidence. In order to prove the existence of force majeure or change of circumstances, the relevant evidence can be collected in the following ways: firstly, the announcement by the government and relevant departments announcing the activation of the first-level response to major public health emergencies, as well as the documents on the notification of information on epidemics, traffic control, the extension of holidays and the resumption of work, etc.; secondly, the relevant documents proving the subject of the contract, due to the confirmed diagnosis of pneumonia or the suspected cases, has been to seek medical treatment; thirdly, the parties to the contract Thirdly, documents issued by the contracting parties themselves and their related parties on the impact of the epidemic on the performance of the contract and other relevant documents.
2. Timely notification. The contractual partner should be notified in a timely manner after the outbreak of the epidemic is determined, i.e. after the government has initiated the first level of response to a major public health emergency. Determination of the outbreak of force majeure should be made at the time when the relevant information is learnt through relevant news reports, notices issued by the government, etc., rather than after obtaining the official supporting documents.
3. Effective notification. Confirmation of notification after an outbreak should first be made in an immediate and convenient manner, such as by telephone, WeChat, e-mail, etc., to ensure the immediacy of information conveyed. For the purpose of evidence preservation, the original formal notification with the official seal of the enterprise should be sent by express mail at the same time of the immediate notification. After obtaining the supporting documents from the relevant government departments, the scanned copies of the supporting documents shall be sent to the other party instantly by email, wechat, etc., and the original shall be sent to the other party by express mail.
4. Opposition from the other party. The party who receives the notice of cancellation of contract shall check whether the notice sent by the other party is in compliance with the provisions of the law and the agreement of the contract, and verify whether the reasons and grounds for cancellation of contract by the other party are sufficient and appropriate. If there is any objection to the cancellation of the contract, the party shall file a lawsuit with the People's Court within three months from the date of receipt of the notice of cancellation and claim for objection. If there is no objection, the two parties may reach an agreement on the cancellation of the contract by consensus on the subsequent matters for compliance.
The occurrence of the epidemic has brought significant uncertainty to the business development of the enterprise. Guotai Law Firm will give full play to its professional advantages to help the enterprise to prevent the legal risks arising from the epidemic; we will also provide more forms and richer legal services according to the needs of the current epidemic prevention and control work and the actual situation of the enterprise, so as to help the enterprise to tide over the difficulties arising from the epidemic.