CYIL vol. 15 (2024)

BÁRA MIKA exemption from liability even though other circumstances were otherwise very similar to the previous two cases where it was denied. The conflict started when the framework agreement was signed and before the orders were placed, it thus can be argued that the seller could have foreseen supply issues with a sub-contractor from the Donetsk area. Furthermore, the buyer ultimately obtained the steel elsewhere so it should have been possible for the seller to deliver (not to manufacture) the steel using a different sub-contractor. There seems to be no obvious reason why the same arguments failed in case of seeds and wood but previewed in the case of steel. Especially if the seller argues that other sub-contractors were more expensive but not entirely non-existent, a possible explanation may be in the absence of experience with hardship argument which was brand new to Czech law when the litigation started. To summarize, the case law shows that pre-recodification Czech law did not offer a usable solution for failed sales contracts. Regardless of the recodification, the standard for excuse from liability remains high and hard to achieve. 3.2 Czech law and hardship The Czech hardship rule is based on the UNIDROIT Articles 6.2.1 to 6.2.3 and with this addition, Czech law now falls in the “dual model” category, together with other Civil law systems (German law) 57 and international instruments. 58 The provision of Section 1765 of Civil Code 2012 59 regulates the “economic impossibility” of performance in certain specific cases where a change of circumstances causes gross disproportion in rights or obligations of the affected party which justifies renegotiation and even potential termination or revision of a contract. Its use is meant to be exceptional and should not cover negative developments “ caused by the simple development of the economy and the market, or which conceptually falls within the scope of the so-called ordinary business risk ”. 60 The exceptional nature of the rule was also confirmed by the Czech Supreme Court, stating that the rule may be applied if the gross disproportion of rights/duties under the contract is caused by “ a substantial, unforeseeable and uncontrollable change in circumstances caused by external (independent of the contract) factors ”. 61 Nevertheless, in the same case, the court also provided quite a wide variety of such external factors, including natural forces, illness, health damage or death, technical failure or damage caused by a third party, or changes in legislation, social or political conditions or general economic and economic conditions (significant increase in the rate of inflation, disruption of supplier-customer relations, etc.). The list was provided without elaboration on thresholds or any additional guidance. This seems to be a bit counter-productive because without such details it may be challenging to distinguish between vis major and hardship. 57 DIMATTEO, L. A. (2015) ‘Contractual excuse under the CISG: Impediment, hardship, and the excuse doctrines’, Pace International Law Review , 27(1), p. 262, doi:10.58948/2331-3536.1351. 58 See Principles of European Contract Law (PECL) and Common European Sales Law (CESL). 59 The full Section 1765(1) of Civil Code 2012 reads: “ If there is such a substantial change in circumstances that it creates a gross disproportion in the rights and duties of the parties by disadvantaging one of them either by disproportionately increasing the cost of the performance or disproportionately reducing the value of the subject of performance, the affected party has the right to claim the renegotiation of the contract with the other party if it is proved that it could neither have expected nor affected the change, and that the change occurred only after the conclusion of the contract or the party became aware thereof only after the conclusion of the contract. Asserting this right does not entitle the affecting party to suspend the performance .”. 60 http://obcanskyzakonik.justice.cz/images/pdf/Duvodova-zprava-NOZ-konsolidovana-verze.pdf p. 440. 61 See Czech Supreme Court case no. 28 Cdo 2989/2022, dated 1.2.2023.

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