The pandemic caused drastic changes in the population’s way of life
The covid-19 pandemic caused drastic changes in the population's way of life. Suddenly, a comprehensive lockdown prevented the movement of people and ordered the immediate closure of commercial establishments that are not related to the provision of essential services. Undoubtedly, home isolation drastically reduces the consumption of goods and the provision of services – which, overnight, creates an environment conducive to defaulting on obligations and, in a macro scenario, economic recession.
Given this context, it is worth asking what consequences an extreme fact like this, unpredictable from all perspectives — as the impact of this new virus is incomparably more serious than that observed in recent syndromes — has on the contracts in force when of the outbreak of the pandemic. Naturally, the core of the discussion concerns contracts signed before the onset of the crisis, but whose execution takes place either continuously or on a deferred basis, so that their effects will be produced in a situation totally different from that existing when they were signed.
The Law took care of situations like this under certain institutes. In classical doctrine, the contractual clause implicit in all commutative contracts, of successive or deferred treatment, is called rebus sic stantibus, according to which the external conditions existing at the time of formation of the contract must remain relatively unchanged at the time of its execution, under penalty of review or resolution of the legal transaction.
In Brazil, the rebus sic stantibus clause was taken over by the so-called Imprevision Theory, originally doctrinal and jurisprudential and, later, reflected in the 2002 Civil Code in different ways. Article 478 created a possibility of terminating the contract, if the following requirements are met: they are contracts of periodic or continuous execution, or of deferred execution (protracted in time); make the debtor's payment excessively burdensome; generate, in return, an extreme advantage for the creditor; occurrence of extraordinary and unpredictable events; and be the cause of the extraordinary and unpredictable event foreign to the parties to the contract.
The configuration of these elements gives the debtor the right to seek termination of the contract in court – or in arbitration, if there is an arbitration clause. The creditor, for his part, can avoid resolution by offering to modify the conditions of the contract, in order to rebalance.
The Theory of Imprevision also brought article 317 to the Civil Code, which provides that, when the value of the payment due at the time of execution of the contract is disproportionate to that at the time of the conclusion of the contract, the judge (also the arbitrator) may correct it. it at the request of the party, in order to ensure the real value of the benefit. It is only an instrument for correcting the economic value of pecuniary benefits, in the case of disproportion caused by supervening facts. In general, such facts may be unexpected exchange rate fluctuations or inflation rates that are disproportionate to the natural variation in market prices. According to doctrinal and jurisprudential treatment, this hypothesis has an even more restricted application in comparison to the resolution, or review, of the contract under article 478.
The Covid-19 pandemic and the various government measures instituted to contain the spread of the virus can, in theory, constitute an external event capable of justifying the termination of contracts or their review. To do this, it is necessary to consider the economic impacts and their impact on the execution of the specific contract itself. This analysis, however, can only be done on a case-by-case basis. The simple installation of a recessive scenario, in itself, is not enough to make it possible to terminate or review the contract as a whole, or even reduce the value of a installment.