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cl

REPORT ON THE REGULATORY FRAMEWORK OF

FORCE MAJEURE IN CHILEAN LEGAL SYSTEM.

© 2011 | Alejandro Meza Barros. Attorney at Law.

ameza@lexnet.cl

I. FOREWORD
For a better understanding of this report it is necessary to set a few
definitions and enunciate the fundamental legal regulations on the subject of
the execution of the obligations of a contract along with the application of those
norms at the judiciary and academic level.

Chilean Civil Code (CCC) is the key regulatory body on this matter, namely
from Articles 1554 to Article 1559 which regulates the consequences of the
failure to perform any term of a contract. The provisions of the legal action to
claim the fulfillment of the obligations of the counterpart are referred on Article
1489 of CCC that regulates the tacit resolution condition1 according to which the
part towards whom the undertaking has not been fulfilled has the choice either
to compel the other to fulfil the agreement when it is possible, or to request its
avoidance with damages.

According to our legal system it is understood that there is a breach of

contract when the following elements concur:

a. The contracting party did not perform his/her obligations in the manner
(Article 1569) or to the extent agreed (partial performance does not imply
fulfillment of the other party’s obligations. Article 1569 CCC) .
b. Delayed execution.

1
Equivalent to Article 1184 of the French Civil Code.

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c. Non-performance is caused by gross negligence (culpa grave) or willful

misconduct (dolo).

In case of a breach of contract the creditor is entitled to alternatively use

one of two of remedies given by the legal system: first, and most importantly is
the right of enforcement (after the claims were demonstrated in Court) and
secondly, if the contract is synalagmatic the affected party could opt for the
termination of the contract and demand the compensation for the damages.

The non-performance is a natural consequence of the delay in performance

which entitles the other party to use the right to either demand the termination
or the enforcement of the obligations. The declaration in court it is necessary in
order to establish the amount of the damages.

According to the Chilean legal system obligations are intended to be fulfill

and namely, to be performed through the payment, which is in other words the
object due to the creditor (Article 1568 CCC). The right of enforrcement action
is the main action incorporated in the contract2.

In conclusion, our legal system is diverse from the Common Law and also
from the Continental European Law. In fact, in Comparative Law it is noticeable
a growing evolution towards the protection of the creditor, and consequently to
an establishment of solutions or remedies aimed at the protection of such
interest. This trend inspire the Vienna Convention on Contracts for the
International Sale of Goods, the BGB (German Civil Code) and Directive
99/44/CE of the European Parliament.

This is the frame in which the breach of contract regulation is inserted in

the Chilean Legal System. With this outline in mind, now we will proceed to
review the case of force majeure, how it is defined in our Legal System, how it
operates as a source of liberation of responsibility.

2
Raúl Lecaros, Civil Law Professor Universidad Católica de Chile, Former member of Chilean Supreme Court
of Justice.

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II. DEFINITION OF FORCE MAJEURE

Unlike art 1148 of the French Civil Code, the CCC in its article 45 defines
force majeure as follows: art 45: “It is called force majeure or fortuitous event
to the extraordinary circumstance which is not possible to resist, such as a
wreckage, an earthquake, the capture of enemies, the deeds of authority put
into effect by a public officer”3.

The most obvious outcome of a force majeure occurrence is the liberation

of responsibility (the performance obligations of each contracting party). In
order to produce this termination of the obligations of the contract (and
accordingly, the liberation of the non-performing debtor), three elements must
concur:

1. The event should be unrelated to the debtor’s will.

2. The event should be unpredictable.
3. The event should be irresistible.

In relation to the first element, jurist Fernando Fueyo asserts that even
though art 45 of the CCC does not mention this element, it is deduced from
other norms of the same Code, such as art 1547. He also mentions that in
various articles of the same code the expression deed or negligence are related
to a personal act and, in opposition, in the case of the force majeure no
personal and direct intervention exist. And at the same time, the action should
not have been caused by the creditor, which in this case there is negligence
from his part and also a liberation of the non-performing debtor, but in no way
this could be deem as force majeure4.

3
Professor Rene Abeliuk M. en su tratado “De las Obligaciones”, pagina 687, supra 839 declares: “Our CCC,
in the line of the classic authors has only established the “termination” of the obligations for force majeure. In
no case this code establishes the “modification” of the obligations for this reason”. He also mentions that “the
definition of force majeure is strict, because in order to exist it needs two correlative elements: irresistibility
and unexpectedness. In other words, it is implied that the obligation performance turns out to be impossible in
absolute terms no matter how serious the previsions of the debtor could possible have foreseen.
4
René Abeliuk M. en su tratado “De las Obligaciones”, pagina 688, supra 841.

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In relation to the second element, the unpredictability, it must be

understood as an event which the parties of the contract could not have
reasonable foreseen at the time of the agreement5. Our jurisprudence has deem
an event as unpredictable when “there is no rational way to anticipate its
occurrence or, more precisely, when it is unknown forehand the cause that
produces that event and in which the affected by it could not predict with a fair
degree of certainty6”. Our jurisprudence has insisted also on the fact that the
unpredictability is the essence of the force majeure.

Professor Fueyo states that Law takes care of normal situations according
to a probabilistic estimation over the specific event. The result of this estimation
is derived from the assessment of the way in which the event occurs, its
circumstances and also a diligence to the agent in order to avoid occurrence of
events by previously assess the likelihood of an event7.

Another aspect of the unpredictability is given by the fact that the behavior
of the debtor is also relevant in terms that he is obliged to collaborate in order
to avoid risks and to take the necessary precautions. Any event beyond this
provisions will be considered force majeure from the obliged party. According to
Fueyo the calculation of odds of the occurrence of the event is ultimately based
on a certain degree of diligence or precaution measures, and it is unpredictable
what occurs beyond these provisions.

Finally, the third element, the irresistibility which is referred to a case when
the consequences are unavoidable in terms that no rational person under the
same circumstances could have behaved in a different manner.

III. CONSEQUENCES OF THE FORCE MAJEURE

5
Fernando Fueyo, “Tratado Cumplimiento e Incumplimiento de las Obligaciones”, pages 399 and 400
6
Fallo de la Corte Suprema de fecha 09 del septiembre de 1992
7
Fernando Fuello, “Tratado Cumplimiento e Incumplimiento de las Obligaciones”, página 401. This author
quotes an remarkable sentence of april 14th 1941 according to which abundant precipitations are no cause for
application of force majeur in very rainy areas.

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As previously mentioned, when the three elements of the force majeure

concur, the debtor is legally released from his obligations in the contract.
Provided this, articles 1547 and 1558 of the CCC do not apply. In other words,
neither the enforcement or the damages could be claimed.

Chilean jurist René Abeliuk suggests that the above mentioned applies not
only to the obligations of transfer but also to the obligations of do and not do.

In addition, Abeliuk sustains that as a general rule, the temporary or

partial irresistibility does not necessarily put an end to the contract. In case of
partial force majeure, the debtor will be released from his obligation to perform
in such obligations in which the performance turns out to be impossible, being
liable for the performance of the rest of the obligations. Also, if the irresistibility
is transitory, the obligations persist beyond this temporary limitation. The
debtor will not be responsible for the delay in performance for force majeure.

We remark the fact that Chilean legislation in this regard it is usually

different to other regulations in Comparative Law.

Now we consider relevant to explain the occurrence of the force majeure

according to the type of contract. On this matter professor Lecaros states that
among other classifications, contracts could be separated into the following
categories:

1. Outright execution.
2. Successive payments (tracto sucesivo).
3. Permanent effects.

Professor Lecaros maintains that this division has not only theoric purposes
but practical as well. Indeed, it is key at the time of the application of the force
majeure as a fundamental for the liberation of contractual responsibility
because in each case it is applied distinctly.

OUTRIGHT EXECUTION: The performance of the contract is represented

by a outright action by each party either at the time of the agreement or in
some point in the future. The first case is called of “instant execution” and

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according to professor López Santa María in this case “the obligations are
fulfilled at the time of the signature. The contract is created and extinguished at
the same time and thus the parties are liberated instantly”. This is the case of a
cash contract of sale. The latter type is also called of differed execution being
an example a contract of sale when the price is established in specific regular
intervals.

SUCCESSIVE PAYMENTS (tracto sucesivo): In words of Abeliuk, the

main characteristic of this type of contract is the fact that “the obligations are
born and at the same time are extinguished over and over as multiple
payments at regular intervals are performed as long as the contract exists.
Typical examples of this category are the rent due in lease, the labor contract
and in general the supply contract.

Lecaros adds that in this kind of contracts the force majeure that affects
the party at the same time liberates the other for logical reasons of
commutative justice: if one party gets nothing, then why the other party should
be bounded to perform anything. The unilateral performance of this party will
be considered without a cause and thus there will be an illegal profit. This
principle is regulated in the Chilean legislation in the CCC norms about the
contract of lease. Article 1590 of the CCC mandates that the contract of lease
ends when the leased object perishes. If the rented thing is not available for the
lessee, why should he/se be bounded to pay the rent to the leaser?

Finally, is good to bear in mind that in Chilean Law according to article

1550 when the performance of one party is liberated for causes of force
majeure, the obligation of the other party persist when the object of obligation
consist in rendering a tangible object (cuerpo cierto). This is what the doctrine
calls the theory of the risk. In other words, this is an exception to the legal
principle of force majeure and consist in the fact that the obligation to pay the
price in a purchase prevails even when the purchased object is destroyed for
force majeure reasons. On the contrary, if the obligation consist in “doing” or

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“not doing” a given deed the force majeure in the obligation of one party,
extinguishes the obligations of the other contractor.

PERMANENT EFFECTS: Authors concur when say that in contracts which

involve successive payments the extinction of one obligation by the force
majeure in the obligations of the other, both obligations are liberated from the
time of the force majeure event onwards. On this subject, professor López
maintains that “In the field of risks our Code establishes as a general rule in
articles 1550 and 1820 that if the obligation of one part ends for reasons of
force majeure, the obligation to perform for the other contractor subsists,
therefore allocating the risk in the hands of the creditor. However, if the
contract is established in successive payments, the extinction of the obligations
of one party for force majeure, release the obligations of the other party. This is
why article 1950 establishes that the total destruction of the rented thing puts
an end to the lease contract and consequently the release of the obligations of
both parties”. In the same sense Abeliuk adds: “If it is not feasible to perform
one obligation in a successive payment contract for force majeure of one party,
the contract ends, without affecting the previously performed obligations”.

Chilean Supreme Court have sustained the same doctrine for over a
century: “Lease contract is subjected to the regulation of article 1550 so when a
rented house is destroyed by fire, the contract ends and the leaser are not
entitled to claim the full payments of the rents from the day of the destruction
on. In consequence the petition of the defendant in order a request from this
Court the dismissal of the allegations of the plaintiff should be sustained”.
Nevertheless, it is relevant to mention the fact that in successive payment
contracts with a limited duration when the force majeure does not destroy the
object but only prevents its use for a limited period of time. The contract, and
consequently the obligations to perform for both parties persist beyond the
temporary limitations.

For all the above expressed, in order a terminate a successive payment

contract by means of force majeure, it is a necessary condition that the

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impossibility of performance for one party is absolute and permanent until the
end of contract. On the contrary, if the irresistible event ends before the
expiration time, the obligations persist for the remaining periods of the
contract.

IV. A FEW RELEVANT DOCTRINE IN COURT SENTENCES.

Guillermo Larraín Vial con Servicio de Vivienda y Urbanización de la

Región Metropolitana. Corte de Apelaciones de Santiago 14 de
noviembre de 2006

§10 According to the above mentioned, it is necessary to bear in mind Civil

Code art 1558, which states that when it is not possible to establish bad faith,
the contractor that caused the damages it is only liable for those damages that
could have reasonably be anticipated at the time of the contract signature.
Thus, as the execution is related to the content of the obligations, and at the
same time damage is related to the breach of contract, it is forceful to conclude
that there will be a breach of contract when the obligation is not fulfilled on due
time, and on the contrary, there will be no breach of contract when an
obligation other than the agreed is demanded beyond provisions and beyond
the contracted agreement on the time set for the accomplishment of the
obligation.
§11 The above expressed it is confirmed by the rule of Civil Code art 1547
when it declares that the obliged contractor is responsible for ordinary fault
(levis clupa) in bilateral contracts. This norm in connection with the previously
expressed makes us conclude that in this case it was set a date, August 2nd
1996, as the moment when the parties initiated the contract which represent
the instant when each one knew the precise scope of obligations and its
particular extent of liability in case a of breach of the contract. In other words,
it is assumed that they were aware of the degree of diligence they needed to
use in order to fulfill their respective obligations. As this is a case in which a

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bilateral agreement is involved, this is, a contract in which both parties are
benefited, they must respond for ordinary fault (levis clupa), and ultimately, no
further obligations exist.

Empresa Nacional de Electricidad S.A. s/ Recurso de Inaplicabilidad

Drought must not be considered force majeure per se considering the fact
that its occurrence it is likely to occur at some intervals in our country. Thus, it
is not possible to purge the obligations of the contractor in case a drought
occurs, specially considering that normal levels of energy production are
feasible in cases of low levels of precipitation periods and that in extreme cases
it is still possible the generation via thermoelectricity. On the contrary, it is
indeed a case of force majeure when an event of drought lingers for periods
beyond which in which the government is forced to decree the rationing of the
supply of water.

Ordenes Muñoz, Mario c/ Inmobiliaria Gestión Integral S.A. - Corte de

Apelaciones de La Serena - 20-jul-07

The acceptance of force majeure is subjected to three concurrent elements

according to the fundamentals of this legal institution. These elements are: an
unexpected event, which is impossible to avoid and whose cause is not related
to a deed of the respective contract party. In this sense, the unexpectedness of
the event means that there is no way to anticipate its occurrence, or more
precisely, an event in which it is not feasible to know in advance the cause that
will likely lead to any given consequence. The doctrine has also added that in
order to anticipate a given situation, the agent must have represented
himself/herself a cause from which it is possible to logically assume a probable
consequence which is ultimately the force majeure.