The challenges facing businesses as a result of the COVID-19 pandemic and the restrictions issued by the Austrian government are many and various. We have put together a brief bullet-point overview of some non-performance issues that have and will continue to seriously affect many businesses – as well as their staff and stakeholders – in the coming weeks and months. The impact of the Covid-19 restrictions on transactions subject to CISG will be reported shortly on this page.

Of course, it is advisable to always check the applicable contracts and underlying GT&C, as a point of departure. Diverging contractual provisions will take precedence and may, moreover, contain a choice of a law other than Austrian law/CISG. 

In view of legal uncertainties and uncertainty as to the duration and continuing extent of governmental restrictions, consensual solutions are recommended wherever possible. 

1. DELIVERY OF GOODS AND SERVICES

1.1   Scenario: Delivery is not accepted when due, e.g. because customer’s premises are closed

• If Austrian law is applicable: 

• Creditor Default (Gläubigerverzug)
  • Supplier remains entitled to payment.
  • No obligation of Customer to accept the goods but: 
    • Risks of damage to the goods devolve to the customer.  
    • Supplier is entitled to reimbursement of expenses for holding the goods and may deposit the goods with court.
    • Supplier is only liable for any damages to the goods if it or its agents are grossly negligent.

• Potentially: Dissolution of the contract due to impossibility of performance (nachträgliche Unmöglichkeit), e.g if acceptance of the delivery were to require personal presence in a place currently prohibited by the governmental restrictions and later delivery is not possible/reasonable.

• Potentially: Cancellation/adaptation of contract due to change of circumstances (Wegfall der Geschäftsgrundlage), if performance cannot reasonably be expected.

1.2   Scenario: Supplier does not deliver (e.g because staff are ill or business has been shut down, voluntarily or by governmental measures)

• If Austrian law is applicable:

• Debtor default (Schuldnerverzug)
  • Supplier remains obligated to perform under the contract.
  • Customer has cancellation right (Rücktrittsrecht) after “appropriate” period of grace (is the “appropriate” period significantly longer in times of COVID-19 measures?). If it is clear that performance is not possible within a reasonable period, immediate cancellation is possible.
  • Supplier may be liable for damages in case of fault (e.g. if Supplier did not take appropriate and available measures that would have made delivery possible, or fails to inform his customers in due time)

• Potentially: Dissolution of contract due to impossibility of performance (nachträgliche Unmöglichkeit) e.g if business has been shut down by the government’s measures and later delivery is not possible/reasonable (e.g. “Fixgeschäft”). 

• Potentially: Cancellation/adaptation of contract due to change of circumstances (Wegfall der Geschäftsgrundlage), if performance cannot reasonably be expected.

1.3   Scenario: Default in Supply Chain

If Austrian law is applicable the same rules apply as above (1.1 and 1.2). Liability for defaults is less likely if the intermediate businesses can prove that it was not possible to deliver the goods/supply the services AND that it was not possible to switch to alternative sources of supply or transport routes. 

2.   TOURISM/EVENTS

2.1  Hotels et al:

If Austrian law is applicable:

• If guests come from an area which is subject to a travel ban, in general, no cancellation fees/no accommodation fees can be claimed by the hotel/provider of accommodation 
  • either based on the standard industry T&C (AGBH), which has a force majeure clause, if agreed on; or 
  • otherwise because of exemption from the obligation to pay rent in extraordinary circumstances (statutory force majeure for rental contracts).

• If the hotel has been closed by law/decree, no cancellation or accommodation fees become due; the hotel has to repay advance payments. This is e.g. the case for Salzburg, Vorarlberg, Tirol and Carinthia until 13^th April 2020, with exceptions upon application.

• If guests do not arrive although they could or because they/dependants are ill or do not wish to risk travelling, the hotel/provider of accommodation is, in principle, entitled to the agreed cancellation fee/consideration. 

If, however, the destination has a significant number of Covid-19 infections and the trip is to take place shortly, guests can – with some justification – argue that they are entitled to cancel due to change of circumstances/unacceptability (similar to case law regarding terrorism in the holiday area). This would apply also to flights et al. It is advisable to contact the accommodation or service provider. 

2.2   Events:  Scenario: Cancellation of events due to government measures:

If Austrian law is applicable: 

• Subsequent (objective) impossibility of performance (nachträgliche Unmöglichkeit):
  • Contract becomes invalid
  • no consideration is due, down payment are to be returned
  • liability for damages only in the event of additional damaging behaviour (e.g. delay in informing guests). As a rule, guests will not be entitled to performance at a later date.

• For guests this means: 
  • Tickets will be refunded. 
  • Generally no liability of event organizer for travel costs or otherwise (unless otherwise stated in the contract) 
• For musicians, suppliers etc this means: 
• no remuneration is due to them 

This overview is only meant as a very brief introduction into the relevant legal context and is not a substitute for legal advice. 

If you have any questions or require legal support, please contact contact Katrin Hanschitz, our head of litigation Bettina Knötzl or your customary relationship professional at KNOETZL. We are ready to assist on short notice with our customary laser-focused advice, just as needed.

Further information on the impact of the planned governmental measures on court cases 

Helpful link to further information from the Austrian Chamber of Commerce on measures intended to alleviate the consequences (tax and social security relief, bridge loans, export guarantees, availability of public funds, force majeure certificates etc): 
https://www.wko.at/service/faq-coronavirus-infos.html