Law and regulation of force majeure in Chile

Force majeure is regulated under Article 45 of the Chilean Civil Code.

A force majeure (or a fortuitous) event is one that is unforeseeable and irresistible, such as a shipwreck, an earthquake, enemy capture, or a government act, etc.

Parties are free to regulate force majeure clauses under the principle of autonomy under Article 1545 of the Chilean Civil Code. 

Force majeure clauses may be regulated within the limits of the principle of freedom of contract; they cannot be manifestly unreasonable according to the standards of good faith and fair dealing, as these principles always prevail in contractual interpretation. Therefore, a force majeure clause that assigns all of the risk under a contract to one party could be considered unreasonable and in breach of the principle of good faith.

In the absence of a definition of force majeure in the relevant contract, Article 45 of the Chilean Civil Code will apply by default.

No. The same rules apply to B2B and B2C transactions.

In Chile, T&Cs may form part of any contract or agreement. In each case, the parties are free to negotiate and incorporate force majeure clauses into their agreements.

However, not all T&Cs are negotiated in circumstances where each party has equal bargaining power.

Generally, consumer contracts include T&Cs. Those agreements are regulated under a special rule: Law No. 19.496, Consumers Protection Act.

Consumers Protection Act, Article 16, considers certain clauses as abusive, and consequently, they are unenforceable. The principles underlying this rule are the preservation of equality between the parties and the protection of good faith.

Therefore, as a starting point there is no difference between when a force majeure clause is laid down in a contract or in T&Cs, since both cases are governed by Article 45 of the Chilean Civil Code. However, taking into consideration the Consumers Protection Act, Article  16, a force majeure clause contained in T&Cs may be considered abusive, and consequently unenforceable, if it does not benefit both parties or if it places an excessive burden on only one of the parties, especially if the party affected by the abusive provision is a consumer.

“For the purposes of this Contract, an event of Force Majeure is defined as any unpredicted and uncontrolled event that has not been caused by a fault of any of the parties, such as:

• Government actions hindering the parties from completing this Contract in a timely manner;
• Acts of God or natural phenomena having a direct effect on the timely compliance of the Clauses in this Contract;
• Strikes or plant shutdowns affecting directly the delivery of the deliverables;
• Civil war, external war, organized internal uproar or public turmoil affecting directly the delivery of the supplies or rendering of services; or any other natural or human event beyond the control of the parties;
• Riots, epidemics, fire, weather, difficulty in obtaining qualified parts or materials, failure of performance by subcontractors or others causes beyond its control;
• Any other natural or human event beyond the control of the parties and not caused by negligence attributed to the parties.

If a party feels that it is enduring an event of force majeure, it shall notify in writing to the other party within a maximum period of fifteen (15) days after the onset of any such event, in order to inform the other party of the event, provide proof of the existence of the alleged event of force majeure, the estimated duration of the event, and the means it plans to use to eliminate or minimize its effects.

In case of an event of force majeure, the date of execution of the contractual liability affected by this event will be extended for a period similar to the force majeure, up to a maximum period of one hundred and twenty (120) days. Upon expiration of this period, any of the parties hereto may terminate the Contract by means of a written notice sent to the other party.

Notwithstanding the abovementioned, in case of an event of force majeure that cannot be overcome within a period no longer than four months due to its own nature, both parties will have the right to terminate the Contract after the date of commencement of such event of force majeure that is absolutely impossible to overcome before four months.”

N/A.

A debtor may not be considered a breaching party if a force majeure or fortuitous event merely impedes the ability of the debtor to fulfil his obligation under the agreement at issue. In that case, the debtor could limit or exclude his liability under contract. Please note that this rule does not apply if the force majeure event takes place after the expiration of the timeframe given to the debtor in which to fulfil the obligation.

This defence might result in total or partial exclusion of liability depending on whether the impediment at issue affects a specific or more generic contractual obligation, as explained below.

If the obligation is specific and the performance of the same becomes impossible due to the force majeure event, the debtor will be released from the contractual obligation. For example, if the buyer bought a specific and non-fungible good, and prior to delivery, the good is destroyed due to an earthquake (or due to another circumstance that is unpredictable, external and non-imputable to the debtor), the seller will be released from the contract.

However, if the obligation is more generic, the force majeure will suspend the enforceability of the obligation at issue for so long as the force majeure exists. For example, if a seller must deliver any quantity of computers with generic technical characteristics, and while the delivery is pending the computers are destroyed due to a circumstance that is unpredictable, external and non-imputable to the debtor, the obligation is not extinguished but suspended, and the seller must deliver other computers with the same characteristics once the force majeure event ceases.

Force majeure could exclude civil liability or extinguish a contractual obligation, depending on whether the obligation in question is specific or generic.

Generally, when an event of force majeure is temporary, as in this case, it causes the suspension of the enforceability of the obligation at issue until the impediment disappears.