The impact of COVID-19 on the obligations of the tenants

The impact of COVID-19 on the obligations of the tenants

Both the spreading of COVID-19 and the measures taken by the government in order to prevent its spreading deeply impacted the economy and that lead the tenants struggling to pay their rents. 

Furthermore, the tenants may not be able to fully and freely enjoy the leased premises.

Since the government did not take any action so far in this concern, courts must assess the parties’ liabilities.

Thus, are the tenants entitled to suspend the payment of the rents or renegotiate the lease contract during these exceptional circumstances? 

Are the tenants entitled to claim for an event of force majeure?

An event of force majeure may excuse one party to a contract from performing its contractual obligations, suspending the performance.

Under the Algerian practice, even in the absence of a clear definition in the law, force majeure is defined, in compliance with the international standards, as an unforeseeable and unavoidable event, which makes the execution of the obligation impossible.

According to the article 467 of the Algerian Civil Code, the obligation of the tenant is to pay the rent. Indeed, money is a fungible good and can be replaced, so performing a payment is theoretically never impossible.

In other words, even if the tenant is severely affected by the impact of the crisis, legally its obligation to pay rent does not become impossible.

Therefore, in the event of non-payment, the tenant’s contractual liability can be raised.

Is there a possibility for the tenant to suspend the lease contract ?

The main obligation of the lessor consists in providing the full enjoyment of the leased premises to the tenant. Meanwhile, the obligation of the tenant is to pay the rent.

If the non-performance of the obligation of the lessor is not excused by an event of force majeure, then the obligation of the tenant to pay rent could be suspended.

On one hand, some measures such as the total closure of certain stores could be considered force majeure events.

On the other hand, some other measures such as the reduction in staff or the curfew hours do not impede the right of enjoyment of the property, but it only alters it.

In this case the right to enjoy the leased premises is not impossible but only partially altered.

Thus, it is unlikely that the lessor can invoke force majeure, which means that the lessor’s obligation is being partially executed.

Therefore, the tenant might be in theory entitled to suspend its own obligation, as provided by the principle of art.

123 of the Civil Code (inadimplenti non est adimplendum).

Consequently, the tenant could suspend the payment of its rent if the lessor does not notify force majeure or, alternatively, its right of enjoyment is impacted.

In absence of an agreement between the parties, the Court will be called to assess the circumstances and provide a solution.

Could the tenant have the right to renegotiate the lease contract?

Under the Algerian Civil Code, the tenant could be entitled, under special circumstances, to renegotiate the terms of the leased contract, including its price.

Indeed, article 107 of the Civil Code provides that the obligations must be executed in good faith.

Yet, with the impact of COVID-19 as exceptional circumstance, the parties are obliged to renegotiate in good faith, in particular, the terms and deadlines for payment.

Also, under the same article, when the performance of an obligation is not impossible yet it becomes extremely burdensome, it is possible to ask the judge to renegotiate the price of the contract.

In any case, to safeguard its rights, the tenant must notify the lessor of the times of the damage suffered.

Navigating the impact of

Covid-19 on your Business

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