During this public health emergency caused by COVID-19, can your debtors refuse to pay your invoices that are due during this period by invoking force majeure?
In this short video, without delving into the debates surrounding the definition of force majeure,we provide practical guidance on situations that companies may face on a daily basis.
Kérine Tran, General Counsel at Cabinet ARC,presents two distinct scenarios and offers a concrete answer to this legitimate question:
- As a supplier , you were unable to deliver the goods ordered by your customer due to the current health crisis. You therefore invoked force majeure against your customer. In this situation, it will be difficult for you to obtain payment for any invoice. The debtor’s failure to pay is, in a sense, a consequence of the force majeure you invoked against them.
- You have duly fulfilled your obligation by delivering the goods to your customer and have issued an invoice accordingly. In this case, your debtor is required to pay you, even if fulfilling this obligation is very difficult or very costly for them. However, of course, during these extraordinary times—when all market participants must heed the call for solidarity—we encourage you to engage in open dialogue with your debtors in good faith and, where appropriate, propose a payment plan. This will ultimately help you strengthen the relationships of trust you have built with your customers.