Ordonnance n°2020-306 of 25 March 2020, as modified by Ordonnance 2020-427 of 15 April 2020 and Ordonnance 2020-560 of 13 May 2020 tries to remedy the influence of the Covid-19 crisis on contractual relationships by paralysing the effect of select contractual clauses which punish the non-performance of a party’s obligation and providing rescheduling arrangements.

There is a limitative list of clauses concerned by these rescheduling arrangements which includes penalty clauses, cancellation clause and clauses setting a deadline.

The Ordonnance fixed the “legally protected period” starting on 12 March 2020 and finishing on 23 June 2020, but the end of the period is only temporary and could be modified given the evolution of the health situation.

The Ordonnance provides for three rescheduling situations:

–The non-performed contractual obligation was due during the legally protected period

These clauses are deemed not to have produced an effect. The effects of these clauses are postponed by « a duration, computed after the end of the legally protected period, equal to the time between the 12 March 2020 or the date when the obligation started and the date when the obligation should have been performed » (Paragraph 2 of Article 4 of Ordonnance n°2020-306).

Example 1: if a term was expected on 20 March 2020, i.e. 8 days after the start of the legally protected period, the penalty clause sanctioning the failure to comply with this term will start to produce effects 8 days after the end of the legally protected period.

Example 2 : if a cancellation clause, resulting from an obligation arisen of 1 April 2020 was supposed to take effect, in case of non-performance, on 15 April 2020, this 15 ay period will be postponed to the end of the legally protected period to enable the debtor to perform its part of the contract.

–The non-performed contractual obligation is set and due after the end of the legally protected period

The effects of these clauses are postponed « of a duration equal to the time spent from 12 March 2020, or from the date on which the obligation arose if it arose at a later date, to the end of this period » (Paragraph 3 of Article 4 of Ordonnance n°2020-306).

It should be brought to attention that the non-performance of an obligation under which a sum of money is due is excluded from this situation. The Report to the President of the Republic on the Ordonnance points out that « the financial difficulties of debtors are to be dealt with according to the rules of ordinary law (grace periods, insolvency proceedings, over-indebtedness proceedings) ».

Example: if a construction contract which took effect before 12 March 2020 sets the delivery of the building at a date which takes place after the end of the legally protected period, the penalty clause on the non-performance of this obligation will start to produce effect on a postponed date which will be computed by adding to the date set by contract the entire period of the legally protected period.

–Penalty clauses having started to produce effect before the start of the legally protected period: their enforcement is suspended during the legally protected period and will restart at the end of the legally protected period. The non-performance of the contract prior to the crisis is independent from the crisis.

Finally, it should also be mentioned that the protection of the debtor as set by these Ordonnances is not an imperative provision and the parties may set it aside or adapt it with a suitable agreement.