A flood can lead to partial or total inability to fulfill a contractual obligation. When the fulfillment of an obligation becomes impossible due to a flood, the party obligated to fulfill it (the debtor) is released from its execution and cannot demand mutual performance. However, if the debtor has already received mutual performance, then they are obliged to return it in accordance with the provisions on unjust enrichment. Performance is considered impossible when no person, not just the debtor, is able to carry it out[1].
Example: An agreement was made to paint the walls in an apartment, a start date for the work was set, and a deposit was given for the execution of the service. Subsequently, before the established start date for painting the apartment, a flood occurred, as a result of which the building in which the apartment was located was destroyed. The contract expired, and the received advance should be returned.
On the other hand, when a flood made it impossible to carry out part of the service, then the debtor loses the right to the corresponding part of the mutual performance.
Example: An agreement was made to paint the walls in an apartment (two rooms, kitchen, hallway), a start date for the work was set, and a lump sum compensation for the service was established. One room was painted and then a flood occurred, as a result of which the building in which the apartment was located was destroyed. The compensation is due for the painting of one room, not the painting of the entire apartment.
The subsequent inability to perform a contractual obligation must be distinguished from economic impossibility[2], that is a situation in which the service can still be performed, but due to dramatically changed conditions, the scope of work and its costs have significantly increased, which could not be foreseen at the time of concluding the contract. A glaring disproportion then arises between the value of the object of performance and the benefits and costs expected by the party, which must be incurred to fulfill the obligation. In such a situation, renegotiating the contract provisions remains, and in case of disagreement, a court ruling will be necessary. The court may determine the manner of performance of the obligation, the amount of the performance or even terminate the contract, considering mutual settlements, guided by the principles specified in the preceding sentence (Art. 3571 § 1 k.c.).
Example: An agreement was made to paint the walls in an apartment (two rooms, kitchen, hallway), the contractor (painter) was to provide the material, a start date for work and lump sum compensation were established. Before the start of the work, a flood occurred, flooding the apartment up to 1.5 m. Painting the apartment is possible, but requires drying, disinfecting and securing the walls with specialist preparations. Such activities were not anticipated at the time of concluding the contract and significantly affected the size of work and its cost.
[1] Supreme Court judgment of May 8, 2002, ref. no. III CKN 1015/99, LEX no. 55497; Supreme Court judgment of November 15, 2013, ref. no. V CSK 500/12, LEX no. 1425057
[2] Supreme Court judgment of May 26, 2021, ref. no. V CSKP 21/21, LEX no. 3219748
Author: Legal Advisor Zbigniew Cieślak, Chałas i Wspólnicy Law Firm
Source: https://ceo.com.pl/powodz-a-realizacja-umow-11621
