That’s the question many businesses ask: My business is closed by the Coronavirus Do I pay the rent?

On 14 March 2020, the Spanish Government declared a state of alarm over the COVID-19 health crisis. 

It also ordered the closure of all businesses open to the public except those of basic necessity. 

This causes, after a week of closure and confinement, a lack of income for business owners.

Tenants wonder, even the Coronavirus, paid rent on my business premises.

This does not apply to regular rental housing for obvious reasons.

On the contrary, if it would be applicable in cases of leasing of business premises. 

It could also apply to leases for use other than housing such as seasonal or student leases.

But what are the options?

First of all,  contracts will have to be reviewed to see and check whether a situation like this has been foreseen.

In the absence of foresight, we will have the option of resorting to force majeure or the application of the clause “Rebus sic Stantibus”. 

What is not an option is to simply breach the contract.

Force majeure. What is it? Is the Coronavirus?

 The Force Majeure is an extraordinary, unpredictable and inevitable event. , 

Article 1105 of the Spanish Civil Code defines it as follows:

‘(…) those events which could not have been foreseen or which were expected to be unavoidable’.

Article 1184 of the Civil Code provides that:

‘The debtor shall also be discharged in the obligations to perform where the performance is legally or physically impossible’.

The Covid-19 together, with the closing of shops and the general order of confinement supposes a clear assumption of force majeure.

This clearly exonerates the full performance of the contract by either party.

However, this exemption applies only to obligations to give or make, but not to obligations to pay a monetary income.

Therefore, force majeure cannot be invoked to avoid paying the rent for the business premises.

Rebus sic Stantibus

The “rebus sic stantibus” clause is the rule that allows a party in a contractual relationship to be exonerated or to reduce the negative impact of a contractual risk not examined at the time of the conclusion of the contract.

The difference between the two is that force majeure makes absolute compliance impossible.

The clause ‘rebus sic stantibus’ allows the alteration and modification of the contract to suit the new circumstances.

 With the ‘rebus sic stantibus’, lessor and lessee could:

1.  alter the lease as regards the determination of the rent and its payment

2.  to terminate the contract.

Proposals for amendments to the lessee

• Suspend rent during the state of alarm period.

• Make a discount on the monthly amount of rent.

In return the lessor could request from the lessee:

• Extend the period of obligation to perform the contract.

• Extend the initial duration of the Contract.

• Increase the amount of monthly income after a certain period of time.

• Update rent with CPI increased by several points.

Conclusion on Coronavirus rent payment:

1. First, to review the contracts in order to verify the possible regulation of force majeure for all types of contracts other than leases.

2. In the case of leases for use other than housing or business premises, it is advisable to weigh the risk of non-payment.

3. Once the risks have been analysed, it may be advisable to make partial amendments to the contract, in particular to the rent and its payment.

For more information or if you want to consult your specific situation or that we review your contract, do not hesitate to contact the office through the contact form. As you know and due to the Covid-19 the consultations will be carried out in a non-personal way either by phone or email or videoconference.

La entrada My business is closed due Covid-19. What Can I do? Shall I pay the rent? se publicó primero en Ferrer Millet Abogados en Gandia.

The most common incidences are:

1. Incidents in baggage transport (Loss)
2. Delay in flight
3. Cancellation of flight
4. Denied boarding (overbooking)

The relevant legislation is Regulation (EC) 261/2004, which applies to any commercial flight of any carrier, both Community and non-EU, taking off from an EU airport. It also applies to flights taking off from a non-EU airport to the EU, provided that the operator is a Community carrier.

The nationality and place of residence of the passenger do not matter for the application of the Regulation.

The rights granted to passengers by the Regulation are:  1. right of care (food and drink), 2. right of accommodation in a hotel,  if necessary and 3. right of transport to the hotel and applies in delays according to the number of hours. If the delay is more than five hours, the passenger is entitled to a refund and to take him back to his point of origin. ,

However the most important right granted by the European Regulation is Right to compensation.

It assumes that a passenger who is delayed, cancelled or denied boarding is entitled to financial compensation from the airline. The amount varies according to the distance of the flight, ranging from 250.€ to 600.€ and without the passenger having to prove any damage.

These amounts may be reduced by half of their cash amount if the carrier offers an alternative flight no later than two, three or four hours from the original timetable and according to distance.

The airline could only avoid compensation to the passenger if the incident was not caused by extraordinary circumstances. These extraordinary circumstances do not include technical failures or even if in third star against the aircraft a ladder. If that would be included as an extraordinary circumstance the damage to a landing gear tire by a foreign body at the airport runway or the meteorological problems, third-party strike and the closure of the airport. However, these extraordinary circumstances alone do not exonerate the airline. In order to be exonerated, you must do everything possible to prevent that extraordinary event from causing cancellation or delay.

However, what happens if there is an impact on a non-Community flight operated by a non-Community airline bound for a Community airport. The Montreal Convention would apply and the passenger would be entitled to compensation although, unlike the flight to which the Community regulation applies, he would have to prove that he had suffered damage.

Practical advice: For passengers who suffer an incident on their flight, we advise first to submit the claim on the company’s website using the online form. The reason is because the claim comes directly to the airline’s customer service department.

If the company does not respond satisfactorily, it is essential to file a lawsuit.

If you are interested in this information or have suffered an incident on your flight, do not hesitate to contact the office. We can help you and assist you with your claim so that you can obtain the financial compensation that you may be entitled to.

La entrada Claim to airlines se publicó primero en Ferrer Millet Abogados en Gandia.