The impact of Covid-19 on Maltese contract law : can the absolute binding force of contracts be mitigated under these exceptional circumstances?

Abstract

In 2020, COVID-19 took the world by storm and had an unprecedented negative impact on numerous businesses and individuals worldwide. In an effort to slow the spread of the virus, the State imposed restrictions and regulations consequently affecting the ability of many to honour contractual obligations. Essentially this triggered the writer to pursue the leitmotif of this dissertation, namely, the impact of COVID-19 on the performance of contractual obligation. Contracts legally entered into require the observance of the maxim pacta sunt servanda. This analytical overview addresses this legal concept binding unvitiated contracts, and the limited existent grounds allowed by law for the rescission, revision, or renegotiation of contracts under change of circumstances. This study is a product of a comparative law analysis of the exemptions to the doctrine of the sanctity of contract, namely the clausula rebus sic stantibus, the doctrine of impossibility, doctrine of frustration and force majeure. It examines to what extent the Court may discharge a party from its contractual obligations due to the changed circumstances. In its entirety the study concerns contracts that were contracted prior to the outbreak of COVID-19 and which have become onerous due to difficulties brought about by this nouveau pandemic. Ultimately this dissertation seeks to address the question whether the absolute binding force of contracts should be mitigated under these exceptional circumstances.