The answer to this question will depend to a great extent with the terms of the relevant contract and the facts surrounding its performance by the parties.

As we all know by now, the Coronavirus pandemic (COVID-19)[1] has had a major impact in the ability to continue with business, commercial activities and the performance of contractual obligations throughout the world. Many governments adopted various measures to cope with or slow down the advance of this pandemic, ranging from temporary border closures, restrictions on the movement of individuals, suspension of school activities, temporary cancellation of mass events and quarantine periods imposed on travelers coming from certain countries, and individuals infected or suspected of being infected with the virus.

Several of these measures will impact, to a greater or lesser extent, with parties’ abilities to fulfill certain contractual obligations. Next and based in rules of the Paraguayan Civil Code, we will address how such circumstances may or may not exempt a party to a contract with performing her contractual obligations – or from the effects of her non-compliance, as well as applicable requirements for certain cases.[2]

Force Majeure events in the Paraguayan Civil Code

In the current context, COVID-19 and its rapid expansion throughout the world, by themselves, will not always represent an impediment to perform contractual obligations. It is likely that in most cases, the administrative decisions taken by the various governments are the triggering events that actually prevent the performance of certain obligations. Below you may find examples of solutions provided under Paraguayan law that may help clarify the problem.

General Rule

In general terms, the Paraguayan Civil Code excuses the performance of certain contractual obligations or the consequences of certain breaches of contract when, due to circumstances of force majeure, such task or obligation could not be fulfilled.[3] In other words, when the contracted obligation (e.g. a road trip to an island connected by a single bridge) cannot be carried out due to circumstances that lie beyond the contractor’s control (e.g. the accidental destruction of the bridge connecting to the island), at first, the contractor would be exempt from liability for its failure to perform the contract.

The Civil Code grants parties the freedom to bargain and agree the terms of their contracts, and to assume or allocate their risks. In fact, parties may even assume the risks related to force majeure events.[4] Returning to our example in the previous paragraph, it is possible that the contractor offering the road trip on the island has assumed the risk of carrying out the tour, even against all risks. If that were the case, the contractor would have to find a way to comply with her obligation even if the only land access road is disabled – by ferry though compliance is more expensive.[5] This highlights an important element to consider in any analysis, what was the agreed contractual obligation.

If the obligation can still be performed, considering the measures adopted by the various governments related to the COVID-19 spread, and this performance does not entail a legal or administrative sanction, it could be understood that we are not facing a force majeure event.

Additional Elements

There are additional circumstances that the Civil Code takes into account to determine whether or not a force majeure liability exemption is appropriate. To address these circumstances, we will continue using our previous example. If it turns out that the bridge had not been maintained and repaired for years, weighing such repairs on the contractor, and the destruction of the bridge is largely due to the lack of repairs, then the contractor would not be exempt from liability. This circumstance is referred to in the law as the concurrent fault of the debtor – contributory negligence of the contractor. [6]

Another circumstance considered by the law is the debtor’s own default.[7]  This refers to circumstances in which a contractor was in default prior to the occurrence of the force majeure event. We think, for example, of the delay in reaching a construction milestone, which is later impacted by further delays due to a climatic disaster that prevents the construction from moving forward. In this case, if there was a previous delay, it would be difficult to exempt the contractor from liability only as a result of the force majeure event.

Another key element to consider is the temporality of the force majeure event.[8]  There are force majeure events that can temporarily prevent the fulfillment of an obligation. In the current context, there are numerous measures that impact the conduction of massive events – concerts and other events were cancelled by some governments. However, several of these measures have a time frame. Arguably, once the administrative restriction is lifted, there would no longer be an impediment to the conduction of some events. The conclusion would be different if the date for the fulfilment of an obligation is essential for one of the parties – if time was of the essence.[9]

Again, the Civil Code grants parties the freedom to agree on the terms of their contracts and to assume the risks therein. It is common to find force majeure clauses that provide some definition of this term, that refers to the foreseeability of certain events, that regulate situations related to subcontractors, as well as to impose notification obligations and several others.

We had already anticipated the answer to the question in the tittle – it will depend on the facts of each case and the terms of the contract. In any case, it is important to consider all the elements mentioned above to determine the answer applicable to your case.


First, given the current extraordinary circumstances, we recommend that all our clients follow the official recommendations and take all required health measures to deal with the expansion of COVID-19.

Second, we recommend that you carefully read your contracts, and especially the clauses about force majeure and others related to the distribution of liability between the parties. This applies both to contracts in which the company must provide a service and to those in which it is the creditor of an outstanding service to be provided by another party.

Third, perform a preliminary analysis to determine whether your company is up to date with its obligations and that you have all documentation that supports this. The same applies to your contractual counterpart. It is important to establish whether the other party is up to date with its obligations, whether this is properly documented, and to consider all other circumstances that are specific to your contract. It is best to have a clear picture of your contractual situation with all its implications, so you can take informed decisions to mitigate the consequences of this pandemic.[10]

Fourth, if you are facing a force majeure event, communicate this impediment to the other party. Most contracts require some form of notice when faced with such an impediment. If you decide to give notice, or if you receive a notice of such situations, we recommend that you seek immediate advice to ensure that all terms and aspects of the contract have been taken into account. A communication in these cases, whatever the means used, may establish a position for the company which entails legal consequences. Therefore, it is best to do so when all factors have already been analyzed from a broad professional perspective. For this phase and all previous ones, our team of professionals is here to assist you in making decisions in these exceptional times.


[2] This article is not a legal opinion and does not reflect the opinions of Vouga Abogados or its professionals. To receive legal advice and our professional opinions, please contact the professionals listed at the bottom of this document.

[3] See in that sense, inter alia, Sections 426, 628 – 632, 643, 721 of the Civil Code.

[4] See Section 426 of the Civil Code (“The debtor will not be liable […] unless the debtor has assumed the consequences of the force majeure event […]”) (own translation).

[5] Under Paraguayan law, hardship does not exempt the fulfilment of contractual obligations. As an example, it is conceivable that in the current situations certain goods are offered less frequently and at higher prices. This would not preclude the fulfilment of certain obligation to procure goods now offered at higher prices, and therefore would not be a cause for liability exemption under Paraguayan law.

[6] See Section 426 of the Civil Code.

[7] See Section 426 of the Civil Code.

[8] See Section 628 of the Civil Code (“[…] If the impossibility is only temporary, the debtor, as long as it exists, is not liable for the delay in performance […]”) (own translation).

[9] See Sections 628 and 727 of the Civil Code.

[10] This will clearly depend on an analysis of the entire contract and the circumstances surrounding its performance. It will also depend on whether there are any mitigation or substitution measures applicable to the case.