During the recent period of Portugal’s financial bailout, following the severe effects of the global financial crisis of 2008, the courts demonstrated a clear reluctance to accept claims for contract termination or modification due to change of circumstances. Within this framework, the Portuguese legislator’s responses to the pandemic raises challenges for the change of circumstances regime. The legislative activity to which COVID-19 has given rise tests the traditional understanding regarding the foundations of the institute, certainly with regard to cases related to the pandemic, but also regarding situations of unenforceability with different grounds.

INTRODUCTION: DISRUPTION TO CONTRACT OBLIGATIONS CAUSED BY COVID-19

As has been the case in many legal orders, the appearance of COVID-19 and the measures taken by the State as a result of the pandemic present a challenge for Portuguese contract law. COVID-19 has emerged in the different countries as a direct or indirect cause of non-fulfilment of obligations or, at least, as a reason for adjusting the contractual position of the parties, due to the great sacrifice connected with fulfilment of the duties to be performed.

Disruption to contract relations may be seen in situations where performance becomes impossible, either temporarily or definitively, and in cases where, although performance is still possible, fulfilment by the debtor appears to be unenforceable since the performances are clearly disproportionate or because fulfilment of the obligations would be excessively onerous. A distinction should be made between these two situations.

Identifying performance as being temporarily or permanently impossible presupposes that COVID-19 prevents its fulfilment. A number of examples may be found, including, in particular, certain effects of the state of emergency measures decreed by the public authorities: a trip has been cancelled, a school has closed, a show has been postponed, the debtor failed to carry out a building contract or to supply goods. The impossibility may also be due to the debtor being infected with the new coronavirus: the debtor was unable to enter into a promised contract, or to be represented in that act, or was physically unable to fulfil a personal provision to which he/she had committed (e.g. painting artwork, composing music, directing a film, producing a text). There are many examples, of course.