Judgment of the Supreme Court of Justice of 23.01.2014

Termination  or  amendment  of  the  contract  due  to  an  abnormal  change  of circumstances

In this case, the Court was requested to rule on whether a crisis situation, namely economic crisis, can fall within the concept of abnormal change of circumstances as grounds for the termination or amendment of a contract. The judgment sustains the understanding that the right to termination or amendment of the contract due to an abnormal change of circumstances presupposes that the amendment relates to circumstances underlying the parties’ decision to conclude the contract, that those fundamental circumstances have undergone an abnormal change, that the stability of the contract implies damage to either party, that the maintenance of such contract or of its terms greatly affects the principles of good faith, that the situation is not covered by the contract’s own risks and, finally, that the aggrieved party is not in default, it being also a requirement that the business base be bilateral and relates to both parties at the same time, that is, that there is an abnormal change of the circumstances underlying the parties’ decision to conclude the contract. Based on this assumptions, the Supreme Court of Justice concluded that, in crisis situations, the change must be abnormal in that it is unforeseeable, since otherwise, the parties could have foreseen and prepared themselves for it and therefore decided that the change of interest rate and of the debt -to-income ratio of bank loans for the payment of a promised contract price, unemployment and currency devaluation cannot fulfil such requirement and excluded the application of the legal framework of the termination or amendment of the contract due to an abnormal change of circumstances to the cases under consideration.

Judgment of the Court of Appeal of Coimbra of 17.12.2013

The suspension of actions for the recovery of debts provided for in Article 17 -E(1) of the CIRE (Special Revitalisation Process) does not cover third parties that guarantee the de bt sought to be recovered by means of security.