Termination

Implied terms

Do special rules apply to termination of a supply contract that will be implied by law into a contract? Can these terms be excluded or limited by including appropriate language in the contract?

The Commercial Code does not include any specific rules regarding termination of a supply contract.

In general, parties to a commercial contract may agree to any licit term in the language in the contract, including rules for termination of the agreement.

Notice period

If a contract does not include a notice period to terminate a contract, how is it calculated?

If the parties continue operating, then it can be deemed that the contract continues to be valid. If they end their relationship and activities associated with the purpose of the contract, then termination will be presumed. There is no provision that addresses automatic termination. However, from a procedural standpoint, a party that wishes to continue the performance of the contract will be subject to limitation periods to bring a claim.

Automatic termination on insolvency

Will a commercial contract terminate automatically on insolvency of the other party?

No, unless such consequence is established in the agreement. Language in commercial contracts usually includes provisions in this regard.

However, if a party becomes bankrupt and fails to pay its debts, the other party may seek legal action under the obligations derived from the contract.

Termination for financial distress

Are there restrictions on terminating a contract if the other party is in financial distress?

No, the Commercial Code does not address this situation. However, language in commercial contracts usually includes provisions in this regard.

Force majeure

Is force majeure recognised in your jurisdiction? What are the consequences of a force majeure event?

Yes, events of force majeure are recognised in both civil and commercial laws, and generally its consequences are the cancellation of the obligations of the party.

Normally the consequences for events of force majeure are included in the commercial agreements.