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 provide any specific rules regarding the termination of supply contracts.
In general, parties to any commercial agreement (including supply contracts) may agree to any lawful terms (including terms related to contract termination).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 or activities associated with the purpose of the contract, then termination will be presumed. However, given that there is no statutory provision that addresses automatic termination, if a party wishes to terminate a contract and the contract does not include any termination stipulations, a written termination notice is recommended. The more formal or documented the termination notice is, the better. Now, from a procedural standpoint, it is worth considering that a party wishing to bring a claim relating to contract termination will be subject to limitation periods provided by law to file such a claim, which will vary depending on the type of claim.Automatic termination on insolvency
Will a commercial contract terminate automatically on insolvency of the other party?
No, unless the agreement indicates so, although commercial contracts generally include provisions in this regard.
However, if a party becomes bankrupt and fails to pay its debts, the other party may seek legal action in accordance with corresponding contractual terms or law provisions, or both.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, commercial contracts usually include provisions in this regard.Force majeure
Is force majeure recognised in your jurisdiction? What are the consequences of a force majeure event?
Yes, force majeure events are recognised in both civil and commercial law; usually, its consequences are the cancellation of the affected party’s obligations.
Moreover, provisions regulating force majeure events and its consequences for the parties are almost always included in commercial agreements.