In business and personal relationships, there are frequent cases where a party cannot fulfill an assumed obligation due to objective or subjective reasons. In such times, the other party (creditor) often applies to the court, demanding contract termination, damages, and large penalties. Non-Performance Defense is a legal service aimed at protecting the defendant's interests and exempting them from liability or mitigating it. Legislation provides for a range of circumstances (e.g., force majeure, substantial change in circumstances, creditor's fault) that justify non-performance.
It is incorrect to assume that a breach of contract automatically means a lost case. A qualified lawyer can prove that non-performance was caused by force majeure, or that the creditor themselves contributed to the breach. Also, disputes over the amount of penalties, which can be disproportionately high, are common. Legal.ge gives you access to lawyers who will help you defend against unfair claims and minimize financial loss.
What Does Non-Performance Defense Cover?
This service covers full legal defense for the defendant:
- Proving Force Majeure: Arguing that performance became impossible due to natural disasters, pandemics, war, or government bans (obtaining certificates from the Chamber of Commerce).
- Reducing Penalties: Petitioning the court to reduce disproportionately high penalties based on Article 420 of the Civil Code.
- Preparing Defense Statement: Drafting a qualified response to the lawsuit, refuting the plaintiff's arguments regarding culpability.
- Contract Adaptation: Requesting to modify (adapt) contract terms due to a substantial change in circumstances (Article 398).
- Disputing Damages: Arguing that the damages claimed by the plaintiff are exaggerated or do not directly result from the breach.
Common Real-World Scenarios
Defense strategies are often used in the following cases:
The first scenario is "Pandemic and Lockdown." A restaurant leased space but was banned from operating due to Covid regulations. The landlord demands rent. The tenant defends citing force majeure and requests exemption from rent for the period they could not use the space.
The second case is "Sharp Price Increase." A construction company signed a fixed-price contract, but material prices rose by 50% due to war. The company requests a price review under Article 398 (change of circumstances) to avoid bankruptcy.
The third scenario is "Creditor's Fault." The contractor delayed the work because the client did not provide the project or materials on time. In this case, liability is shared or fully removed from the contractor.
The fourth situation is "Disproportionate Penalty." A bank or private individual demands a penalty that is 3 times the principal debt. Under judicial practice, such a penalty must be reduced.
Georgian Legal Framework and Regulations
Defense is based on several mechanisms of the Civil Code:
- Force Majeure: Exemption from liability due to irresistible force.
- Article 398 (Change of Circumstances): If circumstances have changed such that the party would not have entered into the contract, they can request adaptation or termination.
- Article 420 (Reduction of Penalty): The court's right to reduce a disproportionately high penalty.
Process and Stages
The process begins with analyzing the lawsuit. The lawyer investigates why the obligation could not be fulfilled. If the reason is objective (e.g., import ban), evidence is collected. A defense statement is prepared. In court, the lawyer tries to prove that the breach was not intentional or due to gross negligence. Often, the case ends with a settlement where parties agree on new, realistic terms for performance.
Why Legal.ge?
Defending yourself in court is difficult without professional help. Lawyers presented on Legal.ge will help ensure that objective difficulties do not become the cause of your financial ruin. We know how to use the protective mechanisms of the law in your favor.
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