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Coronavirus - questions and answers about contracts and regulation

  • Czech Republic

    27-05-2020

    In connection with the spread of Covid-19, extensive crisis measures have been announced in the Czech Republic with a major impact on all business activities nationwide.

    Below we provide answers to frequently asked questions, especially in the area of contracts and regulation. Employment law and related issues are dealt with in more detail in our Practical Guide for Employers and Covid-19: Antivirus Employment Maintenance Program.

    Updated on 27 March 2020. We continue to monitor the situation closely.

    Question No. 1 – Can we claim compensation from the Czech Republic for damage caused by the crisis measures?

    Yes, the State may be required to compensate damage suffered under certain conditions. We have prepared the following summary Covid-19: Business Interruption Loss Recovery.

    Question No. 2 – What business support measures are available?

    There are a whole host of financial measures to support businesses and we advise our clients based on their specific situation. One of the most important measures is the COVID III guarantee programme and the COVID Plus programme, brief descriptions of which we have prepared here: Covid-19: COVID III and COVID Plus guarantee programmes.

    Question No. 3 - We are currently paying off the loan and we need to temporarily postpone the installments. Can we do so without the bank's approval?

    Yes, the law newly introduced a temporary option to postpone loan repayments; the bank only needs to be informed about this step.

    The Senate approved and the President of the Republic signed a bill based on which both consumers and businesses can apply for the postponement of their payments for three or six months.

    This option only applies to loans that were taken out and drawn before 26 March 2020, as well as loans that were taken out before 26 March 20 and which are secured by real estate or provided as special purpose (e.g. to acquire real estate or pay for the transfer of a share in a housing cooperative).

    The debtor will be able to choose whether to postpone the instalments by three or six months or not to use this option at all.

    The Act was promulgated in the Collection of Laws and entered into force on 17 April 2020.

    Question No. 4 – As a result of the crisis measures, the other party is not fulfilling an already concluded contract. Is it entitled to provide fulfilment later and can we terminate the contract?

    Even in view of the unprecedented nature of the situation, many clients prefer to take a business approach and try to find a mutually acceptable solution. We summarised other options in Covid-19: Contracts and force majeure.

    Question No. 5 – As a result of the measures we had to close our business premises. Do we still have to pay rent?

    With respect to this and other questions relating to lease agreements (both from the perspective of the tenant and the landlord), we have prepared the following practical summary: Impact of COVID-19 pandemic on rights and obligations under lease agreements.

    Question No. 6 – Do all the obligations of a member of a statutory body continue to apply if our company goes bankrupt? And can our creditors file an insolvency petition?

    Extraordinary changes in insolvency law have been approved. Some of them apply in general and some are limited to bankruptcy caused by the emergency measures related to the Covid-19 pandemic. The individual changes are described in more detail in Covid-19: Insolvency and extraordinary moratorium.

     

    Disclaimer

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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