Explanation of Article 110
This article addresses the rule of contract dissolution, which in this system refers to the dissolution of a contract by the force of the system, whereby the obligation and its corresponding obligation expire when performance becomes impossible due to reasons beyond the debtor's control. The difference between dissolution by the force of the system and contractual or judicial rescission is that dissolution occurs when performance is impossible due to reasons beyond the debtor's control, while rescission occurs when the obligation is not performed due to the debtor's default, whether specific performance remains possible but the debtor refrains from it, or it becomes impossible due to the debtor's default. In the latter case, the contract does not dissolve automatically but remains in effect, and the creditor may request the rescission of the contract as a penalty for the debtor's breach of obligation or seek compensation based on contractual liability. The consequences of dissolution are the same as those of rescission, with the parties returning to the state they were in before the contract. The first paragraph outlines the case of total impossibility of performance due to reasons beyond the debtor's control; in this case, the obligation and its corresponding obligation expire, and the contract dissolves automatically by the force of the system without the need for judicial or contractual rescission. If the corresponding obligation has been partially or fully performed, it is returned to its owner. Applications of this include the sale of a specific item that perishes before delivery due to force majeure as outlined in Article (329), or the total destruction of a specific leased item according to Article (420), or a partner's share in a company being a property right that perishes before delivery as stated in Article (533), or the death of a contracting party in a contract based on personal consideration such as agency and speculation according to Articles (502, 565). This rule applies even if the contract is conditional on a suspensive condition and performance becomes impossible before the condition is fulfilled for reasons beyond the debtor's control, so the condition does not have a retroactive effect in this case according to Article $(Y\cdot Y)$. The second paragraph outlines the case of partial impossibility due to reasons beyond the debtor's control; in this case, the obligation expires only in the impossible part and its corresponding part, whether in instantaneous contracts or temporary impossibility in time-based contracts. An example of the former is the sale of multiple specific items, some of which perish before delivery, and an example of the latter is a lease on a specific property for five years, followed by a regulatory decision prohibiting leasing in that area for two years. In both cases, the obligation expires by the force of the system only in the impossible part, and if the buyer or lessee has paid the full price or rent, the buyer retrieves the corresponding part of the price, and the lessee retrieves the corresponding part of the rent. The end of the article states that in the case of partial impossibility, whether in instantaneous or time-based contracts, the creditor may request the rescission of the contract, i.e., in the non-impossible part. The provision that rescission is not at the unilateral will of the creditor but rather by judicial request allows the court to reject the rescission request if the part that became impossible to perform is of little importance relative to the total obligation, such that it does not affect the contracting party's consent to the contract. The importance of the impossible part relative to the total subject of the contract may be evident from what is stated in the contract or from the nature of the contract's subject or the purpose for which it was intended, such as if the purpose of the sale or lease is not achieved except by that part which became impossible. If the impossible part is not significant, the court may reject the rescission request; this ruling aligns with what is stipulated in Article (107) regarding judicial rescission. This ruling applies as a general rule to applications of partial impossibility mentioned in the named contracts in this system, including partial destruction of the sold item before delivery or the leased item according to Articles (329, 421). The creditor is not entitled to compensation in the case of partial impossibility, whether they uphold the contract for the remaining part or request rescission, because the assumption in this matter is that the impossibility is due to reasons beyond the debtor's control, so they are not liable for compensation. It is evident from the above that the debtor bears the consequence of impossibility or dissolution by the force of the system, as they have no control over the impossibility and are relieved from their obligation, yet they cannot demand the creditor to perform the corresponding obligation, so the loss ultimately falls on the debtor, who bears its consequence. This is the principle of risk-bearing in bilateral contracts, based on the interconnection between reciprocal obligations. However, if the contract is unilateral, such as a gratuitous deposit, and performance becomes impossible due to reasons beyond the debtor's control, such as the deposited item perishing with the depositary due to force majeure, Article (294) stipulates that the debtor's obligation expires if they prove the impossibility of performance due to reasons beyond their control, and the corresponding obligation also expires if it exists. Thus, the one who bears the consequence is the creditor, i.e., the depositor, not the debtor, i.e., the depositary, because the creditor does not have an obligation to be relieved from in exchange for the debtor being relieved from their obligation. Therefore, it is generally correct to say that the one who bears the consequence of impossibility in bilateral contracts is the debtor, and in unilateral contracts, it is the creditor.
Related To
Article 110
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If the performance of an obligation in a bilateral contract becomes impossible for a reason beyond the debtor’s control, said obligation and the corresponding obligation shall be extinguished, and the contract shall be automatically terminated.
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If only part of the obligation is impossible to perform, the obligation shall be extinguished only for such part and its corresponding obligation. Such provision shall apply to temporary impossibilities in time-based contracts. The creditor may, in either case, demand termination of the contract. The court may dismiss the petition for termination if the part is insignificant compared to the obligation.