Explanation of Article 476
The article clarifies that each of the contracting parties has the right to request the court to annul the contract of work in the event of a specific unforeseen excuse that prevents the execution of the contract, with compensation to the other contracting party for any damage resulting from this annulment, whether it be a loss or a missed gain.
The article indicates that there are three conditions for requesting annulment due to an unforeseen excuse: The first condition: The excuse must prevent the execution of the contract or make its execution burdensome for the contractor, excluding the following: A- If an event occurs that makes the fulfillment of the obligation impossible due to a reason beyond the contractor's control, the contract is annulled automatically without compensation in accordance with Article (110), and the contractor is entitled to compensation for what he has worked on, as specified in the following Article (477). B- If an event occurs due to the contractor's action that makes the fulfillment of the obligation burdensome for him, he cannot request annulment; as the description of the event allowing for annulment due to an excuse implies that it was not caused by him.
The second condition: The excuse must be unforeseen after the contract, meaning it should not be something that a reasonable person could have anticipated at the time of the contract's conclusion. What can be anticipated is not considered unforeseen.
The third condition: The excuse must be specific to the person of the contractor, meaning it is not a general exceptional event; as general exceptional events are governed by Articles (97) and (471).
Once these three conditions are met, the contractor, whether the employer or the contractor, may request the annulment of the contract. For instance, if an employer contracts with a contractor to build student housing near a university, and then the university relocates before the construction begins, the execution in this case becomes burdensome for the employer, as he would be spending money without benefit. Thus, the employer has the right to request the annulment of the contract, with compensation to the contractor for the loss incurred and the missed gain from the annulled contract, taking into account what the contractor could have earned by using the time he was supposed to spend on the work in another job.
An unforeseen excuse may also apply to the contractor if the contract was concluded for reasons related to his person, and an excuse arises that makes fulfilling the obligation burdensome, not impossible, for him; he may request annulment with compensation to the employer for the loss incurred and the missed gain due to the annulment.
The contractor's excuse may not be conceivable if the contract was not concluded for reasons related to his person, as he could delegate the work to someone else; thus, there is no excuse preventing the execution or completion of the work as stipulated in the article.
The above clarifies the difference between the court's ruling to annul a contract of work due to a general exceptional event, which does not involve compensation, and its ruling to annul due to a specific unforeseen excuse of the contractor, which requires compensation. It also shows the difference between annulment for breach of obligation, which is requested by the non-breaching contractor and requires a warning, and annulment for an unforeseen excuse, which is requested by the contractor who has an excuse preventing execution or completion without a warning.
If the annulment is by the employer, he must compensate the contractor for all expenses incurred, completed works, and the missed gain from the annulled contract, taking into account what the contractor could have earned by using the time he was supposed to spend on the work in another job.
If the annulment is by the contractor, he must compensate the employer for the loss incurred due to the annulment, including any additional costs for completing the work with another contractor, and the missed gain due to the annulment to the extent that could not be avoided by reasonable effort.
Contrary to the theory of general exceptional circumstances, the system does not stipulate in the three instances where annulment for an unforeseen excuse is permissible—namely, the contract of work in this article, lease in Article (443), and agricultural partnership in Article (577)—the invalidity of agreements contrary to the provisions of these articles. Therefore, the contracting parties may agree at the time of the contract that neither party has the right to annul the contract for an unforeseen excuse, or agree to limit this right to certain types of excuses.
Related To
Article 476
Either contracting party may demand termination of the contract for service in the event of an exigent matter that affects his obligation in the performance of the contract; in such case, the terminating party shall compensate the other party for any harm sustained.