Debtor’s responsibility
Article 1218 of the Italian Civil Code sets out the discipline regarding the debtor’s responsibility in the event of non-performance. According to this provision, read in conjunction with article 1223, the creditor is entitled to claim for compensation, comprising losses incurred and lost revenue, if the debtor delays or does not perform its obligation. To this regard, the debtor must be considered to be in default on its obligation even if the due date has not yet expired if it has unequivocally expressed its unwillingness to perform. The reference is made to obligations in general and therefore not limited to those obligations originated from a contract.
Article 1218 of the Italian Civil Code states that liability can only be avoided if it is proven that performance was impossible for reasons not attributable to the debtor. The impossibility must be related to events occurred after the conclusion of the contract. It must also be absolute (i.e. could not have been overcome despite any effort of the debtor). Furthermore, the debtor has to prove not only that the obligation has become impossible to perform, but also that this is not to be ascribed to its conduct. If the debtor is indeed able to offer such proof, article 1256 of the Italian Civil Code would apply prescribing the discipline for both temporary and definitive impossibility to perform.
Temporary and definitive impossibility to perform an obligation
If performance has become definitively impossible, the first paragraph of article 1256 of the Italian Civil Code states that the obligation is terminated if the impossibility is not caused by the debtor. The termination of the contract due to supervening impossibility is different from that deriving from non-performance. Supervening impossibility automatically releases the debtor from its original performance, causing simply an obligation to return back to the counterparty what this has already performed.
If the impossibility is only temporary, the second paragraph of article 1256 provides that debtor should not be held liable for any delay when performing the obligation. Safeguarding the interests of both the creditor and the debtor, the provision further clarifies that the obligation is terminated if, having regard to its nature, the debtor can no longer be required to perform it or the creditor has no longer an interest in receiving performance. The provision contemplates those cases in which the delay has made the performance unusable for the creditor and allowing for termination of the obligation even though it might still become possible to perform at a later date.
With regard to the obligation to deliver a certain thing, the debtor that was put on notice can be released from its obligation even if the thing that was to be delivered perished (i.e. became impossible) during the notice period. To this regard article 1221 of the Italian Civil Code prescribes that the debtor that is put on notice is released from its obligation if it is able to prove that the object of the performance would have become impossible even if it were in the creditor’s possession.
Partial impossibility
Pursuant to article 1258 of the Italian Civil Code, if performance has become only partially impossible, the debtor is released from the obligation performing the remaining possible part. The partial impossibility affects the scope of the contract determining a reduction of the debtor’s performance. It does not determine the termination of the obligation and the creditor is still entitled to receive the remaining part.
This provision must be read in conjunction with article 1464 of the Italian Civil Code that prescribes that the counterparty has the right to request the equivalent reduction of the of its performance, or withdrawal if does not have substantial interest in receiving a partial performance. If the party has initially accepted performance of the remaining part of the obligation, it would lose the right to request the withdrawal.