An excusable reason for delay and the creditor’s interest in late performance

Article 87(3) of the Obligations and Contracts Act concerns the judicial rescission of contracts transferring rights in rem over immovable property. If the defendant offers to perform during the proceedings, the court may allow time for performance. If the creditor bringing the claim does not object, the court may set a deadline in view of the defendant’s stated willingness to perform. An objection, however, indicates that the creditor refuses to accept the proposed late performance. The creditor may dispute the debtor’s claim to have an excusable reason for the delay and argue that late performance no longer serves the creditor’s interest.

In Decision No. 29 of 13 April 2011 in commercial case No. 396/2010, the Supreme Court of Cassation explained in detail when the court may grant this additional period and what an assessment “in light of the circumstances” entails. The relevant circumstances under the second sentence of Article 87(3) are an excusable reason for the delay and, if such a reason is established, the creditor’s interest in late performance.

An excusable reason may exclude the debtor’s liability for delay. It may also consist of facts and circumstances in which the delay arose from the conduct of the creditor or of third parties whose cooperation was required by law or by agreement between the parties.

The creditor’s lack of interest is assessed in light of the circumstances in which, unless the parties have agreed otherwise, Article 87(2) allows rescission without requiring the creditor to give the debtor time to perform. The unperformed part must also be considered: if it is insignificant, the contract is not rescinded under Article 87(4).

This raises the question whether a defendant’s offer to perform by delivering another thing of the same kind meets the requirements of Article 87(3).

This article is not a legal opinion of attorney Elitsa Markova, attorney Mihail Tomov or a lawyer at Markova, Tomov and Partners, or advice concerning a particular situation or person. For legal assistance in a case involving creditor default, consult a lawyer practising in this field.