FORCE MAJEURE VS. COVID-19 VS. BREACH OF CONTRACT

TO ALL ESTEEMED BUSINESS PARTNERS

Number

05/2020
 
Dear Colleagues and Valued Clients

Force Majeure is a situation which allows for parties to agreements to be freed from all obligations and liabilities when an extraordinary event, beyond the control of either of the parties, prevent one or both of them from fulfilling their contractual obligations. Also known as an act of God, it does not justify non-performance nor the instant unilateral cancellation of a contract in all cases.
 
Certain criteria must be met for someone to invoke force majeure:
  • Impossibilitiy to perform. This is not a subjective test but rather the "average man on the street" - test.
  • It must be unqualified and definite, not just a probability of not being able to perform.
  • If it can, in general, be done but the other party seeks to escape liability he will be held liable.
  • If the impossibility to perform can be avoided by a reasonable person he should do so.
  • It must not be the fault of any of the parties.
  • Will one be able to continue and honor his contractual obligations once he is able to do so? Differently put: is it possible to extend compliance deadlines or delay performance for the moment?
 
Once these criteria have been considered force majeure may be invoked and  the aggrieved party will (probably) not be able to sue for damages as there is no breach of contract.
 
Thus: Does Covid-19 and resulting national lockdown automatically justify someone not having to fulfill his contractual obligations? Most definitely not.
 
Parties must strictly comply with all relevant force majeure (vis-major) clauses in their contracts and follow the processes set out therein.

Should there be no such clauses the common law principles will apply, as referred to supra.
 
It will, obviously, not be possible for conveyancers to have answer to all the above. It is therefor of the utmost importance that clients be informed of the risks and of being in breach of contract, regardless of what, prima facie, seems like "the end of the world as we know it.....".

Kindest regards.

For any queries please contact our property law division at the details below:
Jodie van Broekhuizen

Tel: 012 425 3520
jvbroekhuizen@macrobert.co.za 
 
Jessica Jansen van Rensburg

Tel: 012 425 3568
jessica.jvrensburg@macrobert.co.za

Anikha Abarder

Tel: 021 464 2400
aabarder@macrobert.co.za 

Kaamilah Thomas

Tel: 012 425 3583
kthomas@macrobert.co.za
 
Denver Vraagom

Tel: 021 464 2400
dvraagom@macrobert.co.za

Daleen Loubser

Tel: 012 425 3489
dloubser@macrobert.co.za
Disclaimer: This newsflash is for general information only and should not be used as legal or professional advice. No liability can be accepted for any errors or omissions, nor for any loss or damage arising from reliance and any information therein