Force majeure and contractual obligations in the time of COVID-19
19 May 2020  | Juanita Havenga | Views: 1070
If you have ever entered into a commercial contract or read the terms attached to one, there is a good chance that you may have stumbled across a force majeure clause. 

In the past (meaning pre-COVID 19 pandemic times) this clause was often overlooked as it typically deals with catastrophic events, such as natural disasters and warfare. Depending on where you live and what exactly you are signing, many South Africans (even those who identify themselves as “worriers” in other situations) don’t fear imminent disasters such as avalanches, hurricanes or the third world war when contemplated entering into a straightforward contract and don’t ask too many questions in this regard.  

Accordingly, upon encountering a force majeure clause, you may have wondered what it was referring to or even why it was ever included in the first place, but hurriedly moved passed-it in the fear of sounding uninformed or accidentally being forced to learn more Latin terminology than strictly required for a non-lawyer (although “force majeure” is technically French and “vis maior” is the Latin term).  

This is normal and you cannot be blamed for your disinterest in learning Latin/French, or your failure to sense an impending disaster such as the novel Coronavirus rearing its ugly head and throwing you into contractual uncertainty. However, force majeure clauses may become the new normal when conducting ordinary business, so I will attempt to give a general overview of force majeure and its effect on contractual obligations. I hope the below summary will assist you.  

What is considered a “force majeure” event? 

The terms “force majeure” and “vis maior” generally refer to an act of God. This is not mere religious terminology, but is intended to refer to an event for which no party can be held accountable (such as a tsunami or an earthquake). The concept of force majeure can also be extended to include human actions such as terrorist activities, armed conflict, civil commotion, riots or war.

One of the key legal issues arising from the current Coronavirus pandemic has been the inability of parties to perform their obligations in terms of agreements and the extent to which such failures can be excused as a so-called “force majeure event”, either in terms of contractually agreed provisions (which are outlined in the respective agreement between the parties) or South Africa common law principles.

Will COVID 19 virus constitute a force majeure event under South African law?

The first thing to establish is whether your contract contains a force majeure clause or not. If it does, then it will usually include wording which excuses a party (often for a specified period of time) from performing some or even all of its obligations in terms of the agreement upon the occurrence of certain situations as identified in the contract. The situations or circumstances identified in the contract (and which will trigger the clause) are the contractually-agreed force majeure events on which you may rely to provide temporary relief from your contractual obligations and avoid being held accountable for failure to perform in terms of the contract. 

In the event that there is no force majeure clause in your contract, don’t despair as it may still be possible to rely on the common law principle of ‘supervening impossibility of performance’ to temporarily suspend your obligations in terms of the contract provided that it has become objectively impossible to perform under the contract as a result of an unforeseeable and unavoidable event, which is not due to the fault of any party to that agreement.

However, it is important to keep in mind that the common law principle of supervening impossibility in respect of non-performance as a result of the COVID-19 virus outbreak will be very fact-specific and you should not assume you can get out of your contractual obligations simply because disaster strikes.

Concluding remarks

In summary, it may be possible for a party to rely on an applicable force majeure clause or the common law principle of supervening impossibility (in the absence of a force majeure clause) due to the COVID-19 pandemic as a means of excusing them from performing their contractual obligations in terms of agreements, but it will depend on the facts. A proper analysis may be complex and readers are warned from both –

(a) simply relying on ‘force majeure’ to escape their contractual obligations; as well as 
(b) trying to enforce contractual terms without taking into account whether the other party can actually perform that which you are asking of them! 

Parties who want to rely on either force majeure clauses or the common law principle of supervening impossibility are advised to obtain legal advice prior to doing so. As is the case when drafting force majeure clauses, rather be safe than sorry.