IMPOSSIBILTY OF PERFORMANCE (FORCE MAJEURE)
Force Majeure, or what is commonly known as an ‘Act of God’, is a clause in a contract that regulates the liability of parties and the effect on the contract when an extraordinary event or circumstance beyond the control of the parties prevent one or both parties from fulfilling their obligations under this contract.
Force Majeure events can include but are not limited to; war, terrorism, quarantine restriction, government control or act, strikes, pandemics, floods or other natural disasters which could not have been reasonably foreseen.
A clause of this nature ordinarily terminates or suspends the existing contractual obligations between the parties. In absence of an express Force Majeure clause in a contract, South African common law prevails, and the contractual principle of Supervening Impossibility will be applicable. The onus will then be on the party alleging impossibility to perform due to the unforeseeable occurrence.
Parties to a contract are obliged to return what has been performed, which is enforceable by way of enrichment action. It must be noted that, the mere fact that a Supervening Impossibility has made it difficult, uneconomical or expensive for a party to perform, does not mean performance has become impossible and would therefore not constitute a defense to non-performance.
The obligation to address the non-performance rests on the service provider and thus it is essential that if your ability to render services as a service provider due to the Lockdown, that you immediately contact your customers in order to agree to a variation of the contract that allows for the contract to survive this period of impossibility of performance.
These COVID-19 times we find ourselves in are definitely unprecedented and difficult times that are preventing businesses of all sizes from delivering on contractual obligations. Before embarking on a protracted litigious procedure however, we would advise a mediation and consultation process to establish how the situation can be salvaged or resolved to the satisfaction of both parties.
For any information or a consultation on an urgent matter contact Fernando at firstname.lastname@example.org / 082 876 5387