INDUSTRY TALK
Doing business during COVID-19 The coronavirus has impacted almost every aspect of our lives and forever changed our perception of stability and future certainty. No other recent event in history has highlighted the fragility of our normal way of living and doing business quite like the global COVID-19 pandemic. Christine van Zyl of Christo Coetzee Attorneys investigates the effects on contractual obligations.
D
ue to the lockdown, parties
suspend the legal obligations of the parties
who had entered into contracts
for a specific period and allow a party
impossibility to perform must relate to
before the pandemic hit South
to elect to cancel a contract, should the
the actual contractual obligations,
Africa, suddenly find themselves
impossibility to perform extend beyond the
the event causing the impossibility
agreed period.
must be unforeseen and it occurs after
in a position where performance has become impossible.
However, one must be careful of simply
Local and global lockdowns and
It is important to note that the
conclusion of the contract. Our law
relying on a force majeure clause to
allows the extension of this principle to
subsequent effects thereof on business
suspend legal obligations. This is because
legislative changes that were introduced
relationships and deliverables have brought
our law places strong emphasis on the
subsequent to the conclusion of the
two legal aspects sharply into focus:
sanctity of contract and the wording of the
contract and which have the effect
1. supervening impossibility to perform
force majeure clause will determine whether
of rendering performance impossible.
2. force majeure clauses in many contracts.
the event obstructing performance, falls
The enactment of the directives and
How will these two principles alleviate the
within the parties intention of what they
regulations under the auspice of the
impact of COVID-19 on your business?
had defined as a force majeure. The courts
Disaster Management Act, could qualify
adapt a strict interpretation of the parties’
as such a legislative change.
A closer look at force majeure
intentions and a vaguely worded force
This is an event giving rise to impossibility of
majeure clause may not have the effect of
Review contracts now
performance. It can be either an act of God
relieving parties from their obligations.
In short, a business may rely solely on
(natural causes) or man (human agency).
its contractual terms or on the common law principle to navigate these difficult
reasonable foresight and unavoidable with
Supervening impossibility explained
reasonable care.
Should a contract not contain a force
formulate an approach carefully in order
majeure clause, or if a contract does
to avoid liability. If nothing else, now is the
a contract has the effect of removing the
contain such a clause, but the wording
best time to review your contracts and
so-called ‘unforeseeability’ of an event. It
does not allow its application to the specific
make provision, as far as possible, for an
may remove or alleviate the liability for
event, parties can rely on the common law
unforeseen event like COVID-19. •
damages as a result of a breach of contract,
principle of supervening impossibility to
due to the impossibility to perform on the
perform. This principle is relied on if a specific
occurrence of a specific event. Depending
event has made it impossible for the parties
on the wording of such a clause, it could
to fulfil their respective obligations.
The event is something unforeseeable with
Inclusion of a force majeure clause in
C C
times, but it is important to review and
Christo Coetzee Attorneys – www.christocoetzeelaw.co.za
Christo Coetzee Attorneys We are not just lawyers, we are part of your business and can assist you in the following areas: • Labelling and advertising compliance • Regulatory compliance • Commercial law • Contracts • Litigation
Christine van Zyl: BSc (Hons.) Biochemistry, LLB, Diploma Cosmetic Chemistry
Tel: 012 342 1930 | Email: office@christocoetzeelaw.co.za | Website: www.christocoetzeelaw.co.za
12 | MAY
2020 | P C Review
