FORCE MAJEURE CONTRACTS

It is clear that the legal principle of force majeure in South African law of contracts is receiving more attention as the second year of the Covid19 pandemic moves on.

Essentially, force majeure in South African common law is a means of obtaining release from contractual obligations, where certain factual circumstances exist, to enable same to be invoked by any party to a contract. The relief does not arise automatically, as there are legal procedures and formalities which must be invoked litigiously.

Force majeure (also known as vis maior, an act of God or vis divina) is taking on more importance not only in regard to contracts concluded prior to the Covid19 pandemic but more importantly since the outbreak of the pandemic. Force majeure will be relevant where some particular objective force, power or agency exists which cannot be resisted or controlled by the ordinary man. This includes not only acts of nature but also acts of man such as new legislation, riots, nuclear disasters, pandemics caused by man and other man created immense impact events or mass destruction events like terrorist bombings.

It is closely linked to the legal principle of casus fortuitous which provides for release from obligations, subject to conditions, when something extraordinary or unforeseen occurs and which human foresight cannot be expected to anticipate or if it can be foreseen it cannot be avoided by the exercise of reasonable care or caution.

Ultimately, whether or not parties to a contract will be able to obtain the full intended benefit of the common law principle of force majeure depends to a large extent on the nature of the contract and where the scale of power is in regard to the parties’ respective negotiating positions of strength. The principle applies to contracts by virtue of the common law either as an agreed contractual term or ex lege (by operation of the law) if the term is not included in the contract itself.

Related to force majeure is the principle of supervening impossibility of performance which is another principle by which a party can obtain release from contractual obligations where performance becomes objectively impossible after conclusion of the contract. This can occur either through physical impossibility or legal impossibility of performance. Impossibility must be absolute, mere difficulty of performance does not suffice.

Invariably, one of the two principles may be applicable to a multitude of contracts concluded prior to Covid19 if one of the parties wishes to obtain a release from its obligations.

In regard to contracts still to be concluded, the positions of strength will determine whether or not the principle of force majeure will be included by agreement. Many companies offering banking, insurance and other related services offer standardized contracts to clients and these are not up for any negotiation. It is clearly take it or leave it.

Bearing in mind the massive stresses caused to millions of people worldwide, and in South Africa particularly, it is submitted that the principle of force majeure will continue to take on increased significance in contractual negotiations having regard to the belief held by so many that Covid19 is the first major health, cultural and legal significant factor to change the face of the world since the 11 September 2001 attacks and that the likelihood of another viral pandemic or similar event cannot be ruled out.

It is thus essential when considering the negotiation and conclusion of contracts in the current Covid19 times, and certainly in the post Covid19 world, that force majeure and impossibility of performance is a material term of any contract and that you employ the services of an expert contracts attorney to safeguard your interests, or otherwise you may be called upon to pay your pound of flesh.

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