COVID-19: An Act of God?

The question many of our clients have had to consider in these current circumstances is whether COVID -19 and its consequences would or does qualify as an Act of God (force majeure or vis major) and thereby voiding and/or suspending many contractual agreements and/or provisions.

An Act of God is an unforeseen and/or superior force, event or circumstance, which is beyond the control of parties to a contract which renders contractual performance impossible. In terms of South African law our courts take the view that “if a person is prevented from performing his contract by vis major…he is discharged from liability” this was affirmed in the case of Peters, Flamman & Co v Kokstad Muncipality 1919 AD 427.

On the 23rd of March 2020, President Cyril Ramaphosa declared that, as of midnight on 26 March 2020, everyone not providing non-essential services would have to stay home for a period of 21 days, thereby instantly bringing the majority of the economy to a grinding halt. The result is an historical event which will undoubtedly cause a multitude of unexpected, unplanned and possibly unforeseen circumstances arising for many businesses resulting in many people/companies not being able to fulfill agreed upon contractual obligations including delivery or goods, products and/or services.

It therefore follows that if you or your business/company are unable to perform during this period, there is a very real possibility that this would not render you liable for a breach of your contract and that your non performance would, essentially, be “excused”.

We have however yet to see the effects of the COVID -19 phenomena tested in our courts and accordingly it is advisable to obtain legal advice on your contracts, the applicable clauses and the potential consequences applicable to each client’s specific situation.

We therefore recommend that prior to taking any drastic steps, or agreeing to any terms that another party to your agreement may be trying to get you to agree to, you obtain legal advice. It is also, in our opinion, advisable to obtain this information before the lock down is over so that you are well prepared and well placed to proceed appropriately fully knowing, understanding and appreciating your legal position. We at Gjersöe Inc. stand ready during this lock down period and thereafter to assist you with all your needs in this regard.

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