Page 103 - Q&A
P. 103

How far can Covid-19 be used to avoid
            meeting contractual obligations?


            May 2020
            “With the outbreak of the coronavirus and the resulting lockdown I have found
            that many of the service providers to my business are using the coronavirus as
            an excuse to not meet their contractual obligations. We have all been affected
            by this, but at some point, the virus cannot be a blanket excuse for not meeting
            your obligations. To what extent is the virus a valid excuse?”
            It is indeed unprecedented times affecting many businesses. These times also
            call for patience and accommodation that sometimes goes beyond the letter
            of the contract. But the coronavirus has not invalidated our law or given rise
            to a new set of legal rules overnight. The law of contract still applies and is still
            relevant to your existing contracts and the obligations thereunder.

            What the virus may have triggered in terms of a contract is what our law tends
            to call a force majeure event, with the coronavirus potentially falling into the
            category of events that qualifies as a force majeure event. Typically, such events
            will allow a party to claim a postponement-amendment or absolution of their
            obligations in terms of the contract due to the event occurring.
            Reliance on  force majeure is, however, not automatic and a contract must
            make provision for such events and define what could be construed as such an
            event as well as the consequences that would follow if such an event did occur.
            Assuming though that a contract does provide for such an event, it would then
            allow the other party to claim such relief as afforded to the aggrieved party
            by the contract. If any of your service providers are claiming reliance on a
            force majeure clause, it will be important to review your contracts with them to
            establish if such reliance is correct and provided for.
            Another justification which parties could use for not meeting their contractual
            obligations  is  the  common  law  defence  of a  supervening  impossibility  of
            performance. This defence can be used where an event like the coronavirus
            makes it partially or temporarily impossible for a party to perform in terms of
            an agreement. Each set of facts will have to be evaluated on their own merits   Litigation
            to determine whether such a defence is valid and whether it would apply to
            all obligations or only certain obligations under the contract. Where there is a
            valid impossibility to perform, the party’s obligation to render performance is
            then usually suspended until the impossibility disappears, and the obligation
            then again becomes due. However, if the impossibility becomes unreasonable,
            too lengthy or even permanent, the party awaiting performance may elect to
            cancel the contract.








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