What is force majeure

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Understanding force majeure and its connection to the lockdown

President Ramaphosa has pleaded with businesses not to enact force majeure clauses… but what does it all mean?

What is force majeure

Image via Adobe Stock

Force majeure is a contractual clause — recognised in the context of South African common law — connected to any event beyond the control of parties which renders obligations of the agreement impossible to fulfil.

During his public address on Thursday night, South African President Cyril Ramaphosa announced an extension of the national lockdown currently in place to combat the spread of COVID-19. The president, who noted with serious concern the adverse impact this extension would have on the local economy and businesses, pleaded with companies not to enact force majeure clauses, saying:

“I would like to call on all businesses to continue to pay their suppliers, to the extent that they can, to ensure that those suppliers can also continue to operate and pay their staff and suppliers.

In this respect, I would like to appeal to all large businesses not to resort to force majeure and stop paying their suppliers and rental commitments, as such practice has a domino effect on all other businesses dependent on that chain.”

What is force majeure?

Force majeure — meaning “superior force” — is a legal clause which frees both parties from contractual liability in the event of an extraordinary, uncontrollable circumstance or an “act of God”. Events which trigger force majeure include wars, riots, natural disasters or the declaration of a State of Emergency.

Classified as a global pandemic by the World Health Organisation (WHO) and, in the South African context, declared a State of Disaster; COVID-19 fits the force majeure mould.

Force majeure is recognised within contracts and common law; the latter under the principle of ‘supervening impossibility of performance’.

In this way, most South African companies are able to investigate force majeure — the merit of which will ultimately be determined by the court system if challenged by the defending party.

While the concept of force majeure may seem clear within the context of COVID-19 and the South African lockdown, businesses interested in enacting force majeure, as a means of avoiding contractual obligations, should proceed with caution and consult expert legal advice.

Determining force majeure

If the contract in question does not contain a clear and concise force majeure clause, it’s important for parties facing force majeure to understand the court’s determinations and considerations. The court will look at:

  • The nature of the contract
  • The relation of the parties
  • The circumstances of the case
  • The nature of the impossibility invoked by the defendant

Furthermore, law firm Cliffe Dekker Hofmeyr points to six fundamental conditions which need to be fulfilled for the force majeure to trigger contractual terminations or suspensions:

  1. The impossibility must be objectively impossible
  2. It must be absolute as opposed to probable
  3. It must be absolute as opposed to relative, in other words if it relates to something that can in general be done, but the one party seeking to escape liability cannot personally perform, such party remains liable in contract
  4. The impossibility must be unavoidable by a reasonable person
  5. It must not be the fault of either party
  6. The mere fact that a disaster or event was foreseeable, does not necessarily mean that it ought to have been foreseeable or that it is avoidable by a reasonable person

‘Nobody has an obligation to do the impossible’

Impossibilium nulla obligatio est maxim — nobody has an obligation to do the impossible — is the legal determination which excuses parties from performing, due to the impossibility of performance, as a result of an unforeseen, uncontrollable event.

In contract law, parties may be afforded the right to suspend the contract — as opposed to an outright termination — allowing for a time period connected to the force majeure clause. Once the suspension period has elapsed, parties can re-evaluate the situation. Should the impossibility of performance still exist any party has the right to terminate the contract in its entirety.