Businesses experiencing disruption from the recent events in South Africa may be able to invoke force majeure clauses in contracts, or the law of supervening impossibility, depending on the circumstances.By Michael Straeuli and Dominic Harris from Webber Wentzel The events of the past few days have resulted in considerable social and commercial upheaval. In the face of ongoing and future disruptions, the potential impact on a party’s ability to perform in terms of a contract may be far-reaching. We have highlighted some key issues related to contracts at this time – focusing on force majeure clauses and the accompanying doctrine of supervening impossibility. Should you require advice tailored to your specific factual context, please do not hesitate to contact us. As you may be aware, force majeure clauses exist to protect a party to a contract from an event beyond the control of that party, which subsequently prevents the party from performing its contractual obligations, through no fault of their own. A party who successfully invokes force majeure will be released from their contractual obligations, either temporarily or permanently, and will escape any liability that may arise in respect of the “default”. Whilst it is correct to associate force majeure with natural disasters, the concept also covers a wide range of events, including public riots, strikes, sabotage, national crises and, in certain cases, the declaration of a state of emergency. Importantly, each force majeure clause is different and, while some clauses are more substantial than others, it is often industry practice to include events, such as public riots and strikes, in the list of what would constitute a force majeure event in a contract.
If President Cyril Ramaphosa declares a state of emergency in response to the recent riots and looting, this may well constitute grounds on which to declare force majeure or rely on the doctrine of supervening possibility, although a final determination in this regard would depend on your contract and whether the declaration has or will result in an impossibility to perform in terms of the contract.Should the recent turmoil have affected your inability to perform in terms of a contract, we recommend taking the following steps:
- Step 1: examine the wording of the force majeure clause in your contract to check whether it covers the event in question – e.g., public riots;
- Step 2: establish the facts – force majeure is only available if the prescribed event has taken place and has caused (or is about to cause) the default in question;
- Step 3: a party seeking to rely on a force majeure clause will probably be required to give timeous notice to the other party; and
- Step 4: be mindful of any exclusion listed in your contract which could result in the event not constituting force majeure in terms of the contract.