When signing a contract, one cannot predict whether certain circumstances will arise or not. No one expected the occurrence of COVID-19, yet it had a devastating effect on the global economy, leading to widespread unemployment.
Force majeure is a common clause within contracts that accounts for "acts of God" - the events and circumstances that are beyond your control. It is a way for the parties involved temporarily to be excused from contractual obligation, if or when such an event takes place, and either or both parties are not able to uphold their end of the agreement. The contract in question can be suspended for a certain period of time stipulated in the contract. Once this determined time period has lapsed, the parties involved may decide to terminate the contract.
Force Majeure: Meaning and Events
A force majeure clause can be written to be as specific or broad as desired; however, there are a few events that are generally considered to fall under force majeure. These include but are not limited to:
A Force Majeure Event: The Requirements in South Africa
There are multiple requirements that have to be met before an event can be constituted as a force majeure event. Every event that occurs must be analysed to ensure they meet these requirements:
- The event in question must take place after the contract has been created and signed.
- The event must, under all circumstances, be unavoidable; thus, making the terms agreed upon impossible to fulfil.
- If the event in question was foreseeable, then force majeure may not be applicable.
The Implementation of Force Majeure
If the event in question meets all of the requirements needed to be considered a force majeure event, the contractual obligations will be resolved in a certain order. This order consists of:
- The contractual obligation that is impossible to perform will be extinguished and neither of the parties will be expected to adhere to the contract.
- It must be decided whether performing the obligation is objectively or absolutely impossible. If the obligation is objectively impossible it could be because one of the parties cannot physically perform the task anymore or cannot be expected to perform the task.
- A time period in which the force majeure is applicable will be decided upon. Once this time period comes to an end, and if the parties involved are able to perform their obligations, the contract will be reinstated.
Depending on the circumstances, a force majeure clause can be a lot more complex or comprehensive and will require the specialist assistance of an attorney to ensure that it is drafted properly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.