Cost Calculators

News & Updates

COVID-19 AND CONTRACTS: CAN I ESCAPE FROM MY RECENT PURCHASE OR LEASE AGREEMENT?

Apr 9, 2020

Share this:
Share
Share

Many of our clients have asked how the outbreak and deepening of the worldwide Coronavirus Crisis affects already-concluded sale and lease agreements and performances due in terms of these agreements, and whether they may be excused of their legal obligations in certain circumstances.

South African law recognises both the contractual provision of Force Majeur  and the common law principle of supervening impossibility of performance (the so-called Act of God or vis maior). 

Various contracts may contain Force Majeur clauses that modify the common law position and provide for the extinguishing or suspension of performance in certain circumstances specific to the nature of the agreement.

In the context of sale and lease agreements in the immovable property arena however, it is the common law principle of supervening impossibility that is likely to apply. This principle provides that where:

  1. the supervening impossibility arises after the contract was concluded; and
  2. renders performance physically or legally impossible (not merely more burdensome or economically onerous); and
  3. without any fault on the part of the parties to the agreement; and
  4. as a result of unforeseen and unavoidable events 

then the obligation to perform and the reciprocal right to performance may be extinguished.

In applying the doctrine of supervening impossibility, South African courts have deemed it necessary to look at factors such as the nature of the contract, the relationship of the parties, the circumstances of each specific case and the nature of the impossibility.

So, in conclusion, it is clear that any reliance on the COVID-19 virus pandemic to substantiate a defence of supervening impossibility is going to be case-specific and potentially complex. Please consult with one of our attorneys for further assistance and advice.

All News & Updates