Navigating Force Majeure in South African Contracts

by | Mar 8, 2024 | Contract Drafting, Contract Law

Introduction

Force majeure is a contract clause that frees both parties from liability or obligation when an extraordinary event or circumstance is beyond the parties’ control. Examples of these events can be a war, strike, riot, crime, plague, or an event described by the legal act of God preventing one or both parties from fulfilling their obligations under the contract. This article delves into the fundamental aspects of force majeure in South African contracts, elucidating its essence, functionality, and imperative considerations for businesses seeking protection.

 

Understanding Force Majeure

Force majeure, a legal term, pertains to unforeseeable and unavoidable events beyond the control of contract parties. Embedded within contracts, a force majeure clause typically absolves one or both parties from liability or performance obligations following the onset of such events. The underlying principle dictates that upon the occurrence of uncontrollable events, a party is exempted from or entitled to suspend contractual obligations, thereby evading liability for non-performance, as per the clause.

South African law is stringent as it does not exclude the performance of a contract in all cases of force majeure. Several conditions must be satisfied for a force majeure to trigger impossibility to perform, namely:

  • the impossibility must be objectively impossible;
  • it must be absolute;
  • it must be absolute as opposed to relative. Therefore, if it relates to something that can, in general, be done, but the one party seeking to escape liability cannot personally perform, then such party remains liable in the contract;
  • the impossibility must be unavoidable by a reasonable person;
  • it must not be the fault of either party; and
  • 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.

To shield against the repercussions of force majeure events, businesses in South Africa are urged to incorporate clear and precise force majeure clauses in their contracts. These clauses should comprehensively cover foreseeable events likely to transpire.

Businesses must grasp the limitations of force majeure clauses and prioritize proactive measures to mitigate potential impacts. This entails devising contingency plans, securing appropriate insurance coverage, and maintaining open communication with contract counterparts.

Moreover, businesses should acknowledge the potential emergence of supervening impossibility, even in the absence of a force majeure clause. In such instances, proactive communication and legal consultation are imperative to navigate liability concerns effectively.

 

Conclusion

Force majeure stands out as a crucial aspect in South African contract law, providing businesses with a shield against unexpected interruptions. Through the inclusion of precise and explicit force majeure clauses, businesses can effectively navigate risks and minimize the impact of unforeseen circumstances. By exercising strategic planning and thorough preparation, businesses can strengthen their contractual arrangements, ensuring they are legally binding and reducing liability in the face of force majeure events.

For any assistance, contact an attorney at SchoemanLaw.