THE IMPACT OF FORCE MAJEURE ON RENTALS DURING LOCKDOWN

Common Law position - in absence of a "force majeure" clause

A force majeure is an act of God or man (such as a war, strike, riot, crime, plague, or an event described such as a hurricane, flood, earthquake, volcanic eruption, etc.), that is unforeseeable, out of the reasonable control of the parties to a contract and which makes it objectively impossible for one or both of the parties to perform their obligations under the contract.

In the absence of such a clause, or if the clause doesn't specify the unforeseen event(s) on which the parties can reply, then the parties may be able to rely on the common law principle of "supervening impossibility of performance" to suspend their obligations under the contract, provided that it has become objectively impossible for them to perform under the contract as a result of an unforeseeable and unavoidable event(s). For the doctrine to be enforceable, the following applies:

• The impossibility must occur after the conclusion of the contract.
• These events must be unavoidable and make proper performance of the contract impossible and must not merely make performance more burdensome or economically onerous.
• If performance becomes objectively or absolutely impossible, the contractual obligation is extinguished and the duty to perform and the corresponding right to claim performance falls away.
• Objective impossibility includes instances of actual physical impossibility and also where performance remains physically possible but cannot reasonably be expected to be performed.
• Both parties' obligation to perform the contract will be extinguished.
• If the event causing the impossibility was foreseen or foreseeable and could have been avoided, then the parties cannot rely on this doctrine to not perform their obligations.
• Once the force majeure event has come to an end and performance has become possible again, the contract will continue.
• The creditor will have the option to terminate the contract if the interruption is likely to endure for an unreasonably long time.

• In applying the doctrine of supervening impossibility, the SCA in Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal [2008], held that in order to determine whether the doctrine applies, it is necessary to consider factors such as the nature of the contract, the relationship of the parties, the circumstances of the case and the nature of the impossibility. Accordingly, any analysis of whether a party would be able to rely on the defence of supervening impossibility in respect of its inability to perform its obligations in terms of an agreement due to the COVID-19 virus outbreak must take into account all of the surrounding circumstances of a case.