DEED OF SALES: Vis Major and COVID-19
The far-reaching consequences of the COVID-19 epidemic will no doubt affect the rights and obligations of parties to existing and new deeds of sale.
Vis Major / force majeure in short means “a greater or superior force / irresistible force”, an event which nobody could, objectively, foresee or prevent from happening. In everyday language, it is also referred to as an “Act of God”. The COVID-19 epidemic will certainly also qualify as a vis major event, in the broad sense of the term. The general rule is that no party to an agreement can be held liable for damages caused by such an event.
At this point it is important to distinguish between deeds of sale containing vis mayor clauses and those that do not, or not sufficiently so.
If the deed of sale makes provision for vis major events, the wording of that clause will determine how it affects the parties’ obligations towards each other. Usually, the operation of the agreement or portion thereof is suspended for a period of time and/or the agreement can be terminated.
In the absence of a sufficient vis major clause, our common law still provides a possible remedy called supervening impossibility. In short, this common law principle provides that if a vis major makes it objectively impossible for any party, without any fault on any party’s side, to perform in terms of the agreement, his obligations in terms thereof will be extinguished. It is important to note that the mere fact that a vis major makes it more challenging or difficult for a party to perform, does not necessarily amount to supervening impossibility.
The court has set very strict requirements, which will not be discussed for the purposes of this article, which must be met before a party to an agreement can call upon supervening impossibility as a possible remedy. The merits of each case will determine the outcome thereof.
It will be advisable for parties intending on entering into a deed of sale to act pro-actively by inserting a sufficient vis major clause. In doing so, you can manage expectations in very uncertain times as well as mitigate possible damages.
Kindly contact us should you require assistance in the wording of the specific clause.