eTTP #INFORM: Raising Force Majeur / Vis Major / Vis Major / Act of God
Date: 5 June
Time: 10:30 am
Post Lockdown Against Your Contractual Duties And The Possible Snags.
You can watch the full YouTube video of this session via this link https://www.youtube.com/watch?v=XtvXXJM7RRA
RAISING FORCE MAJEURE / VIS MAIOR / VIS MAJOR / ACT OF GOD, POST LOCKDOWN AGAINST YOUR CONTRACTUAL DUTIES AND THE POSSIBLE SNAGS.
NB: This summary is a general overview and should not be used or relied on as legal advice. No liability will be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Consultation with legal counsel on your specific scenario and circumstance is essential. Errors and omissions excepted (E&OE).
WHAT IS FORCE MAJEURE, VIS MAIOR, ACT OF GOD, AND WHAT REPRIEVE DOES IT OFFER ?
- Terms force majeure / vis maior / vis major /act of GOD, used interchangeably, in the event of an unforeseen superior force, event or circumstance, which is beyond the control of the contracting parties, and resultant renders contractual performance impossible.
- If such clause is documented, it will not automatically terminate the agreement, or absolve liability for performance, as a result of lockdown.
- In the successful consequence, the clause will, limit the liability of a non-performing party, suspending performance until possible, or finally terminate the agreement without liability, where performance has become absolutely and indefinitely impossible.
IS FORCE MAJEURE, VIS MAIOR, ACT OF GOD, APPLICABLE TO MY CONTRACT?
- Establish if your contract contains such a clause.
- Determine objectively if performance was impossible. (Inconvenience, increase in cost to you, and the like not considered impossibility)
- Impossibility should not be created by contracting party. (Purposely delaying performance when becoming aware of the lockdown is an example of self-created impossibility)
WHAT IF MY CONTRACT DOES NOT CONTAIN FORCE MAJEURE, VIS MAIOR, ACT OF GOD CLAUSE?
Where an agreement does not contain a force majeure clause, the common law legal principle of supervening impossibility may be relied on. The legal requirements being slightly different to that for recorded contractual clause.
WHAT TO DO AFTER YOU ESTABLISHED THAT PERFORMANCE WAS IMPOSSIBLE?
- Check the prescribed time periods recorded in the agreement, relating to implementing the clause. (It is preferable to have legal counsel establish these)
- Check the requirements, if any, recorded in the agreement, for implementing the clause. (It is preferable to have legal counsel establish these)
- Before proceeding consider the monetary, possible reputational, and time cost to you.
WHAT OPTIONS ARE AVAILABLE TO ME IF I PREFER NOT TO TOE THE LEGAL LINE?
- Most, if not all, written contracts contain an amendment provision or clause toward the end of the document, you can thus re-negotiate the terms of your agreement and reduce to a formal amendment.
CONTRACTING IN THE CURRENT ECONOMIC CLIMATE, WHY TO TAKE A STEP BACK BEFORE YOU COMMIT
- Far too often a contract, and what is records is only read with purpose, when the contractual dispute surfaces.
- Entrepreneurs are passionate, self-motivated, optimistic, and driven by nature, having an appetite for risk.
- In the current climate, the median between absolute optimism, and a calculated risk should be followed.
- Know who you are contracting with. (Is it the individual in personal capacity, as middle person, or representing a trust or company.)
- Due diligence is essential. (Do a “background check”, is the opposite party solvent, reputable, longstanding, and will they be able to deliver.)
When you decide to commit:
- If you are the middle person record your position clearly. (Don’t commit personally to perform in the hope of a 3rd / 4th party’s performance.)
- When contracting take a bottom up approach, consider possible breach by both the opposite party and yourself, factor in unforeseen delays or interruptions, and don’t overcommit in haste to “seal the deal”.
- Understand what you read. There is a shift away from excessive legalise and Latin in contracts recently, however legal principals will definitely be recorded. The untrained eyes may not spot these principals to their detriment. Obtaining legal counsel to vet the documents is always preferable.
WHAT TO DO IF YOU ARE CURRENTLY PARTY TO AN ORAL AGREEMENT DURING THIS TIME.
Make notes of the following in relation to oral agreement
- Who were the parties
- Where was the agreement reached
- What was the date of agreement
- What was the time of agreement
- What specifically was agreed to
- Was breach discussed
- Were there any witnesses
In addition, you must store all Electronic communications around the agreement safely.
It is always best to “Get It in Writing”.
Now is not a time to burn bridges. Even if you have absolutely nothing to offer in terms of contractual performance, don’t just shrug your shoulders and walk away, inform the opposite party of your predicament, discuss possible future resolve or opportunities.
Courtesy Buckus Attorneys