The Future of Force Majeure clauses

If force majeure clauses are vague and incomprehensive, their interpretation could be problematic. Covid-19 has made sure we reflect on this.

Under South African law presumptions of interpretation to determine the meaning of words in contracts when the intention is not clear from the way a clause is drafted. To interpret the agreement, the court will presume that the words used are used precisely and exactly.

According to Harms,[1] in the case of Sucden Middle-East v Yagci Denizcilik ve Ticaret Ltd Sirketi (The ‘Muammer Yagci’) – [2020] 1 lloyd’s rep. 107 the UK court noted that the phrase

‘force majeure’ is simply a phrase to label a list that includes a mixture of matters. The list informs the meaning of the phrase, and not the other way around.The South African courts would likely follow the same approach.

As such, the parties cannot simply rely on a clause that is labelled as a ‘force majeure’ clause or contains those words, but does not list or elaborate on what the parties agree a force majeure to be. Force majeure clauses must be detailed and specifically list the force majeure events that the parties agree will suspend their performance of the contract (such as an epidemic). In this regard, parties should specifically list broad catch-all wording to contracts such as ‘act of God’ or ‘acts of authorities’ that they can rely on to encompass events they may not reasonably have foreseen.

In the context of  common law any occurrence beyond the control of parties, to an agreement, which makes the performance of contractual obligations impossible after the conclusion of a contract (that does not have a force majeure clause) is dealt with in accordance with the principle of supervening impossibility or vis major.  Where a  situation arises, which  renders  the performance of a contractual obligation by one of the parties impossible, the party is excused from the failure to perform. However, the performance must be  objectively impossible and not just difficult.

Accordingly, well-drafted force majeure clauses sets out the following:

? what would constitute a force majeure by providing a list of such events;

? what would constitute a force  majeure;

? a requirement that a party seeking to rely on the force majeure should provide notice before invoking the; and

? a period after which the agreement may be terminated by either of the parties without liability to the other for any loss suffered if the force majeure continues beyond that period.

[1] Lexis Nexis D R Harms SC: Covid 19 Force Majeure