Government measures in key jurisdictions 5th edition - Flipbook - Page 122
SouthAfrica
Contractual
Issues
What measures
have been taken
to reinforce
contracts?
122
•
As such:
– any business rescue applications filed with the CIPC in the prescribed manner and form
during the dies non period would be processed to reflect the dates on which it was filed,
– the appointment of business rescue practitioners filed in the prescribed manner and form
during the dies non period would be endorsed by the CIPC to reflect the dates on which it
was filed, and
– entities commencing business rescue proceedings (filed in the prescribed manner and
form) will automatically receive a five day extension to appoint a business rescue
practitioner.
•
In terms of Notice 35 of 2020, the CIPC is now issuing certificates without a stamp which
evidence either the commencement of business rescue or the appointment of a business
rescue practitioner.
•
The offices of the Master of the High Court are still only operating in respect of certain
services.
•
The RSA legal system recognises the principles of sanctity of contract and relaxation in the
face of an unforeseen event which justifiably renders the performance of a contractual
obligation impossible. There are a number of principles which are available either in
common law or commonly in agreements which may offer some options or relief to
contracting parties (described briefly below).
•
Although businesses have generally been encouraged to, where possible, not invoke force
majeure provisions in order to preserve existing contractual arrangements and business,
this decision is ultimately dependent on the particular contracting party, industry and
surrounding facts and circumstances. Practically, there have been some contracting
parties who have sought to invoke these provisions, while others have been willing to hold
back on doing so and/or negotiate and agree amendments to contracting arrangements.
•
Under the common law, force majeure events include acts of God, war, riots, natural
disasters, energy blackouts, lockouts and labour unrest. Material Adverse Change (“MAC”)
clauses, like force majeure clauses, are used in contracts to allocate the risk of events that
are unforeseen at the time of contracting.
•
These provisions usually provide that a party will be able to suspend the performance of
their obligations for so long as the force majeure event continues or for a set period of time,
whichever is the shorter. Since this is a contractual provision, the extent to which a party
will be able to rely upon the clause will depend on the specific wording of each clause. The
onus of proving the force majeure will be on the party alleging it and typically that party will
have to show that the event was not within its reasonable control, could not have reasonably
been avoided and was not a result of an act or omission on their part. While this may seem
likely to encompass Covid-19, it is the impact of Covid-19 on the party’s ability to perform
that is essential. Force majeure clauses are also likely to include an obligation on the parties
to first discuss the effect and potential mitigation of the force majeure, as well as a general
obligation on the claiming party to mitigate the impact of the force majeure.
•
It is common to see a force majeure clause that will lead to a termination of the
contract if the force majeure is not resolved after a certain number of days.
•
MAC clauses are contractual and are not regulated by the common law.
The contract will define the circumstances in which a material change will be
deemed to occur and each contract should be carefully considered with the
relevant facts to determine if circumstances exist to invoke a MAC. The burden of
proof is similarly on the party alleging the MAC.
Government measures in key jurisdictions
