A farmer contracts to supply logs to a purchaser after having made the necessary arrangements to automate his tree harvesting activities: he orders the machines. Owing to the closure of borders and factories, following on the corona virus pandemic, these are not delivered. Can he be held liable under that contract? What happens if the machines are delivered but are delivered late? Can he insist that the purchaser take half the contracted for logs if he cannot fully perform before the wet season?
South African contract law is founded on the principle that you are held to your contracts and non-performance is considered a breach. Our common law allows you to escape from this obligation, amongst others, by pleading that your performance under the contract has become impossible, owing to no fault of your own. Force majeure events (the term is French; Roman law equivalents are vis maior and casus fortuitus) which may broadly be defined as happenings or circumstances beyond the control or reasonable foresight of the parties which render performance under the contract impossible, allow both parties to escape from the consequences of their contract. This exception does not include hardship or a change in circumstances which would make performance under the contract difficult or expensive. In the example above, the farmer might well be expected to make other arrangements and might well end up delivering the logs at a loss.
What to do?
The above dilemma, caused by a void in our common law, is often addressed by so-called force majeure clauses inserted in a contract, in order to change the automatic common law consequences of such an event or to contractually extend the reach of supervening difficulties.
By way of example, the farmer could contract that, if his machines arrive late, delivery schedules might change; that rising fuel price rises would affect the price paid to him, or that the delay taking him into the wet season, would allow him to deliver a lower tonnage, and so on. This sounds easy but it is not: one must provide for what could possibly happen, which requires insight into the exigencies of farming, our economy, and our social and political life.
The advent of the coronavirus pandemic is indeed a force majeure event and will have a far-reaching effect on our contractual world.