The saying man proposes but God disposes has its accommodation in law, as individuals freely enter into contractual relations with the underlying knowledge that ‘Pacta sunt servanda’ a latin maxim which states that “agreements must be kept”. This is basic principle in private contracts that; contained clauses are laws between the parties, and implies that non fulfillment of respective obligations is a breach of the pact (wikepedia).
However, unforeseen circumstances can prevent parties from meeting, or achieving its objectives, such as accidents, sickness, change of law et al. it is in response to circumstances as this that the law has made accommodation to protect parties from liabilities or loss.
It is no longer news that the world now grapples with a pandemic of Covid’19, a novel corona virus with confirmed cases of the virus now hitting nearly 2.5 million globally, with business coping with lost revenue and disrupted suplly chain as factory shutdowns and quarantines measures spread across the globe, restricting movement and commerce.
Particular amongst this government reaction to curb the spread is restriction of movement/lockdown making it impossible for movement of labour and person, closure of national and international borders, and airports, making taking of delivery and supply almost impossible, and outright disruption of commerce. Amidst these regulations a multiple legal issues can arise due to the impossibility of contracting parties to keep their end of the bargain.
This paper considers the legal implications of the Covid’19 pandemic on contracts and the protection the law offers in times like these.
A party defaulting can first, rely on the clause of ‘FORCE MAJEURE’ literally translated as “superior force” which literally is a contractual provision which may excuse parties from performing their contractual obligations, in circumstances beyond their control.
This clause covers war, strike, riots, or acts of god. Acts of god are defined in the English case of Transco PLC V Stockpot Metropolitan council as events which involve no human agency, are not possible to guard against, due direct and exclusively to natural cause and which could not have been prevented by any amount of foresight, plan or care’.
The clause also avails the party when circumstances are such that performance is inadvisable, commercially impracticable, illegal or impossible.
However, it is deducible from above that one can rely on the Force Majeure clause provided thus;
One of the event referred to in the Force Majeure has occurred It has been prevented, hindered or delayed from performance by that event. Its non performance was due to circumstances beyond its control.
There were no reasonable steps that could have been taken to avoid or mitigate against the event.
Note that, a defaulting party seeking to rely on the clause cannot do so successfully when the causative link to the non performance is broken; party must as well comply with all procedural requirements under contracts and give notice of its intention to rely on the clause to the other party.
With particular time scales, as well as obeying all other formalities for the service of notice.
Whereas the Force Majeure clause is required to be part of the agreement, in its absence parties can invoke the doctrine of FRUSTRATION; a contract may be frustrated if an unforeseen event occurs after the contract that makes the contract
Impossible to perform see Taylor V Caldwell (1863)
Loss of object
Supervening illegality see.
Denny,Mott V James Fraster
Circumstances change: like an intrusion or occurrence of an unexpected, unforeseen event beyond the control of either party that makes meeting the obligation impossible, would give reason for the court to declare frustration on the contract on the grounds of subsequent impossibility.
When this happens, the effect of frustration is that the contract is terminated and liability is excused for non performance.
Summarily as the world seeks to curb the spread of Covid ’19 pandemic, there is no gain say the many precautionary measures have placed grave impossibility on the part of contracting parties, ranging from the restriction of human and vehicular movements, lockdown orders which have made it impossible to get the supply of labour and closure of government and private establishment whose functions are necessary for contracting parties to keep to the terms of the agreement.
It is also safe to say that the law has afforded and made adequate provision for parties to seek its protection offered for contracts at this critical time and be guided accordingly.
Victor Egba
is a 300l, Faculty of Law
University of Calabar, Nigeria.
Writes from Calabar
07053006545
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