I doubt there is any person who is not aware of the Corona/Covid 19 Virus (‘CV’). It has overtaken power outages/load shedding as the main topic of discussion and distressed hand-wringing has been overtaken by ferocious handwashing with sanitary hand-towels ‘flying’ off the shelves of pharmacies around the world.
The industry arguably the hardest hit is the tourism industry and this includes the entire chain of providers from any mode of transport to accommodation. The question providers are faced with is what to do about it and what are their legal rights and obligations? Contractual and duty of care issues are being debated by the commercial and legal fraternity alike with no definitive answers forthcoming.
The best advice is to keep calm and deal with the matter on a factual basis rather than in ‘panic mode’. If you look at a world map reflecting where CV has occurred, it is quite astonishing how wide and far it has spread and how quickly. However not all areas have been affected to the extent that life has come to a virtual standstill. South Africa (‘SA’) is one of those and a level headed approach is called for i.e. at this point travel to SA has not been limited by the World Health Organization (‘WHO’) or any government advisory body.
The primary starting point for any business is to ascertain whether it is in a contractual relationship with the parties affected such as supplier and travellers (‘Pax’) – this article will focus on the latter as it is there where calls for cancellation is primarily coming from (but clearly with a major ripple/domino effect) . The contract can either be specific i.e. a written document entered into and signed by the parties or by implication, e.g. the service provider’s (‘SP’) terms and conditions (‘T&C’) may have been incorporated in negotiations by inference such as reference thereto at the bottom of e-mails, quotes, and/or hyperlink or by a ‘click and accept’ mechanism. If there is no contract (OR no/an inadequate force majeure clause) then common law will apply.
A contract per se will not be the whole story – you’ll have to check the content i.e. does it contain a force majeure clause and if so, is it adequately worded? Courts generally speaking interpret such clauses narrowly – more about the wording below.
The common law principle applicable is that of impossibility or frustration of performance. Again the courts interpret such clauses narrowly and scrutinize the application of the duty of care principle. Clearly a common-law situation is the worst case scenario for the SP.
So what does the term ‘force majeure’ (or for that matter the Latin version of ‘vis major’) mean? Here are a few cryptic aspects:
- It is a chance occurrence; inevitable; an unavoidable accident; natural disaster which was unforeseen
- Vis Major is the ‘narrower’ version limited to natural causes
- The test applied by the French legal system is: was it foreseeable, external and irresistible?
- The International Chamber of Commerce has extended impossibility to include events that make performance unreasonably burdensome and n
Each lawyer has his/her own drafting style and preference, here are (but a few) aspects to address in the wording of a force majeure clause:
- If the contract has an ad hoc application to an event, consider the locality and local threats e.g. in the Alps: an avalanche or somewhere in the east: monsoon season
- Broaden the scope beyond the hackneyed wording such as reference to (only) Acts of God, strikes & lockouts
- Don’t limit the application to non-performance only – include e.g. under-performance (& see ICC above)
- Include a requirement to give notice of the force majeure
The consequence of force majeure if applicable is that the parties to the contract are released from their obligations.
How to manage a force majeure event? Here are few things to bear in mind:
- The parties are still under an obligation to mitigate the impact including removing/overcoming the causes
- This entails using due diligence and best endeavours
- Keep detailed records
- Work closely with your insurer
What to do if it is not or not deemed to be force majeure? As is always the case with disputes, however strong your (legal) case, managing your brand is paramount. Doing so effectively means you may well win the battle AND the war! The approach taken by the industry has been varied and there is no right or wrong save, at this point, to uphold the view that the situation in SA is not one of force majeure. Accordingly, some resorts have offered rebooking without any penalty whilst others have applied/insisted (on) partial or 100% cancellation clauses. Others have applied a ‘sliding scale’ depending e.g. on the notice period. Empathetic, factual, without prejudice discussions with pax are called for.
PLEASE NOTE THAT THIS ARTICLE IS NOT INTENDED AS LEGAL ADVICE – EACH SITUATION MUST BE INTERPRETED ON ITS MERITS AND IN EACH CASE INDEPENDENT LEGAL ADVICE MUST BE OBTAINED
COPYRIGHT ADV LOUIS NEL
MARCH 11 2020
PS WRITTEN BEFORE PANDEMIC ANNOUNCEMENT – SUPPLEMENTARY ARTICLE TO FOLLOW