The effects of Covid-19 have sent economies worldwide into a state of disarray. A consequence of the pandemic has been that unemployment rates in many countries including the US, UK, Spain, and Italy have risen drastically. At present, more than 6.6 million Americans have filed for unemployment benefits. This is the highest in its history. In South Africa, a nationwide lockdown to contain the spread of the virus was declared by the country’s President to be effective from the 26 March 2020 until the 30 April 2020.


South Africans are required to stay in their homes due to social distancing rules, with the exception of essential workers in the health, food and media industries, etc. Shops and businesses are to remain closed unless they are classified as essential service providers. Many South Africans are expected to be left unemployed, and businesses closed due to the effects of Covid-19. It is anticipated that the unemployment rate will follow the trend of other global economies, and it will take a further knock from its present souring rate of 29%.


In light of the above, many individuals and companies are concerned about whether they will be in a position to fulfill their obligations in terms of contracts of sale they may have entered into or intended concluding. This article will highlight some of these concerns, and the legal implications that will be required to be addressed in order to resolve these concerns.


Many wish to suspend or terminate the agreements that they have entered into for various reasons, which from a purchaser’s perspective may include:

  • Inability to pay the purchase price due to permanent or temporary loss of employment.
  • Termination of bond grants by financial institutions to secure the purchase price.
  • Closure of business.
  • The decrease in the value of the property purchased, due to tenants defaulting on payments or request for rental deductions or abatement due to government regulations.


A Seller may wish to resile from an agreement due to:

  • A purchaser’s inability to perform timeously in terms of an agreement.
  • Delays caused by the Deeds office and municipalities to effect the transfer, resulting in the sale not being economically viable anymore.
  • Inability to have transfer documents signed and commissioned due to the lockdown regulations, resulting in delays in transfer.


The question arises, can either of the parties to the sale agreement have it suspended or terminated?

To answer the above question, one must first examine the sale agreement to determine if a force majeure clause is included therein. Force majeure means a “greater force” or an act of God or man that is unforeseen and out of the reasonable control of one or both the parties to a contract, which makes it objectively impossible for one or both parties to perform their obligations under the contract.

The agreement of sale may indicate what constitutes a force majeure event e.g. a pandemic, strike, fire, war, act of God, or a natural disaster, and may exclude a party from performing its obligations either partially or in full. It may further entitle a party to suspend or claim for an extension of time to perform an obligation. Many force majeure provisions require the following provisions to be satisfied, prior to allowing this provision to be invoked.

  1. The event must be beyond the reasonable control of the party,
  2. The affected party’s ability to perform must have been caused by the event, and
  3. The affected party must have taken all reasonable steps to mitigate the event and the consequences thereof.


A party wishing to rely on a force majeure clause due to Covid-19 must ensure that the requirements as set out in the force majeure clause are satisfied, and this clause is wide enough to include the pandemic. Performance cannot be avoided as a result of one’s negligence, failure to exercise due diligence and care, or due to a party’s poor financial condition which was not a result of the spread of the virus. Each force majeure provision must be considered on its precise terms and its specific context.


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