The COVID 19 global pandemic and its effects on the world is well known and needs no introduction. It has decimated economies, crippled industries and wreaked havoc in many businesses. The impacts include the ability of businesses to complete transactions.
This triggered a mad scramble by Fijian parties to avoid liability including citing COVID 19 as a force majeure event. Some countries have even gone ahead and made legislative changes to allow termination of contracts based on an Act of God.
For example, Fiji amended section 24 of the Employment Relations Act to absolve employers from the duty to provide work where an act of god frustrates or prevents the performance of the contract of service.
Force majeure events can be simply described as events unforeseen extra-ordinary events or circumstances which prevent parties from performing their obligations under a contract. A party can rely on a force majeure event to avoid liability from the ‘non-performance’ of the party’s obligation under a contract. Certain contracts have specific force majeure clauses whilst others rely on common law.
Whilst COVID 19 should generally qualify as a force majeure event which may prevent the performance of contracts by parties, it is not a blanket cover or defence to non-performance of each and every contract in the Fijian jurisdiction.
Any party that seeks to rely on force majeure events to avoid liability should first take into consideration on whether or not COVID 19 actually had the effect of preventing the performance of a contract.
For example, a vendor may not be able to rely on a force majeure event on its failure to settle on a land sale contract. It will be difficult to convince a Court that COVID 19 prevented the vendor from receiving the purchase price and effecting settlement. On the other hand, a company that is unable to deliver perishable goods in time due to closure of airports may be able to successfully rely on COVID 19 being a force majeure event.
We strongly recommend getting legal advice where a party is unable to perform its obligations under a contract.