08/04/2020
COVID – 19 AND CONTRACTURAL OBLIGATIONS: A TIME FOR MEDIATION
The lock-down to which most of us are subjected to, will no doubt result in critical times hard to deal with. A time of force majeure (or vis major) (uncontrollable natural forces) which will impact on all agreements, has arrived. This will be a time to work together for all, landlords, tenants, suppliers, distributors and all contracting parties. Tenants cannot simply stop paying rent assuming landlords have unlimited funds but similarly landlords may wish to consider a remission of a portion of rental depending on the tenant’s personal circumstances. Contracts have to be scrutinized to identify vis major clauses, rental payment clause’s and material adverse effect clauses. These have to be considered with the common law principle of “supervening impossibility” and the inability of performance. Contracting parties should also consider their legal obligations to mitigate damages and curb their losses.
In the absence of legislation, in order to bring relief or an indication of direction, we are of the considered opinion that the pushing of the proverbial re-set button, must force us to be pragmatic and recognize that we are entering a time period, in which negotiation and mediation will become the ‘order of the day”. Litigation is expensive – and if instituted at an unprecedented scale, would be bound to clog the already over-loaded Justice System.
It is thus more than likely, that the traditional methods or remedies, will not be the route to follow. Anyone seeking enforcement, must also bear in mind the often-un-anticipated scepter of the “hollow Judgment” - [a Judgment creditor not having enough assets or means, to satisfy the judgment against him / her].
These will be times of negotiation, mediation, not running to court with collections and obtaining judgments.
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