AGONY OF CUSTOMERS AS CORORAVIRUS OVERTURNS CONTRACT SIGNINGS GLOBALLY

Clients globally are experiencing difficulties due to Cororavirus pandemic. PHOTO /CORRESPONDENT

AGONY OF CUSTOMERS AS CORORAVIRUS OVERTURNS CONTRACT SIGNINGS GLOBALLY

By Wachira Muthee and Sharon Chebet (African Times Guest Writers)

In the wake of the year 2020, a pandemic struck

the world, including Kenya. The World Health

Organization (WHO) labeled it Corona Virus 2

(COVID-19). The pandemic saw the country and

the world, in general, impose hard regulations to

curb the fast-spreading respiratory illness.

These included among others; travel, import,

export, and travel restrictions.

As such, it is imperative that commercial

contracts would be rendered impossible to

perform either permanently or temporarily.

Ordinarily, failure to perform one’s end of the

bargain in a contract amounts to a breach of

contractual terms or warranties. This may

either lead to the defaulting party being ordered

to remedy the situation if the breach is seen to

be of a warranty or termination of the contract

as a whole and payment of damages where the

breach is of a condition. As such, the remedies

under the contractual agreement and the Law

of Contract Act (Chapter 23) Laws of Kenya

begin to accrue against the party in default.

A greater force “Force Majeure” clause in such

contracts that operates under the Common Law

Doctrine of “Frustration” may offer relief to

contractual parties subject to various

conditions. “Force Majeure” is a French term

that means ‘greater force’. It is highly linked to

the concept of “Act of God”, an event for which

no party can be held accountable. Therefore, it

is imperative that a Force Majeure clause may

offer relief to contractual parties subject to

various conditions. Force Majeure is basically a

clause which states that one or both parties will

not be liable for any delay in performance or for

non-performance of its obligations upon the

occurrence of certain events. The clause acts

as a shield for its parties that are unable to

perform their obligations.

The Burden of proof “Onus Oparandi” lies on

the person alleging that the non-performance or

the delay in performance is due to Force

Majeure. In the particular case of COVID-19,

where three conditions must be met:

Impossibility of performance- it must be clear

that from the complications and laws imposed

by the Coronavirus pandemic, it is no longer

possible to perform the contract.

The impossibility is linked to COVID-19- it must

be proved that the impossibility is not just as a

result of other inconveniences and not as a

result of the unforeseeable circumstances of

COVID-19. e.g. when you are unable to transport

goods from Nakuru to Kisumu, its difficult to

claim that its as a result of COVID-19 because

there are no travel restrictions between the two

towns as a result of the pandemic. The close

link between your inability to perform and

Corona Virus is key.

The occurrence could not reasonably be

foreseen- this is mostly governed by the time of

the contract. For example, a contract entered

into in 2019 can have the corona virus as an

unforeseeable occurrence. However, when

parties entered into the contract in March of

2020, it would be unreasonable to claim that

the occurrences of COVID-19 were

unforeseeable.

Reliance on a greater force “Force Majeure”

clause does not necessarily mean that the

contract stands terminated but rather that the

performance could be suspended for a certain

prescribed duration of time, what is exactly

happening within the corridors of Justice in

Kenya, with more hearing cases being

suspended until further notice due to the deadly

Cororavirus pandemic .

In most cases, greater force “Force Majeure”

clause will be interpreted in the interpretation

clause of the Agreement to contract. In most

cases it will be construed narrowly within the

meaning of how it was interpreted in that

particular clause. COVID-19 will therefore

qualify as Force Majeure if the contract defines

it to include things such as ‘pandemics’,

‘epidemics’ or ‘state of emergency’.

It is therefore very important to ensure that

when drafting commercial contractual

agreements, the definition clause is drafted in

such a way to include as many possible

occurrences as possible.

Foreseeability: Force Majeure and generally the

doctrine of Frustration requires that at the time

of the contract, the events leading to its

invocation be unforeseeable. It is inherent that

no party should use it ultimately

or its own unfair advantage.

Impossibility and Impracticability

Performance will only be excused due to greater

forces “Force Majeure” if performance of the

same is impossible or impracticable.

Impossibility means that performance cannot

physically occur, for example, a contract to

install air conditioners in a house would be

excused if the house is destroyed by a fire.

Impracticability on the other hand means that

performance can only occur at an excessive

and unreasonable cost that was not bargained

for.

Impossibility may occur where government

orders make it illegal to perform under the

contract. For example, in Kenya, a contract that

requires cross-border travel may be excused

following the COVID-19 government orders and

interventions which make it illegal and

ultimately impossible to travel across most

borders.

It is important to carefully review contract to

see what kind of notice or warning to provide to

other parties involved in the contract before

considering the invocation of a greater force

clause.

Most contracts will have in them a defined

notice period and requirement. It is vital that it

be observed while invoking the clause of

greater force .

Kabathi & Co. Advocates offers competent legal

advice and legal services which will enable

clients to make informed decisions in every

contractual relationship. Further, the firm make

well-sealed agreements that protect clients

best interest in every contract. They are also

involved in Alternative Dispute Resolution for

out of court settlements where need arises,

firm well-founded on Court based litigation to

ultimately seek justice in Courts of Law.

Kabathi & Co. Advocates. The Firm has

established a comprehensive network of

carefully selected correspondent law firms. And

has 13 branches spread within the Country

from Murang’a, Embu, Meru, Kerugoya,

Nyahururu, Mwea, Gikomba, Kangari, Nanyuki,

Nyeri, Chuka, Juja to Kangema.

HEAD OFFICE – NAIROBI

Muringa Court, House No. B12 –

Kirichwa Road, Hurlingham.

P.O Box 21413-00100, Nairobi.

Office Tel: +254 722 556 028.

Office Mobile: 0725 900 166.

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