Get the latest COVID-19 Information from https://sacoronavirus.co.za/

Hotline: 0800 029 999 WhatsApp: 0600-123456

Commercial lease contracts:

Which duties remain after all has been looted?

Following the arrest of a former president, a surge of riots swept through most parts of KwaZulu-Natal and some parts of Gauteng, during which many businesses were looted, and some destroyed.

Most businesses have not completely recovered from the damages, and while some will not be able to recover, some are still in the process of rebuilding their stores. With the above in mind, some tenants find themselves facing eviction as their landlords insist on the payment of full rental as per the lease contract. It now becomes important to analyse the lease contracts that most people sign without reading them first and questions arise as to whether any solution may be found outside of the contractual clauses where the contract does not provide for a solution.

One of the clauses that become most relevant at times like these is the vis major or casus fortuitus clause. This clause, often included in most contracts, including lease contracts, caters for unforeseen, unavoidable, and external circumstances that are beyond the reasonable control of either of the parties to the contract. Most of the events falling under this clause are often said to be “acts of God”, however, some are caused by human agency (e.g., war), with the requirement being that the situation giving rise to vis major must have been “unforeseeable with reasonable foresight and unavoidable with reasonable care

The inclusion of a clause providing for a remedy upon the occasioning of a dispute between the parties is always advisable. As will be seen below, the same can be said with including a proper and elaborate vis major clause in a contract as opposed to being at the mercy of the common law when disputes arise.

Contracts with a vis major clause

Parties to a contract have the liberty to stipulate events which they would like the vis maior clause to cater for, and some of the examples include acts of State, natural disasters, wars, or even strikes, however, the list is non-exhaustive. Often enough, the parties also stipulate what the effects of such an event would be on their obligations, which is advisable to avoid ambiguity should the events occur.

Where the parties have failed to include a vis major clause, the common law will apply by default.

How, then, does all of the above affect lessors and lessees, and what will the solution be for them in such a situation?

The Lessor’s obligations and delivery of performance

When a vis maior event occurs, it may become impossible for the lessor to ensure that the lessee has undisturbed use and enjoyment of the property. Some lessors safeguard their interests against loss of rent by including a clause in the contract in terms of which the lessee assumes risk where a vis major event occurs. Such a clause will prevent the lessee from claiming a remission of rent.

The lessee’s duty to pay rent

One of the most important duties of a lessee is to ensure that they pay the rental amount as agreed per the lease contract. Payment of rental serves as counter-performance for the performance tendered by the lessor in relation to the leased property. Where the lessee has not assumed risk where a vis maior event has disturbed their use and enjoyment of the property, the courts mention that the lessee will be entitled to a remission of rent.

Conclusion

It is always advisable for parties entering into a contract, especially lessees in this context, to ensure that they read and analyse each clause thoroughly before signing the contract to ensure that there is consensus. To avoid wasting time and money on legal fees seeking clarity from the courts, it is also advisable that all the necessary clauses be included in the contract and that they be worded as clearly as possible, especially those providing for remedies in case of a dispute arises.

Article courtesy of Lexis Nexis