What if, for example, a seller contracts coronavirus and has to self-isolate between exchange and completion? In this article, we consider the potential impact of coronavirus on your property contracts, and the steps you can take now to ensure that your position is protected.
You may have seen discussions in the press about the concept of 'force majeure'. This is where an unforeseen circumstance or event prevents someone from fulfilling their contractual obligations.
Force majeure provisions, which relieve parties from their contractual obligations in the event of a 'force majeure', are common in some types of commercial contract. However, contracts for the sale of land that incorporate the Standard Conditions of Sale (whether Commercial or Residential), rarely contain 'force majeure' provisions that would apply to the kind of disruption we are seeing.
Whether you are a buyer or seller, you may wish to consider negotiating a force majeure provision into your contract. Such a provision could, for example, seek to suspend the parties' right to rescind the contract whilst the disruption associated with the coronavirus pandemic continues.
Unfortunately, even the inclusion of a force majeure clause is not a failsafe. Disputes could arise surrounding the interpretation of the force majeure event, and other supervening events could render one or both parties unable to complete when the disruption has come to an end. Clients in chains will need to ensure that similar force majeure provisions are included in all contracts in the chain.
In times such as this, it is more important than ever that parties act commercially and in good faith. If you have not yet reached the stage of exchanging your property contract, you should discuss the possibility of including a force majeure clause with your solicitor. Likewise, if you are due to complete a property contract and run into issues, such as being forced to self-isolate, you should raise this issue with your solicitor and the other party as soon as possible.
The above reflects guidance as at 23 March 2020. We will continue to update this as the situation develops. While we aim to release updates as quickly as possible, it is important that readers check the latest governtment advice for further updates.