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Brief Insights into the Issues COVID-19 Presents

On the 15th March, President Cyril Ramaphosa declared the Corona Virus Pandemic a National State of Disaster in South Africa.

It is no secret that the virus has brought about tremendous challenges in all sectors, including the legal field. 

In order to curb the rapid spread of the virus, the President declared a nationwide lockdown from Thursday 26th March 2020 until midnight on Thursday 16th April 2020, which has now been extended to 30th April 2020.

Corona Virus Shutdown - Attorneys Cape Town

Lockdown Rules in South Africa

To prevent and combat the spread of COVID-19, South Africans have been forced to stay within the vicinity of their homes during lockdown.

A person is only allowed to leave the house for the purpose of performing an essential service, obtaining essential goods or services and for the collection of social grants and pensions.  

Cigarettes and Alcohol Banned during Lockdown

As a protective measure, the sale of cigarettes and alcohol has been prohibited.

Additionally, movement between provinces, metropolitans as well as district areas has also been prohibited.

Movement of “essential workers” and “essential services” is permitted, however, only if a valid permit to travel has been obtained from the necessary authorities.

All gatherings, including concerts and sport events are prohibited. Funeral Services have been restricted to a limited number of people.  

Travel between Cities during Lockdown

Strict rules are in place for travel with no travel allowed between cities.

With regards to intercity travel - a private car is limited to two occupants. Public transport is only allowed to operate during certain times of the day and with a limited number of passengers.

Lockdown Consequences for Businesses in South Africa

Although the above stringent rules have been implemented to protect people and slow the rate of infection, lockdown has placed immense strain the economy.

Many debts have become uncollectable. Additionally, because most businesses have been unable to operate, tenants have had no income and therefore landlords have had to cut rent or go without rent entirely.

Credit Insurance

The purpose of having credit insurance is to prepare businesses for financial crises and loss of income – and now more than ever, smaller firms and businesses are benefitting from having it.

It is especially handy in times like these where cashflow and paying day-to-day business expenses is near impossible.

Breach of Contract

Failure to pay full rental does constitute a breach of contract which enables landlords to cancel leases, claim arrear rental and/or sue for damages. However, can this be expected during the lockdown period where a debtor/tenant is not able to work because their business is not deemed an essential worker/service and therefore cannot earn an income?

Unfortunately, landlords are by no means obliged to suspend rental payments or grant remission of rental during the lockdown period. One of the only solutions is to give effect to the terms of the lease and have regard to the common law principles. Alternatively, strategic financial planning must be implemented and negotiations between landlord and tenant must be had to overcome the detrimental effects lockdown has had on contractual obligations.

Additionally, a similar approach applies to contractual obligations and the restrictions placed on businesses and their operations which has resulted in them not being able to fulfil their contractual obligations.

In order to limit the risk of non-performance, parties to a contract are forced to now review the terms of their contract, amend or terminate it. Some of the options parties can consider are breach of agreement, suspension, variation or termination of contractual obligations.

It is also in the best interest of parties to make provision for a vis maior clause which often refers to a pandemic such as COVID-19 to which we have no control over nor could we have foreseen it.

Protection of Personal Information Act

Furthermore, in relation to the Protection of Personal Information Act (“POPIA”). The POPIA was due to come into effect on 1 April 2020, however, due to COVID-19 the President’s decision to fully enforce the Act has been halted. The Act is aimed at protecting personal information and addresses the issues regarding the capture and distribution of personal information.

In addition, there is concern that under the given circumstances, implementing POPIA could have significant repercussions for the economy as it is a costly undertaking that South Africa cannot afford.

The POPIA itself contains several conditions regarding the lawful processing of personal information, which gives effect to the right to privacy. However, in terms of the Disaster Management Act, the Department of Health must create and maintain a database which enables them to trace people who are infected with COVID-19 as well as those who have been in contact with infected people.

Such information is strictly confidential and may not be disclosed unless given necessary consent. This also applies to those who have died of COVID-19. Data processing in this regard is in the best interest of the public.

Bailey Haynes Inc. – Attorneys in Cape Town

During these times, it is vital that South Africans stand together and offer support where we can. Our law firm in Cape Town is still operating remotely and we are happy to assist you with any legal questions you may have regarding COVID19 and the implications it may have on your business, rental situation or assets. Contact us.

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