Dear reader

Why does this year feel like 2016 has never ended? Luckily, there are a few mahala vacation days coming your way! Heading to the beach? Watch Suzelle DIY’s video for some good beach tips. However, if you are a workaholic, or someone who would rather stay home over the holidays and rent out your beach house, read our article on lease agreements and the relevancy thereof.

If you have already had bad luck with a planned short breakaway in 2017 due to the cancellation of the Cape Argus, read our article on how vis major affects agreements. For the legal minded, who knows almost every word in the Oxford dictionary but “vacation”, read our relevant article regarding the prescription of Arbitration Awards in CCMA and Bargaining Council litigation.

We hope you enjoy the read and the much needed rest!

JJR Inc. Team

For the first time ever the Cape Town Cycle Tour was cancelled on 12 March 2017 due to the extreme weather conditions which placed the safety of the participants at risk. Although the tour started on time it was stopped shortly afterwards as a result of the gale force winds. In terms of the Agreement entered into between Cape Town Cycle Tour and the participants it is specifically stated that:

Many contracting parties (or consumers) fear that bad weather or similar circumstances will simply result in contractual obligations not being met, whilst they have to suffer the consequences. It is important that consumers are aware of what the effect is if performance of a contract becomes impossible and possible remedies that exist if any.

As with the Cape Town Cycle Tour, performance of a contract can become impossible, but a distinction needs to be made between different types of impossibility namely: initial impossibility, supervening impossibility, partial impossibility and temporary impossibility.

Initial impossibility entails that from the onset it is impossible to perform in terms of the agreement. The contract will be void and the only relief that is available is a claim for restitution if one of the parties have already performed in terms of the agreement.

In the case of the Cape Town Cycle Tour the performance of the contract became impossible through no fault of Cape Town Cycle Tour, and the obligation was extinguished. This is a case of supervening impossibility. Supervening impossibility cannot be used as a defence against non-performance under all circumstances. A debtor cannot rely on supervening impossibility under the following circumstance 1) if the debtor had not performed timeously and the events beyond his or her control only occurred thereafter; 2) if the impossibility was self-created, or 3) in the event that the contract itself states that the debtor bears the risk of impossibility. Typical examples of impossibility are impossibility which is caused by vis maior (irresistible force such as extreme weather conditions) or casus fortuitous (unforeseeable accident).

In the case of partial impossibility the creditor has the choice to accept partial or defective performance or cancelling the contract. Lastly temporary impossibility does not necessarily bring the contract to the end. Only on the case where final impossibility is inevitable the contract will come to an end.

Contracting parties (and consumers) should not fear that contractual obligations are extinguished on a whim. If a contractual party, due to no fault of his or her own, cannot perform it cannot be expected that the party bears the risk of impossibility unless contractually obligated. Contracting parties should be certain when entering into an agreement that they know whether they assume the risk in the case of impossibility.

¹ For more information see http://www.capetowncycletour.com/enter/rules-and-regulations/.

The Rental Housing Act¹ did not compel a landlord to reduce a lease into writing, except if the landlord was requested to do so by a tenant.² The Rental Housing Amendment Act³ however does compel a landlord to reduce a lease to writing.

This is a good change as it provides protection and certainty to the parties to a lease and possible future disputes can be avoided or easily resolved.

A contract of lease must stipulate that one party is allowed to use the property owned by another in exchange for payment of rental. Therefore the property description, the duration of the lease, the rental amount and method of payment are some of the terms that must be specified in the agreement. Then there are also terms that will automatically be included in a lease agreement, terms which are implied by law. These terms usually protect one or both of the parties from a risk typically associated with a contract of lease, for example the landlord’s tacit (implied) hypothec⁴, which protects the landlord from a tenant who does not pay his or her rent. The parties may however exclude these terms by express agreement. There are also legislation like the Consumer Protection Act⁵ which prohibit parties to exclude certain common law rights that would otherwise be applicable.⁶

Besides putting the essential terms in the contract of lease, the parties can also agree on additional terms that supplement the rights and / or duties of the parties. It might be a good idea for the landlord to include a set of house rules as an addendum to the contract, especially when it is a vacation home, which is basically a second home and usually has significant monetary and sentimental value. Here are some examples of house rules if you are considering renting out your vacation home this holiday:

It should however be borne in mind that although it is the landlord’s prerogative to make house rules, certain rules are however not realistically enforceable and if you are saving up for your next overseas trip or local holiday you do not want to scare away potential renters.

Contact JJR Inc. if you need assistance with your lease agreement.

¹ Section 5(1) of the Rental Housing Act, 50 of 1999 as amended by the Rental Housing Amendment Act, 43 of 2007.

² Section 5(2) of the Rental Housing Act Supra.

³ Section 8 of Act No. 35 of 2014.

⁴ The right of a landlord to attach the movable property of the tenant, which is on the leased premises, until the tenant pays any outstanding rent. The purpose of the hypothec is to secure the lessee’s obligation to pay the rent stipulated in the lease agreement, and it is triggered (by operation of law) as soon as the rent is in arrears.

⁵ 68 of 2008.

⁶ Catherine Maxwell The Law of Contract 2nd impression (2010) at 235-236.

The recent Constitutional Court judgment of Myathaza CCT 232/15 decided on 15 December 2016 [2016] ZACC 49 created confusion amongst labour practitioners, employers and employees alike.

The main question in this judgment was whether or not the Prescription Act, 68 of 1969 (“PA”) applied to arbitration awards issued under the auspices of the CCMA or accredited bargaining councils. The Constitutional Court was torn in two upon deciding whether or not the provisions of the Prescription Act applied.

Judge Jafta’s decision (supported by three Constitutional Court Judges) in summary boiled down to the fact that the PA does not apply to arbitration awards as there are fundamental differences between the respective acts – the Labour Relations Act 66 of 1995 (“LRA”) as amended and the PA. Judge Jafta went further to state that an arbitration award resolves a claim or dispute and that it therefore does not create a claim as envisaged by the PA. Although Judge Jafta argued that the PA is not applicable to arbitration awards, he found that an arbitration award is final and binding and also earns interest, and therefore the award has to be enforced expeditiously within one year of the issuing thereof, alternatively reviewed within a one year period, failing which the award becomes unenforceable.

Judge Froneman’s decision (also supported by three Constitutional Court Judges) in summary concluded that the LRA and the PA complement each other and that the PA therefore applies to the LRA. Judge Froneman further indicated that prescription does not run until such time as the review of the arbitration is finalised, that review proceedings interrupt the running of prescription and that an arbitration award can be construed as a “debt” in terms of the PA.

The split decision of the Constitutional Court Judges has created great havoc and confusion amongst the workforce, as it boils down to the fact that arbitration awards cannot prescribe until such time as review proceedings are finalised. What happens however if no review is filed? Furthermore, what if the review proceedings are not finalised within 6 months or a year from the Award?

With no clarity on the matter, employers and employees alike are placed in a position wherein they can decide to follow the approach of either one of the judgments.

Hopefully another Constitutional Court judgment will be given to shed some light on the matter.