Monday, 06 April 2020

Judge Sloss once explained, "A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at excessive and unreasonable cost.

It is through the lens of Judge Sloss that I view any discussion on COVID-19 and the pandemic is continuing to have on businesses. It should be universally clear by now that a lot of things previously normal that happen in our lives and our businesses have become impossible or impractical.

In my article on COVID-19 & Force Majeure last week, we quoted the Gibson Dunn Law Firm as stating, “Whether or not the contract contains a force majeure clause, the common law doctrines of impossibility or commercial impracticability may be available and legal analysis of such a claim should be conducted…

the party asserting this defence will bear the burden of proving that the event was unforeseeable and truly rendered performance impossible, and the doctrine generally is applied narrowly…

if an agreement does not have a force majeure or “act of god” clause, an analysis under the doctrine of impossibility or commercial impracticability, depending on the jurisdiction, may be warranted.”

Last week’s article triggered some healthy discussions amongst readers and myself. That article had, as I put it, real gems from a real lawyer and a real law firm”. Today’s article is the content of dialogues with two good friends, one being my proclaimed King of Brainstorming, and the other the man I will credit if ever I take up full-time Pan-Africanism.

Foster Awintiti Akugri, the Stanbic Bank Incubator Manager and Founder of Hacklab Foundation, explores how COVID-19 could trigger commercial impracticability for contract holders. Tom Arowojolu is a Director at Mainbridge Group and CEO of Mainbridge Investment Advisory. He touches on what he calls the “Dawn of a New Reality”.

Before you read it, I agree with Tom’s assertion that, in legal proceedings and within a legal framework not subject to conspiracy theories and the like, the corona virus cannot be automatically categorized as an “Act of God”.

I say this because, from a legal standpoint, the onus is on whoever is making the claim, be it Force Majeure or Commercial Impracticability, to prove the aforementioned claims. It is going to be very hard to prove that, in these times of advanced modern technology, a virus like this can only be an “Act of God” and not engineered in a lab.

Enjoy the read!

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How COVID-19 could trigger common law doctrines of Commercial Impracticability.

Let me start from the national level. The COVID-19 has been so critical to the extent that governments have had to shut down certain arms of its operations in terms of economic activities as a measure to curb the spread. And this has disrupted a lot of value chains and supply chains businesses all over.

Huge sections of the Ghanaian economic community now seem to pose a threat to national security and risk defying the executive order of the President of Ghana if they go about their breadwinning activities as they are used to. So this puts businesses in some form of a shamble where they are caught between “do we fulfil the deal or do we come to a consensus to postpone whatever we may have agreed on or committed to”.

And in as much as a contract is a contract, even in the absence of force majeure, some circumstances can make execution impossible or impractical. In this instance, it is an executive order of the President of Ghana, the one person of the highest authority of any economic environment putting an embargo on and limiting some business operations. This may definitely have an impact on some types of businesses and some types of contracts.

Let’s take another instance. Assuming I got involved in an accident today or I got paralysed and I am unable to fulfil a certain obligation because of that incident. If I can demonstrate clearly with evidence that it is beyond my control to get my duty done as per a contract, then common law doctrines of commercial impracticability could be enforced.

But again, it depends on how the contract is also drafted. There are a variety of avenues that this may end up taking. Severability Clauses may only allow the courts to void one part of the contract while keeping the other parts very much alive.

[Severability Clauses might say, “If any clause, or portion of a clause, in this Agreement is considered invalid under the rule of law, it shall be regarded as stricken while the remainder of this Agreement shall continue to be in full effect.]

Also, keeping in mind that Severability Clauses potentially allow only parts of a contract to be voided, everything that’s happening with these lockdowns other COVID-19 situations do not necessarily make contracts automatically void when the common law doctrines of commercial impracticability is enforced. You may consider giving an extension to the other party or suspending the activity until both of you have agreed on something. But it also gives the right to one party to terminate the contract.

This becomes the much more complex part of it, which in this circumstance is the impact of why you are writing this article right? To seek the opinions of your readers as to whether people can take advantage of these circumstances to get out of contracts.

[At this point I interjected that “Advantage” is a strong word: this is more like the exploration of an option that readers requested I delve into after reading a little about it in the closing paragraph of my last article on ‘COVID-19 & Force Majeure’. Foster continued…”

Ok, then let me rephrase it as this is explore considerations to taking precautions in light of the complications of COVID-19 to renegotiate contracts which they were initially tied to and now seem to have no option than to fulfil them.

Most people have Force Majeure clauses in their contracts though which addresses pandemics. And technically, this is a pandemic.

So terrorism, earthquakes, hurricanes, acts of governments, plagues and/or epidemics are usually what’s mentioned in Force Majeure clauses. So where the term epidemic is used, it could be argued that it loosely also refers to an pandemic, which clearly COVID-19 has been declared as such by WHO.

Recent events all over the world has and will affect every business differently. The imposition of travel restrictions, restrictions of import and outbound-inbound trade, other trade embargos, quarantines, closing down some buildings and borders, closing down or decongesting crowded areas like marketplaces, etc. These and many others are major hinderances to the many things that ensure that a trade happens or that a contract is executed successfully.

But then again, this doesn’t mean people should jump to cancelling contracts. Another clause that’s usually in many contracts is the Entirety of Agreement Clause. Thought it states that the agreement is complete and anything not written there is excluded, it allows you to make changes later to the contract especially when it also states that any additions should be signed by both parties first.

[Entirety of Agreement Clauses might say, “This Agreement embodies the entire, final and complete agreement and understanding between the Parties and replaces and supersedes all prior discussions and agreements between them with respect to its subject matter. No modification or waiver of any terms or conditions hereof shall be effective unless made in writing and signed by a duly authorized officer of each Party.”]

So if COVID-19 raises the situations of impossibility and commercial impracticality, look to enforcing the entirety clauses where you have to write to the other party to draw their attention to the facts on the ground. You shouldn’t assume that they should have agreed in principle that since the situation is this way, then everybody should know what to do. You have to put it in writing and inform the other party that due to circumstances arising, you would rather you two renegotiate the terms of the contract to reflect the current situation. In circumstances where there is uncertainty on fulfilling the obligations of both parties or one party, they usually come to a consensus whether to suspend the contract or terminate it.

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The COVID-19 Virus and Dawn of a New Reality

In recent weeks a new reality has dawned upon the world which has a huge impact on how we engage socially and with our work routines. The disruption has led to isolation and a distinct change in work patterns. Business has been disrupted significantly with a detrimental impact on many sectors where some have even considered reducing their workforce numbers as a result. The longer this debacle continues, the more time the new reality will have to set in and thus become the new norm. 

Business will have to continue in a different manner and some will either sink or swim depending upon how hard they've been hit or how quickly they're able to adapt.

As some businesses seek solutions to the current debacle numerous questions are being asked. Two key questions are:

What is the government doing to support businesses and their workforces during this uncharted period? And,

Can the Corona Virus pandemic be deemed as an act of God in force majeure?

The answers are indeed critical to the survival of many businesses and also to the mental well-being of the workforce at large.

In response to the first question, many Governments have implemented a range of measures to assist businesses as they understand the gravity of what the businesses are up against with the current pandemic.

In response to the Corona Virus however the pandemic is not an act of God as it could be man-made hence I believe that the latter will prevail as the former has further implications.

However it is certain that we are in unprecedented and extraordinary times and therefore have to contend with the current circumstances. As the virus ravages the environment and changes the way we operate socially and in business we have to be prepared and adhere to the necessary precautions.

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Hit me up on social media and let’s keep the conversation going! I read all the feedback you send me on LinkedIn, Twitter, Instagram and Facebook.

Go to bit.ly/maxwrites to read all my previous articles.

Also, feel free to send me your articles on relevant topics for publication on the Macroeconomic Bulletin. I’d give you full credit, an intro, and an outro. Kindly make it about 1000 words.

Have a lovely week!

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Maxwell Ampong is the CEO of Maxwell Investments Group, a Trading and Business Solutions provider. He is also the Business Advisor for the General Agricultural Workers’ Union of TUC (Gh). He writes about trending and relevant economic topics, and general perspective pieces.

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Published in Macroeconomic Bulletin
Monday, 06 April 2020 08:28

Coronavirus: Africa death toll hits 383

The World Health Organisation (WHO) Regional Office for Africa in Brazzaville, Congo, says there are now 8, 596 confirmed cases of COVID-19 on African continent with 383 deaths.

The UN’s health agency gave the update on its official twitter account @WHOAFRO.

“Africa now has a total of 8,596 confirmed cases, 383 deaths and 792 recovered from 51 Countries.

“Number of cases continue to rise on the African continent with 8,377 cumulative cases reported.

“Algeria and Cameroon have reported a sharp case increase in past 24 hours,’’ it stated.

Algeria had on Saturday reported 986 cases and 83 deaths while Cameroon confirmed 306 cases with seven deaths.

The agency said South Africa currently had the highest in the region with 1, 585 cases and nine deaths, followed by Algeria 1,251 cases with 130 deaths and Cameroon has 555 confirmed cases with nine deaths.

Meanwhile, Nigeria has 232 confirmed cases of COVID-19, 33 patients had been discharged with five deaths as at 9:30 p.m on Sunday

Coronavirus disease (COVID-19) is an infectious disease caused by a new virus.

The disease causes respiratory illness (like the flu) with symptoms such as a cough, fever, and in more severe cases, difficulty breathing.
You can protect yourself by washing your hands frequently, avoiding touching your face, and avoiding close contact (one meter or three feet) with people who are unwell.

Published in World
Dangote Cement Plc, says it plans to raise up to N100 billion in fresh funds from the bond market, under its N300 billion Debt Issuance Programme.
 
The plan seeking to raise up to N100 billion was detailed in an investor presentation document prepared by the company themed: “Building Prosperity in Africa,” made available to newsmen on Sunday in Lagos.
 
According to the document, the funds from the debut offering in the bond markets are to be utilised to refinance existing short-term debt previously applied toward cement expansion projects, working capital and general corporate purposes.
 
Also, the bond (medium term debt paper), Dangote Cement is issuing for the first time, signifies confidence in business growth and in the Nigerian economy long term growth.
 
“Dangote Cement Plc is a good offer for discerning institutional investors and high networth individuals as it is Nigeria’s largest company by market capitalisation on the Nigerian Stock Exchange.
 
“Certain factors across Africa signal positive long term trends for Dangote Cement.
 
“There is an increasing demand for cement as urbanisation continues across the continent, demanding more infrastructure, housing and commercial building.
 
“As democracy becomes entrenched in Africa, it brings increasing political stability, enabling rapid economic growth, growth in infrastructure such as roads, housing, schools, among others, built from cement.
 
“With steady population growth, younger and more mobile population drive the need for building, while the emerging middle-class, fuels increasing consumerisation and access to credit,” it stated.
Published in Business
A tiger at New York’s Bronx Zoo has tested positive for Coronavirus, the institution said Sunday.
The animal is believed to have contracted the virus from a caretaker who was asymptomatic at the time.
 
The four-year-old Malayan tiger named Nadia along with her sister Azul, two Amur tigers and three African lions all developed dry coughs.
They are all expected to fully recover, the Wildlife Conservation Society that runs the city’s zoos said in a statement.
 
“We tested the cat out of an abundance of caution and will ensure any knowledge we gain about COVID-19 will contribute to the world’s continuing understanding of this novel coronavirus,” the statement sent to AFP said.
 
“Though they have experienced some decrease in appetite, the cats at the Bronx Zoo are otherwise doing well under veterinary care and are bright, alert, and interactive with their keepers,” the statement continued.
“It is not known how this disease will develop in big cats since different species can react differently to novel infections, but we will continue to monitor them closely and anticipate full recoveries.”
All four of the zoos and the aquarium in New York — whose virus death toll has topped 4,000 — have been closed since March 16.
 
The zoo emphasized that there is “no evidence that animals play a role in the transmission of COVID-19 to people other than the initial event in the Wuhan market, and no evidence that any person has been infected with COVID-19 in the US by animals, including by pet dogs or cats.”
Chinese disease control officials had identified wild animals sold in a Wuhan market as the source of the coronavirus pandemic that has infected well over one million people worldwide.
 
According to the US Department of Agriculture website there had “not been reports of pets or other animals” in the United States falling ill with coronavirus prior to news of the tiger Nadia.
“It is still recommended that people sick with COVID-19 limit contact with animals until more information is known about the virus,” the department’s website says.
In late March a pet cat was discovered infected with the novel coronavirus in Belgium, following similar cases in Hong Kong where two dogs tested positive for COVID-19.
All of those animals are believed to have contracted the virus from the people they live with.
The Bronx zoo said preventative measures were in place for caretakers as well as all cats in the city’s zoos.
Published in World
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