Now that the dust has settled on the initial phase of the Coronavirus and businesses have begun to get to grips with operating in the guise of the ‘new normal’, having dealt with forced business closures and complying with ongoing social distancing measures, many businesses are starting to look ahead at how they can still conduct business and emerge with gusto after the restrictions are lifted.
We have received an increase in enquiries from Companies and businesses in relation to contracts that they already have in place. It is unlikely that many businesses would have clauses in their contracts relating to the outbreak of a pandemic and therefore, many Directors have been left wondering where they stand.
Although it might be assumed that the terms of a contract are set in stone, this is not necessarily the case. In fact, in the majority of cases, contractual agreements can be amended at any time, provided that both parties are made aware of and agree to the new terms which of course may be beneficial for both. To this end, it can be possible to amend or vary contractual documents to build in some protection in view of the coronavirus and the existing contract will often deal with the mechanism for such changes to occur i.e. by formal Deed of Variation of simple written agreement to vary.
In addition, we have been looking at future performance Contracts (Sale and Purchase Property Contracts and Agreements for Leases) with a future Completion Date subject to a Long Stop Date, enabling the parties to secure the contract, also allowing both parties to rescind the contract in the event of COVID-19 still impacting the market or in the event that the Long Stop Date is achieved without Completion having occurred due to the ongoing effects of COVID19. This allows speculative business ventures to be contracted with built in protection for both parties in the event that the COVID-19 situation doesn’t improve. Very particular and careful drafting is required i.e. as to what constitutes a COVID 19 event permitting one party to delay, and we have been involved in the drafting of such clauses for use on contracts which we have completed and which work.
Where possible, parties to contracts should be undertaking an early contract review, engaging with key customers and suppliers to try and establish a way forward. In doing so, they may be able to mitigate risks, also building a stronger basis on which to conduct ongoing business and/or future business after the restrictions are lifted. Taking action sooner rather than later is likely to avoid further cost and disruption should disputes arise further down the line.
Our Dispute Resolution team are also are continuing to work closely with clients to protect them in every way possible throughout the course of this pandemic. Many businesses have, understandably, been caught off guard and we are working through their contractual arrangements and obligations to best mitigate any financial loss and help them to come out the other side in as strong a position as possible, under the circumstances.
For more information or to speak to a member of our commercial and dispute resolution teams, please get in touch with us on 01457 761 320. James O’Donnell is Head of Commercial Law at O’Donnell Solicitors and can be contacted directly on email@example.com.