Yearly Archives: 2020

The COVID-19 pandemic will likely continue for some time. To help your business adjust to these uncertain times, each day this week we are posting on what to keep in mind concerning your business’s commercial contracts.As this is the last post in this week’s series, today we will give some practical tips about what to ensure your standard terms and conditions include from now on, in case (for instance) we encounter a ‘second wave’ of the pandemic later this year or next year. We would suggest:a) where you are the supplier:ensuring any force majeure clause in contracts you are negotiating or planning to enter into explicitly refers to pandemics and epidemics, and includes a right to terminate if the force majeure event continues for more than a certain period of time (this may not be enough for you to rely on this, particularly as COVID-19 is no longer something unforeseen, but it could help in certain situations); andincluding wording to the effect that no force majeure event exonerates a party’s payment obligations, and consider having a right to terminate if the customer does not pay on time; andwhere possible, using wording that refers to using your reasonable endeavours to undertake something, rather than agreeing outright to do it (this may give you a little leeway, depending on the circumstances).b) where you are the customer:where possible, insisting on your own standard terms, which should take the opposite position to the above tips for suppliers;negotiating longer payment timescales, in case of cashflow difficulties, as well as a lower interest rate for late payments; andseeking provisions giving you priority if there is an adverse impact on the supplier’s ability to provide you with the goods/services you are purchasing, so that you are first in the queue for any scarce resources.We hope you’ve found this week’s series of posts on contracts and coronavirus helpful. You can find additional COVID-19-related resources from Collyer Bristow here. If you have any specific queries regarding your business’s contracts, our Commercial team is on hand to help.

The COVID-19 pandemic will likely continue for some time. To help your business adjust to these uncertain times, each day this week we are posting on what to keep in mind concerning your business’s commercial contracts.One major impact on businesses resulting from the coronavirus fallout will be on their cashflow. In order to mitigate this, your business can take steps now to address this by building in protective provisions in contracts that it enters into with new customers and suppliers.For example, consider insisting in your standard terms and conditions that you have a longer payment period than you might usually offer (payment within 30 days of receiving an invoice is common across many sectors, but, depending on your bargaining power, you could negotiate up to 60 days). Conversely, you could stipulate shorter payment periods for your own customers. Of course, whether the counterparty will accept this will depending on the strength of your bargaining position.Where you are acting as the supplier, you could also state in your standard terms that late payments will be subject to statutory interest (rather than stipulating a specific figure for the interest rate). Under the Late Payment of Commercial Debts (Interest) Act 1998, the annual interest rate on late payments is currently 8.1%, which is above what is frequently agreed between many contracting parties. You could also include a right to terminate for missed payments, as well as the right to suspend performance if a customer has not paid a previous invoice in time.If your business is purchasing goods or services from another party who proposes all three of these consequences for late payment, you could, as a customer, argue that this is excessive and negotiate the terms of the contract accordingly.In our final post in this series tomorrow, we will suggest additional provisions that you can include in your terms and conditions to give further protection to your business in these uncertain times. In the meantime, you can find more coronavirus-related resources from Collyer Bristow here.

The COVID-19 pandemic will likely continue for some time. To help your business adjust to these uncertain times, each day this week we are posting on what to keep in mind concerning your business’s commercial contracts.Our previous posts in this week’s series discussed the relevance of termination and force majeure provisions in commercial contracts where performing contractual obligations is no longer viable. However, in many cases, rather than resorting to these clauses, it will be more practical in the first instance to engage openly with your customers and suppliers about the effect COVID-19 is having on your business. You may well find that the other parties in your supply chain are sympathetic. In such cases, rather than explore termination or suspension options, the contract itself can be amended (or ‘varied’) by agreement with the relevant counterparty.You may have already agreed to do this verbally with certain customers or suppliers, but we would strongly recommend setting out any variation to a contract in writing, and having this signed on behalf of both parties. This way, there is no risk of a dispute later on as to what the varied terms were, or how long they would last for. Unless the variation is executed as a deed, you and the counterparty will need to state what the ‘consideration’ is to make the variation legally binding (this concerns what needs to be promised by one party to the other to receive promises or obligations in return – essentially, it is an exchange for something of value). If you need assistance in documenting a variation to an existing commercial contract, our Commercial team can help to draft and negotiate this.You can find more coronavirus-related resources from Collyer Bristow here.