Shorter Reads

Contracts and coronavirus (1/5)

1 minute read

Published 30 March 2020

Authors

Share

Key information

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. If you haven’t done so already, now’s the time to review your key supply and sales contracts and determine which critical ones are likely to be impacted the most by the coronavirus outbreak, so that you can plan accordingly. If you sell goods or services under an existing contract and no longer wish to do so because current circumstances make it economically unviable, you may be considering terminating the contract. This should be considered carefully, as this could have reputational repercussions in the current climate. You will of course need to take into account the effect of any such termination on your business relationship with your customer.

Some contracts, if they explicitly state this, allow you to terminate for convenience (i.e. without cause), so if this is an option available to you and the required notice period to terminate is sufficiently short, consider whether you wish to cut your losses. Be aware, though, that many contracts do not include provisions that allow for termination for convenience. In that case, unless you can rely on another termination provision (for example, if you think you won’t get paid from a struggling business, you could consider whether you could rely on any termination provisions for insolvency or ceasing business), it’s unlikely you will be able to end an English-law contract without breaching it. Ultimately, this will depend on the contract’s wording. Remember, if you do decide to terminate, it is important to observe any requirements set out in the contract for serving notice; if the notice is invalid, then termination may not be effective.

If COVID-19 seriously impacts on your performance of a contract, terminating it isn’t necessarily your only (or even best) course of action. Later this week, we will consider other options where performance is impacted, including variations to contracts and relying on ‘force majeure’ clauses. In the meantime, you can find more coronavirus-related resources from Collyer Bristow here.

Message us on WhatsApp

Arrow Back to Insights

Shorter Reads

Contracts and coronavirus (1/5)

Published 30 March 2020

Authors

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. If you haven’t done so already, now’s the time to review your key supply and sales contracts and determine which critical ones are likely to be impacted the most by the coronavirus outbreak, so that you can plan accordingly. If you sell goods or services under an existing contract and no longer wish to do so because current circumstances make it economically unviable, you may be considering terminating the contract. This should be considered carefully, as this could have reputational repercussions in the current climate. You will of course need to take into account the effect of any such termination on your business relationship with your customer.

Some contracts, if they explicitly state this, allow you to terminate for convenience (i.e. without cause), so if this is an option available to you and the required notice period to terminate is sufficiently short, consider whether you wish to cut your losses. Be aware, though, that many contracts do not include provisions that allow for termination for convenience. In that case, unless you can rely on another termination provision (for example, if you think you won’t get paid from a struggling business, you could consider whether you could rely on any termination provisions for insolvency or ceasing business), it’s unlikely you will be able to end an English-law contract without breaching it. Ultimately, this will depend on the contract’s wording. Remember, if you do decide to terminate, it is important to observe any requirements set out in the contract for serving notice; if the notice is invalid, then termination may not be effective.

If COVID-19 seriously impacts on your performance of a contract, terminating it isn’t necessarily your only (or even best) course of action. Later this week, we will consider other options where performance is impacted, including variations to contracts and relying on ‘force majeure’ clauses. In the meantime, you can find more coronavirus-related resources from Collyer Bristow here.

Authors

Need some more information? Make an enquiry below.

    Subscribe

    Please add your details and your areas of interest below

    Specialist sectors:

    Legal services:

    Other information:

    Jurisdictions of interest to you (other than UK):

    Article contributor

    Enjoy reading our articles? why not subscribe to notifications so you’ll never miss one?

    Subscribe to our articles

    Message us on WhatsApp (calling not available)

    Please note that Collyer Bristow provides this service during office hours for general information and enquiries only and that no legal or other professional advice will be provided over the WhatsApp platform. Please also note that if you choose to use this platform your personal data is likely to be processed outside the UK and EEA, including in the US. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information provided. All information will be deleted immediately upon completion of a conversation.

    I accept Close

    Close
    Scroll up
    ExpandNeed some help?Toggle

    Get in touch

    Get in touch using our form below.