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Force majeure clauses, contracts and Covid-19: What’s the latest news for businesses?

Our team discuss the key issues above, their implications for businesses and steps we are advising business owners to take in order to protect their contractual position.

What are the key developments with regards to Force Majeure (FM) clauses?

The situation is ongoing and FM clauses are still the biggest consideration for businesses at the moment because we’re unsure about what’s is coming down the track, so they are trying to make as many detailed provisions as possible. For example, many are looking at including the official World Health Organisation definition of Covid-19 to create as much clarity and certainty as possible.

What kind of issues have you been assisting clients with, in relation to contracts and FM clauses?

When clients are entering into new contracts, we’re looking at how the pandemic is specifically affecting them. On first sight, there are many businesses and sectors that appear to be relatively unaffected by this crisis and their key concern is what they need to put in their contracts to take account for the fact that they businesses that they work with may well be affected themselves so that they don’t encounter problems further down the line.

As such we’re seeing extensive planning being put into place, with extensive documentation, where this may not have been required previously. In essence, it’s just good contract management but it’s more necessary now than it ever has been before for businesses to ensure that their contracts and provisions are in good order.

We’ve seen businesses in some sectors, such as hospitality, that have been hugely affected by the crisis and some who have had to diversify their offer. Does this have an impact from a commercial law perspective?

Absolutely. To take the example of the hospitality sector, many pubs, clubs and restaurants they’ve had to ‘rip up the rule book’ in terms of the way that they’ve operated in the past and put completely new procedures, terms and conditions in place. Prior to Covid, there was no requirement for customers to provide personal details to a restaurant when they were going for a meal, but now there are many GDPR implications for them to consider when gathering this data.

Also, many of these businesses are now offering online delivery and products to enable customers to cook their favourite restaurant dishes at home. Both of these modifications to businesses operating procedures come with significant changes to their terms and conditions, so we have been helping many businesses with the drafting of these.

What advice would you give businesses in terms of the protections that they should have in place against the background of Covid to ensure that they are best place to deal with the challenges now and further down the line?

In terms of the protection businesses need, the first question is; are you operating as you always have or are you now operating in a different way, as a business? If it’s the latter, it’s likely that you will have to consider putting new legal protections in place.

The other key thing to look at is the fact that even though you may not think that your business is directly affected by this crisis, others in your supply chain might be. As such, it’s important to look at what practical measures and procedures you have in place to mitigate the impact on your own operations. It may also be the case that you need to ask others that you contract with to put measures in place to protect your dealings with them. As always, detailed documentation is key.

We’re here to help you. If you are looking for help and advice relating to your business operations during the coronavirus crisis or any other aspect of commercial law, you can contact us by emailing or call our friendly team on 01482 325242.

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