General Commercial Matters:
The unprecedented COVID-19 and the subsequent lockdown has affected all facets of business, irrespective of their size. Of particular concern for our clients and businesses in general, is how this affects the contracts to which they are a party. The impact of COVID-19 is far-reaching, resulting in many businesses being unable to perform their contractual obligations, either in the manner dictated, or at all.
Commercial contracts, which have already been, or are likely to be, affected by the current circumstances should be reviewed, with such a review looking in particular at the following:
- to what extent, if any, does the contract provide for time and manner of performance?
- is time of the essence, i.e. is the completion of the contract by a specific date a condition of the contract?
- must performance of the contract occur in a certain manner for the contract to be successfully carried out?
- is there a force majeure clause within the contract, i.e. a clause excusing one or both parties from performance of the contract in some way following the occurrence of certain events which are outside a party’s control?
- if so, does it cover COVID-19, e.g. events including pandemics or epidemics?
- if there is no such force majeure clause, will the non-performance due to COVID-19 be covered by the legal doctrine of frustration?
- what remedies could be available for any losses incurred as a result of non-performance either under a force majeure clause or through the doctrine of frustration?
Please see more detailed guidance on the above, and more, here.
Following a contractual review, a commercial and practical approach can be formulated. This can be discussed with the other parties to the contract, with the aim being to minimise the effects of the inability to perform obligations and seek to resolve matters outside of the courts.
COVID-19 has also caused uncertainty for employees and employers and so it is not only commercial contracts that it would be wise to review. As the government has implemented its job retention scheme (known as the “Furlough Scheme” or “Furloughing”), it would be prudent to review employment contracts to enable businesses to support their employees in a commercially viable manner.
Such an employment contract review would take into consideration the following:
- does the contract contain a clause providing for the Furloughing of workers without their consent?
- does the contract provide for contractual sick pay above the rate of Statutory Sick Pay?
- does the contract provide for contractual sick pay when looking after a dependant?
- does the contract permit a reduction of hours?
Please see the following guidance on the above, and more, here.
Our corporate and commercial solicitors are currently providing contractual reviews for a fixed fee, to enable businesses to gather all the relevant information, understand their position from a contractual point of view and implement an effective strategy to move forward and minimise risks.
Edited by Partner, Grant Esterhuizen.