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Coronavirus: impact on commercial contracts

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author/source: Holly Jade O'Leary
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In light of the potential impact of Coronavirus across the commercial industries; Alinea offer services to review existing contracts

coronavirus-impact-commercial-contracts

Businesses are facing unprecedented challenges as Coronavirus (COVID-19) impacts industry on a global basis.

The team at Alinea are able to review new or existing contracts to minimise risk, generate commercial strategy and we also offer advice on government-backed support for independent businesses.

The City of London are offering full business rates relief for 12 months; until the end of the fiscal year, to businesses with a rateable value of £51, 000 to minimise the impact to trade. 

The government has announced for people to avoid social interaction, public gatherings and unnecessary travel, therefore the market conditions for the retail industry will be impacted, and companies are seeking guidance into how to adjust their supply chain and distribution accordingly. 

Companies may seek to:

  • Suspend the delivery of stock;
  • Renegotiate quantity;
  • Renegotiate payment terms;
  • Seek relief from the performance of contractual obligations.

 Sophisticated domestic and international trade agreements of long duration will typically contain a renegotiation or adaptation clause that provides flexibility to the relationship.

These may be able to be implemented through initiating a force majeure clause.

The term 'force majeure' is a French term for a 'superior force' and identifies that a party may not be liable for any failure or delay in the performance of the agreement which are:

a.) Beyond the reasonable control of a party;

b.) Materially affects the performance of any of its obligations under this agreement;

c.) Could not reasonably have been foreseen or provided against, but will not be excused for failure or delay resulting from only general economic conditions or other general market effects.

The implementation of a force majeure clause will vary according to the terms of the contract and the jurisdiction, no doctrine of force majeure will apply outside of the commercial mechanism, and will be triggered by the issuing of a formal letter of notification to the contracted party.

Certain civil law systems will also apply a doctrine of hardship, for the variation or suspension of the performance of the duties of the contract due to unforeseen circumstances outside of the control or influence of the party.

 

Please telephone Holly Jade O'Leary, Director, on 020 7101 4242 or email [email protected] to arrange a professional consultation.  



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