Contracts and the Covid-19 crisis

To quote Oscar Wilde, “expect the unexpected”, and never has this ‘saying’ been more relevant.

Not only has the whole country been learning how to expect the unexpected over the past couple of weeks, it’s fair to say the world, as a whole, is learning how to adapt to the Covid-19 crisis.

At the beginning of any contractual relationship, I always advise my Clients to prepare for the absolute worst-case scenario. It may be morbid, and Clients may not want to contemplate the end of their contractual relationship before it has even begun, however, you cannot predict what is around the corner.

Governing how the contract can be breached and further confirming what is outside the party’s control is key to overcoming an unexpected situation such as this. Contracts and the parties thereto will have been severely affected by the crisis. There will be numerous elements of thousands of different contracts that cannot be performed.

The failure to perform the contract can be a problem for both parties or possibly just one party; you may, for instance, encounter supplier issues, delivery issues, performance issues, attendance issues, access issues or technical issues.

There is an array of potential problems that could arise as a result of something that is entirely outside of your control. The term ‘Force Majeure’ and a ‘Force Majeure’ clause in a contract is an important one. This clause will often be found in contracts, particularly contracts of a commercial nature and it is designed to assist when the unexpected happens.

A force majeure clause will be clearly stated within the contract, if you have said clause. The force majeure clause will relieve one or more of the parties from part of, or all of its obligations, due to events outside of its control.

This could help or hinder you, depending on which party you are. Whether or not the Covid-19 crisis will fall under the Force Majeure clause very much depends on the wording of the clause.

If you have encountered a problem with a contract and aren’t sure where you stand, then please do contact Oakwood Solicitors. We have already received instructions as a direct result of this crisis and if we can help make it a little easier for you, then we certainly will do.

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