Does Force Majeure apply to the leasing of commercial property?
Some commercial tenants have queried whether the current situation is a force majeure which may allow it to terminate the lease. Clauses which allow a party to terminate a lease for a force majeure event or, to put it another way, an “act of God”, are however extremely rare in modern commercial leases. Even if there is such a provision in your lease, it would need to be drafted to apply to an outbreak of disease.
Related FAQs
The coronavirus outbreak has seen State support being given to businesses on an unprecedented scale.
This issue is likely to be increasingly relevant as Governments seek to protect and stimulate their economies as they emerge from lockdown.
How have the rules been relaxed in the context of the crisis and what facets of the existing law can be used for the State to provide support to undertakings?
CMA guidance suggests that it will not take enforcement action in respect of agreements which:
- Are appropriate and necessary to avoid a shortage, or ensure security, of supply
- Are clearly in the public interest
- Contribute to the benefit or wellbeing of consumers
- Deal with critical issues that arise as a result of the Covid-19 pandemic
- Last no longer than is necessary to deal with these critical issues
The Coronavirus pandemic will have impacted businesses in many different ways, but some of the most likely impacts that could have a legal implication are as follows:
- Services were not performed in accordance with contract during the period of disruption. This could be a reduction in volume of services performed, a suspension of services, or performance in a way that does not comply with contractual KPIs
- Late delivery or non-delivery of goods because of factory closures, or disruption in the supply chain
- Changes being agreed between parties to contracts to deal with the consequences of the Covid-19 outbreak
Employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However in doing this, they must not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation.
Employees who are pension scheme trustees or trustee directors of a corporate trustee may also undertake trustee duties in relation to the pension scheme. However, a professional, independent pension scheme trustee who has been furloughed by the independent trustee company cannot undertake trustee work that would provide services to or generate revenue for, or on behalf of, the independent trustee company or any organisation linked or associated with that independent trustee company during hours when they are recorded as being on furlough.
The Confederation of British Industry
“What you need to know about coronavirus and how it will impact your business”. This includes the very influential and highly regarded daily webinars hosted by Director General Dame Carolyn Fairburn.
https://www.cbi.org.uk/coronavirus-hub/
The Entrepreneurs’ Forum
Links to valuable resources collected by the Entrepreneurs’ Forum team as requested by its members and partner network, including on People, Finances, Physical and Mental Wellbeing, Technology and Leadership.
https://entrepreneursforum.net/support-hub
RTC North
Billed as containing “all the UK government information in one place”, this resource includes information on access to finance, employees, planning and leadership, Growth hub toolkits, and working from home.
https://www.rtcnorth.co.uk/covid-19/
Newcastle Gateshead Initiative (NGI)
Businesses across the UK and around the world are sharing their expertise in everything from remote working to business planning. The team at NGI have collated some of the most useful resources, alongside its own content which is designed to help partner organisations and other businesses across North East England.
https://www.ngi.org.uk/covid-19-business-resources/
North East of England Chamber of Commerce
The NEECC brings together its latest advice and guidance for businesses, as well as some of its own FAQs.
https://www.neechamber.co.uk/covid-19
Greater Manchester Chamber of Commerce
The Chamber has pulled together information about how it and others in the area are supporting all businesses during the Covid-19 outbreak.
https://www.gmchamber.co.uk/covid-19-coronavirus/
North East Growth Hub
The North East Growth Hub toolkit is intended to provide businesses with the latest advice, guidance and support available from government in response to the COVID-19 pandemic. Topics covered include:
- Financial support available for businesses
- Official guidance for employees, employers and businesses
- Advice on effective home working
- How to care for staff/suppliers/customers and prevent the spread of COVID-19
https://www.northeastgrowthhub.co.uk/toolkits/covid-19-coronavirus-toolkit
Pro-Manchester
Links to valuable resources collected by the Pro-Manchester team, including national Government support and advice, regional support and cyber security advice.
https://www.pro-manchester.co.uk/home/covid-19-support/
Innovation SuperNetwork
The Innovation SuperNetwork, a “network of networks”, detail on their website what their team of Innovation Managers are offering during these difficult times, as well as details of funding available, and what is being offered by their numerous partners.