What if you want to terminate the contract completely?
If changed circumstances mean that a business wants to exit from a contractual arrangement, then before trying to terminate it, a careful review should be carried out to see whether a right to terminate actually exists. For example:
- Not every contract for the sale of goods contains the right for the buyer to terminate in circumstances where the supplier hasn’t done anything wrong. If a business has entered into a contract on the supplier’s standard terms, it is unlikely to contain any such provision
- A contract for the provision of services is unlikely, if drafted by the customer, to contain a provision that allows the supplier to walk away from the arrangement at short notice, or perhaps at all
If a party tries to terminate a contract when it doesn’t have the right to do so, the other party will likely claim breach of contract and could sue for damages. In the case of a long term or high-value contract, this could amount to a very significant liability.
Even if the right to terminate the contract does exist, there might be particular rules about the following:
- How much notice has to be given
- How such notice has to be served (for example, it might have to be in writing to a particular address)
- When the notice can be served (perhaps on an anniversary of the start of the contract)
- How much a party has to pay if it cancels (for example, for raw materials, for work done to date, or even the whole contract price)
All of these factors must be taken into account, and any contractual processes for termination are followed.
Related FAQs
Small suppliers (defined by reference to certain financial indicators) are temporarily exempt from these new restrictions until 30th March 2021 in order to account for the difficulties to small suppliers during the Covid-19 pandemic.
There are also certain industries that are exempt from these restrictions (for example financial services). The Secretary of State may also create further exemptions framed by reference to kinds of company, supplier, contract, goods or services or in any other way.
To respond to the crisis businesses might need to exchange information to a greater extent than they would usually. They might need to discuss capacity and to coordinate supply chains (both upstream and downstream). They might need to purchase or sell jointly to ensure vital supplies are maintained. In general agreements or collaboration which:
- Avoid a shortage, or ensure security, of supply
- Ensure a fair distribution of scarce products
- Continue essential services
- Provide new services such as food delivery to vulnerable consumers
The Flexible Furlough Scheme was introduced from 1 July 2020 and is due to come to an end on 30 September 2021.
Yes. The Government continues to support the construction industry and the Prime Minister’s recent statement supports the return to work of those who cannot work from home, if they can work safely. This has seen an immediate surge in industry workforce returning to work. Banks and storage and distribution businesses are permitted to operate as essential businesses.
Solicitors and estate agents may still not permit members of the public to enter their premises, but can operate remotely via website, phone, email and other methods, as normal. The Government’s latest guidance published on 13 May now advises that moving house need not be postponed, provided social distancing and safe ways of working can be adopted. Restrictions remain for those who are infected or who are self-isolating or vulnerable, and they should not move house or accept visitors.
Initially, the relaxation applied to supermarkets and food suppliers. This was subsequently widened to apply to other businesses, permitting them to collaborate where necessary to respond to the crisis in the interests of consumers.