What should businesses do now?
Many will have worked collaboratively with their suppliers and customers to deal with the immediate public health crisis. This will have meant offering flexibility as to contractual arrangements, whether in delivery dates, volumes of goods or services supplied, or even in the specification of what has been delivered.
If this is the case, it is important that businesses now do their legal housekeeping and make sure they have a proper record of what has been agreed. Unfortunately, our experience shows that many legal disputes arise out of amendments to contracts, typically where the parties to the contract each have a different view about what exactly they agreed to change.
We would therefore advise businesses to review any amendments that they might have agreed either verbally, by email, or otherwise, and consider whether they need to be captured in a more formal way which will make clear exactly what has been agreed to be varied, and (where appropriate) how long that variation will remain in force.
It’s also important to remember that some contracts contain provisions that set out specific requirements about how amendments are to be made. For example, they might require that amendments are made in writing (rather than verbally). These “No Oral Modification” clauses are commonly found in commercial contracts, and the courts have recently shown that they are willing to enforce them.
Failing to deal with amendments in accordance with contractual requirements could therefore have a serious impact on businesses as they recover from the disruption caused by the lockdown. If they end up in dispute with a customer or supplier, a business could find that the contract has not actually been amended in the way that they think – potentially leading to legal costs and liabilities at the worst possible time.
Related FAQs
Employers had until 31 July 2020 to make any claims for claim periods up to 30 June 2020. That was the end of the old scheme.
From 1 July 2020, claim periods must start and end within the same calendar month and must be for at least 7 days unless you are claiming for the first few days or the last few days in a month.
You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.
For example, if an employee is furloughed for 7 days spanning a month. You can claim the last 3 in one month, and 4 from the next.
The crucial point is that you cannot make claims that cross calendar months.
The first time that you could make a claim for days in July 2020 was 1 July 2020. You could not claim for periods in July 2020 before this point.
- Keep in touch. If contact is poor, workers can feel disconnected, isolated or abandoned. This can adversely affect stress levels and mental health – especially in the current crisis when everyone is feeling more anxious.
- Think about the use of laptops/devices (DSE) at home. Provide a basic form of risk assessment for self-completion.
- Remind workers of simple steps to reduce the risks from display screen work:
- take regular breaks (at least 5 minutes every hour) or change activity
- avoid awkward, static postures by regularly changing position
- get up and move or do stretching exercises
- avoid eye fatigue by changing focus or blinking from time to time
The change in the law has the potential to place much greater financial risks on suppliers, making it more difficult to exit a contract with a customer of doubtful solvency. This will place increased emphasis on appropriate financial due diligence and credit checking before entering into supply contracts.
In addition to the obvious issues around financial risk, suppliers will also need to think carefully about how their contracts are drafted. For example, any form of right that is drafted so as to be triggered on customer insolvency will clearly be problematic. These could include:
- Retention of Title provisions, which are commonly drafted so that the right to enter premises and retake possession of the goods is triggered on insolvency;
- Provisions for brand protection, which seek to control how goods are dealt with on termination of the contract.
This is potentially a very significant development for many businesses. We would strongly recommend specialist advice be obtained so that:
- businesses understand the potential increased risks faced; and
- where possible, contracts are updated so that appropriate protections are maintained.
This will be dependent upon the how the leasehold structure is set up for each relevant building, but it may be the local authority. We would be happy to provide further advice in relation to specific buildings if you contact us separately with the relevant details and documents.