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If you run your own business you are likely to have experienced many different challenges, highs and low along the way.

 

If you have been in business for some time, you will have weathered the ‘manufacturing meltdown’ of the 80’s, Lawson’s Legacy in the early 90’s and more recently the financial crisis the 2008 banking bust put the country through.

 

But this latest challenge, the coronavirus pandemic, is one set to impact businesses of all shapes and sizes over the coming months or even years that was difficult to predict. The good news is that the Government are desperately trying to provide as much help and support as possible in order to keep businesses afloat.

 

Are Businesses Covered by Force Majeure?

 

Force majeure is a meaningless term unless it is specifically defined and contained in a contract. Generally, it is defined as unforeseeable circumstances that prevents a party from fulfilling its contractual obligations. A party affected by such an event which falls within the specific definition would be relieved from its obligations (and any related liability) for the duration of the impact of the event.

 

This coronavirus pandemic is an unforeseeable threat that is out of our control, however, unfortunately it is unlikely to be covered in most force majeure clauses unless the wording in the contract expressively covers such events.

 

If your business contract contains terminology such as “pandemic”, “epidemic” or “disease” then you may find it easier to argue a force majeure clause. It would be more difficult to argue Covid-19 as a ‘natural disaster’, ‘act of god’ or ‘government action’.

 

Not only does your contract need to clearly cover the coronavirus situation in its wording, but you will also need to demonstrate the impact is has had in preventing you to be able to adhere to the terms of the contract. Hindering your ability to honour agreements or making it difficult to fulfil will not be enough to claim force majeure.

 

A party seeking to use a force majeure clause will also have to demonstrate the lengths and efforts they have gone to in order to mitigate the event and its consequences. For example, does your business have policies and contingency plans to protect it from external events?  What “work around” solutions are available and have you adopted them?

 

It is also important that timely and sufficient notice is given by businesses wanting to claim force majeure.

 

Next Steps for Businesses

 
  • Carefully read through your contracts and pay attention to the specific language used.
  • Consider whether your contact covers the current pandemic we are facing.
  • Gather evidence, proof of prevention and steps you have taken.
  • Give official notice to the holder of the contract or agreement
  • Consider the implications of a successful or unsuccessful claim
 

Here to Help During Covid-19

 

If you need some clarification on your business contacts, terms and conditions during this time then please get in touch with our Company & Commercial Lawyer on 01256 844888.

 

We continue to work remotely and safely to support our clients and local business community through these challenging circumstances.

 

You can email our team at enquiries@lambbrooks.com or speak to our online chat assistant who is available on our website 24 hours a day, 7 days a week.

 

Please stay safe during this time.

   

Other articles you may be interested in reading:

Remaining Positive During the Covid-19 Pandemic

Recovering Debt in Crucial Times

Coronavirus Government Job Retention Scheme

 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.