Article

Contractual challenges in the face of disruption

Our main focus during this COVID-19 crisis will be turned towards the health of our family, friends, employees and society as a whole. From a business perspective, however, COVID-19 is having an unparalleled impact on businesses. Organisations are faced with uncertainty and the need to focus on ensuring the viability and continuity of business and to identify proactive measures that can be taken in order to mitigate and manage their risks.

The paralysis of many business operations means that it is becoming harder for companies to meet the obligations of their existing contracts. With an impact on both buy-side and sell-side contracts, having a strong understanding of an organisation‘s entire contract inventory can help determine the risks and
steps that can be taken to mitigate them. One such area is force majeure, used to protect companies unable to meet their contractual obligations due to events and circumstances beyond their control.

Considering the extent of the contracts impacted, companies are likely to face a need to review contractual relationships they hold with customers, suppliers, contractors, insurance companies and employees.

Such reviews may include the identification of applicable law, insurance provisions, contractual obligations related to delays in provision of goods and services and terms relating to failure to deliver in the event of a pandemic.

Read more in our working paper (download). 

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