COMMERCIAL CONTRACT ADVICE CORONAVIRUS
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additional payment is to be made within a specifi ed period of becoming aware of the circumstances giving rise to the claim. Absence of such proper notice may be fatal to a claim. Keep the position under review.
Many Standard Form contracts require particulars of claims when initially made and updates when the full nature and extent of the problem become known.
Force majeure If the eff ect of a virus like coronavirus isn’t stated expressly to be an employer’s risk under the terms of your particular contract, could it fall within the defi nition of ‘force majeure’? The legal doctrine of force majeure applies in exceptional and unforeseen circumstances. The phrase force majeure has no generally accepted legal meaning. Many consider that it means some ‘Act of God’ but its meaning can be wider than that. It is important to carefully check the force majeure clause in your contract to ascertain whether the circumstances experienced constitute force majeure. If such circumstances are recognised in the contract, it may give rise to an entitlement to extension of time and, possibly, additional payment. However, here again, many contracts include onerous notice provisions which need to be followed in order to make a successful claim. One eff ect of the coronavirus is that contract draftsmen may revisit the terms of construction contracts
DOMESTIC WORK
From a domestic contract perspective, i.e. when carrying out work at someone’s home, if someone has contracted for work to be done and then cancels, the person who cancels might open themselves up to a claim for damages. However, that isn’t going to help re:
small contracts either in relation to amount of damages – likely to be very low if accepted at all – and the very poor impact on customer relations. It would be preferable to agree that the work would be carried out a future date.
to make clearer whether a virus like the coronavirus falls within the force majeure clause.
Amended Standard Form? As with all of the above, if you’re operating on an amended Standard Form contract, make sure you check how any bespoke changes may aff ect the terms under which claims can be made.
Frustration/Impossibility The legal doctrine of frustration operates where there are intervening circumstances which make the performance of the contract impossible or radically diff erent than initially expected. Think about whether the direct
eff ect of the virus itself or the eff ect of Scottish/UK Government action has prevented or frustrated you in carrying out your obligations, or otherwise made
performance of your obligations under the contract impossible. If you can’t claim the virus is a force majeure, it may be possible to argue that you are not obliged to perform/complete your contract work because that has become impossible or illegal.
Insurance
Check what you are covered for and, importantly, what you’re not covered for under the insurance cover you have in place. It may be that, if your business has been adversely aff ected by the virus, your policy will aff ord you some degree of cover. Check the terms of the policy or speak to your broker. There are now certain business interruption policies that may cover delay and disruption to works caused by the virus itself or government action in response to it. When your policy is up for renewal, check if it gives you the cover you want in these circumstances. If it doesn’t, you may be better to shop around for insurance that more accurately refl ects the needs of your
18 CABLEtalk APRIL/MAY 2020 All information was
correct as CABLEtalk went to press on
24 March. Events may have subsequently changed, so please check
select.org.uk or call 0131 445 557 for specifi c queries.
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