Covid-19 may have come as a surprise to many, but it would seem that the impacts may be here to stay… at least for a while.
What does that mean for your company, and how you do business moving forward? There are many good blog posts and articles regarding the employment and health and safety side of things, but something less focused upon, is the impact on new agreements.
The Vancouver Regional Construction Association recently posted a helpful article published by the Canadian Construction Association, on this issue. The full article can be viewed here:
While the above article is specific to the construction context, the advice can be more generally applied to commercial agreements as well.
When negotiating a new agreement, parties should think beyond “force majeure” clauses for protection and allocation of risk. As this article points out, “force majeure” clauses are typically triggered by an “unforeseen” circumstances. Once triggered, these clauses can give parties certain remedies, as specified in the contract (may be additional time, additional compensation, ability to terminate, etc). For many with existing contracts when covid-19 first affected operations, the presence of such a clause may assist in providing a legal remedy to that which was unanticipated when the agreement was negotiated.
However, given the prevalence of covid-19 in our lives today, it will likely be difficult to argue that potential future impacts to an agreement are unforeseen or unanticipated. What this means, is that parties will have to think beyond standard terms relied upon in the past, to properly account for and distribute risk and responsibilities in agreements going forward. A “head in the sand” approach to the potential impacts of covid-19 moving forward will undoubtedly be a costly mistake.
The good news, is that your company can take steps now, at the contract negotiation stage, to prevent an unhappy surprise later. We have been following the impacts of covid-19 closely, and provide advice and consultation regarding appropriate clauses and negotiation techniques that will result in an agreement that you can feel good about moving forward with.
For further information, please contact Stephanie Streat, [email protected], 604-917-0045.