Therefore, resolving a dispute rather than litigating in the Courts, is going to be a much more attractive route, not least because it will be less expensive and achieve a faster recourse. Some practical steps that can be taken now and moving forward, are as follows:
1. Assess your contracts Assess your contracts carefully and if you feel that the performance of those contractual obligations may be affected, it is recommended you discuss these with your counterparties. Remember every business is going to be affected, so chances are your counterparty will have a good understanding and be willing to compromise. It may be that as a result of those discussions, you are able to renegotiate some key contractual terms such as payment structure, fees, deliverables, etc. Do remember that if you do vary the contract, you should get some advice to formally do this and ensure that those terms are properly reflected.
2. Check your insurance policies Are you covered for business disruption as you may be able to rely on this to cover any contractual issues that may arise and /or loss of profit?
3. Keep records of all discussions, emails and correspondence If point 1 is not achievable, you should keep a detailed account of all discussions, emails and correspondence between you as this may be necessary in the future. Remember with a dispute, what you write or say may be used against you or scrutinised, so do think about this at all times.
4. Consider ADR or formal mediation Consider ADR (“Alternative Dispute Resolution”) such as a round table meeting or formal mediation to resolve this rather than looking to the Courts. Commercial mediation has many significant advantages particularly in this present time. It is significantly cheaper and can also be done remotely with a skilled mediator using conferencing facilities. Often the outcomes of mediation can be more effective than a Court, because the mediator can help the parties to achieve more commercially based settlements, which a Court would not be able to do.
There are other forms of ADR that could be considered. So what happens if you cannot facilitate a variation to the Contract? Can you terminate? This will depend on what your contractual terms are, so it is important to consider these in detail.
Key express terms that may be relevant at this time are:
- Force Majeure clause
- Material Adverse clause
- Warranties and Undertakings
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