We all hope that the predictions about the spread and seriousness of COVID-19 (coronavirus) prove to be unfounded. Whatever course the development of the virus takes, many of the measures that have been taken or are under consideration by governments, businesses and other organisations are already having or will have a significant effect on commercial relationships and commercial life generally. We are already seeing a slowing down in production and consumption around the globe, disruption to supply chains, the transportation of goods and the supply of services, the cancellation of events, and the imposition of travel and employment restrictions. The effects may be felt immediately or they may take time to filter through a network of relationships.
Inevitably, failure to perform or difficulty in discharging legal obligations will lead to financial losses and disputes arising from contractual arrangements and other commercial relationships. Parties should be reviewing the application of “force majeure” and other provisions and legal concepts that may be relevant when external factors cause disruption.
There are steps that any business can take to protect itself: from giving or responding to notices, taking action to mitigate losses, renegotiating commercial arrangements, through to enforcing rights or defending claims. Insurance programmes are a significant asset and they should be carefully reviewed to identify any protection that they may provide. Businesses should also be considering the ways in which protections can be built into contractual arrangements which are being negotiated and entered into now.