COVID-19 contract impacts

The restrictions on social gatherings and non-essential businesses will impact the ability of many parties to comply with their contractual obligations. 

What commitments do you have to your customers, and can you still meet them?   Your customer agreements may provide you with the ability to suspend your obligations under ‘force majeure’ circumstances.  However invoking force majeure means you are responsible for your costs – it may be preferable to wait for a request from customers to amend the contract and come to a position where the costs of modifying or suspending work can be mitigated in a shared paradigm.

Are your suppliers affected, or do you need to cease supply of certain services?  If you have a right of suspension of the services, then the contract may also identify who will bear the costs of that suspension.  Be careful with exercising this right, as you may be liable for costs of suspending suppliers if you initiate the suspension.  If there is a force majeure clause in the supplier contract, it may be beneficial to wait for the supplier to invoke its force majeure rights. 

Also consider how services will be delivered or experienced very differently.  Services may be able to be delivered virtually, however this may be perceived to have significantly less value to some customers.  You should review your refund policies (and Australian Consumer Law obligations if applicable), as part of coming to an appropriate response. 

For further information or advice, please contact:

Paul Gray
Principal
T: 03 5225 5231
E: pgray@ha.legal

Alasdair Woodford
Senior Associate
T: 03 5225 5217
E: awoodford@ha.legal