Government measures in key jurisdictions 2nd edition final pages - Flipbook - Page 103
United Kingdom
4
5
Contractual
Issues
What measures
have been taken
to reinforce
contracts?
Property
•
As yet there has been no statutory Government intervention into the workings of
UK contracts between commercial entities and the normal rules apply. However,
the Government is strongly urging contracting parties to act fairly, reasonably and
in the national interest when seeking to enforce contractual rights and remedies, in
an attempt to minimise the impact the coronavirus will have on jobs and the wider
economy. Legislation may follow to give teeth to this guidance.
•
In the UK there has been an increased focus on contractual small print, such as the
precise wording of force majeure clauses within contracts. The sort of unforeseen
disruption to lives and businesses that we are now seeing is exactly what one
imagines a force majeure clause is designed to respond to. In many cases the
pandemic or the restrictions the Government has now advised to limit its spread will
fall into a contractual definition of force majeure, however the clause itself will need to
be scrutinised carefully in order to determine whether or not it is engaged.
•
If a force majeure clause is engaged, typically it will suspend the performance of the
affected party’s obligations under the contract, for the duration of the force majeure event.
•
If performance of a contract may be significantly affected it is crucial to review the
terms of your contracts so you understand your rights and obligations and to allow
you to scenario-plan accordingly.
•
Contracts in the time of COVID-19: Force majeure and frustration
•
Particularly with long-standing contracting partners, many businesses are trying to
agree a mutually acceptable way forward, including varying contractual obligations
and sharing the exposure more fairly (in which case any variations should comply with
the formalities required by the original contract).
•
Public sector bodies are being strongly encouraged by the Government to provide financial
support to their at-risk suppliers to increase the financial resilience of their supply chains.
•
The Government is fearful of a plethora of disputes that could arise as a result of
the chaos caused by the coronavirus crisis and is encouraging parties to resolve
contractual disputes responsibility, using alternative dispute resolution procedures
where possible, before commencing formal litigation.
•
Under emergency legislation:
– Landlords of business tenancies are prohibited from re-entering premises (forfeiture)
for non-payment of any sums due under the lease, from 26 March to 30 June
inclusive. This period can be extended by further legislation. Landlords will retain their
right to exercise re-entry for these sums at a later date, unless they expressly waive it
in writing. Existing court orders for possession of premises may be postponed.
Have any changes
been made to
the laws around
property, rent and
enforcement?
– Notice periods for terminating most residential tenancies are extended to three
months, for the period 26 March to 30 September. The notice period can be
extended to a maximum of 6 months by further legislation.
•
All current housing possession claims are suspended from 27 March for 90 days.
This suspension affects all tenancies and licences of dwellings. Again, this period
can be extended.
•
Many business tenants are no longer able to open their doors to the public. However,
aside from the legislation above and absent any other intervention, leases will
continue and the obligations on tenants will carry on as before.
Government measures in key jurisdictions
103