Contract Clauses in the Time of COVID-19

| Nov 30, 2020 | Business Litigation

Over the last several months, the idea of “business as usual” has been turned on its head. Companies across California have pivoted to stay competitive during the pandemic and meet the shifting safety requirements imposed in response to COVID.

While you may be focused on your remote workforce or finding ways to minimize financial losses, it is crucial to consider the changes you may need to make when drafting and entering contracts.

Contract Clauses to Consider

Although creating agreements with suppliers, vendors, and other parties has never been a straightforward process, today, there is far more insecurity with respect to expectations and extenuating circumstances.

When you are involved in a commercial transaction, you should pay especially close attention to the following clauses:

  • Conflicting terms or conditions
  • Warranty provisions that limit liability
  • Indemnity clauses that shift losses
  • Dispute resolution procedures
  • Actions for breach of contract

As this National Law Review article explains, these are some of the provisions that can take on a new level of importance in the current climate. Today, there can easily be disruptions in supply chains and pandemic-related reasons that prevent parties from fulfilling their end of a contract.

When negotiating contracts it is crucial for business leaders to establish these provisions and clearly understand the consequences of breaching any contract.

Resolving Contract Disputes

A breach is one element of commercial transactions that has not changed. When a breach occurs parties must take appropriate action to resolve the matter. Potential outcomes could include financial payments or contract cancellation.

Many parties mediate or arbitrate their contract disputes, which keeps cases out of court. This can reduce costs and often results in achieving a faster resolution than would occur in litigation. However, there are situations in which there is no choice but to go to court for a breach of contract.

No matter which route you end up taking to resolve a contract dispute, it is essential that you prepare your case accordingly and consult legal professionals who can help you find creative solutions.