Category: Legal Updates

Businesses and individuals are facing uncertain times at the moment. There is the immediate risk to health and wellbeing – both physical and mental – physical health issues and other concerns including children staying home from school, exams being abandoned, long-term plans and commitments put on hold and lack of social interaction.

There are also many uncertainties about the impact on businesses and contracts.  Contracts can be highly personal – a wedding or holiday or more long term such as sponsorship, entertainment and supply agreements where either suppliers are required to make guaranteed supplies which they may not be able to do or customers are required to purchase minimum amounts of goods or services which they no longer require.

• Can I get out of my contract or can the other person get out of their contract with me?

Start with looking at the contract itself. There may be a ‘force majeure’  clause or some other way to terminate the agreement.

• What is a force majeure clause anyway? This is a legal name for a clause usually stuck in the back of a contract which lets a party avoid performing its obligations in certain circumstances

 

• What does it mean? That depends – they are all drafted differently and very often not even considered carefully if and when they are negotiated. Each one needs to be looked at individually to see whether it applies and what you have to do to rely on it. Legal advice on its interpretation should be obtained. For example:
• Is the current issue covered by it
• If it is, it that the only reason you can’t perform?
• What else does it say – you must follow any provisions.
• You may have to notify the other party within a fixed time to rely on it
• You may have to take steps to minimise the impact (sometimes called ‘mitigation’)
• In some cases if the event carries on for a particular time the contract may be terminated

 

• What else should I be concerned about? – if you refuse to perform a contract or wrongfully terminate a contract when you aren’t entitled to, that will create liability

 

• Is that it for force majeure? Not entirely because Parliament has created laws that may have an impact on whether force majeure clauses will work. For business to business contracts there is the Unfair Contract Terms Act 1977 which may apply and for business to consumer contracts, there is the Consumer Rights Act 2015.

 

• Can you be more certain? Each case is very much dependant on the facts of the contract so needs to be considered separately. While these clauses have been in contracts for many decades, cases still keep being considered on them so there is no one size fits all.

 

• I’ve read about the doctrine of ‘frustration’ – will that let someone get out of a contract? This applies when something happens after a contract has been formed which makes it physically or commercially impossible to perform it or even illegal. Although this dates back many years, cases still are being argued over its scope. At the end of last year the courts refused to agree that Brexit was a frustrating event in a long term lease in Canary Wharf to the European Medicines Agency. We may see more leniency from the Courts for Coronavirus but any decisions are likely to only take place after the current crisis has passed. This is a complex area of law and the legal position needs to be considered very carefully in each case. It may be a fast moving area, for example if the Government stops gatherings.

 

• Other things to look out for – expect some government legislation which may have an impact on these matters to try and relieve contracting parties and reduce uncertainty. If you are a director, also be mindful of your duties as a director and insolvency risks. If you have insurance you should always comply with the terms of the policy.

 

• Any practical tips? If you can agree something with the other party that would be best in removing some of the likely uncertainties of relying on interpretations of force majeure clauses or legal doctrines. Collect evidence of any facts you want to rely on. It is imperative to understand what your legal position is as accurately as possible as early as you can and then see how you can de-risk any action that you might want to take.

 

• International Contacts – overseas governments and the EU may start to impose their own laws. This might affect the ability to enforce terms or contracts and limit remedies.

If you have any questions in relation to the above or concerns about your business, contact Clive Halperin, Head of Corporate & Commercial, directly on [email protected] or 0207 822 2220.

© 2020 GSC Solicitors LLP. All rights reserved.  GSC grants permission for the browsing of this material and for the printing of one copy per person for personal reference. GSC’s written permission must be obtained for any other use of this material. This publication has been prepared only as a guide to provide readers with general information on recent legal developments. It is not formal legal advice and should not be relied on for any purpose. You should not act or refrain from acting based on the information contained in this document without obtaining specific formal advice from suitably qualified advisors.

Tier 2 sponsors take their compliance duties seriously and usually they must report to the Home Office if a sponsored worker does not ‘turn up for their first day of work’. Once a sponsored worker has commenced employment, the sponsor must then report if the worker is absent from work for more than 10 consecutive working days without permission. However, in the light of the Covid-19 pandemic, the government has updated their position ( https://bit.ly/2Uosk1d ), which states that: 

“Licensed Tier 2, Tier 4 or Tier 5 sponsors: absences due to coronavirus

Some Tier 4 students or Tier 2/5 employees may be prevented from attending their studies or employment due to illness, the need to serve a period of quarantine or the inability to travel due to travel restrictions caused by coronavirus.

Sponsors do not need to report student or employee absences related to coronavirus which they have authorised.

Sponsors do not need to withdraw sponsorship if they consider there are exceptional circumstances when:

• a student will be unable to attend for more than 60 days
• an employee is absent from work without pay for four weeks or more

Decisions on whether to withdraw a student from their studies or terminate an employment are for sponsors to make. The Home Office recognises the current situation is exceptional and will not take any compliance action against students or employees who are unable to attend their studies/work due to the coronavirus outbreak, or against sponsors which authorise absences and continue to sponsor students or employees despite absences for this reason.

The Home Office will keep this under review, especially if the length of absences mean a potential repeat of period of studies become necessary”

What should sponsors do ?

If workers who are sponsored are absent from work due to coronavirus, employers do not have to report anything to the Home Office or cancel the employees sponsorship. Nonetheless we would recommend that sponsors maintain copies of emails or notes of their discussions with the sponsored employee to be able to show that absence was due to Coronavirus.

Our team of legal experts can help you. We’re continuing to work throughout the pandemic as our business is already being carried out remotely, so it’s not a substantial disruption to the way that we deliver our service to you during this unusual time.

We will be continuing to provide sponsors with updates when any further Home Office guidance is published.

However, if you have any questions or concerns, contact Hateem Ali, Head of Corporate & Private Immigration, directly on [email protected] or 020 7822 2209.

© 2020 GSC Solicitors LLP. All rights reserved.  GSC grants permission for the browsing of this material and for the printing of one copy per person for personal reference. GSC’s written permission must be obtained for any other use of this material. This publication has been prepared only as a guide to provide readers with general information on recent legal developments. It is not formal legal advice and should not be relied on for any purpose. You should not act or refrain from acting based on the information contained in this document without obtaining specific formal advice from suitably qualified advisors.

In these unsettling times, it’s inevitable that many businesses will suffer and, sadly, some will be unable to withstand the effects of this unprecedented virus. That’s not necessarily the case for you though; we’re here to provide options and possible solutions for keeping your business afloat.

However, it’s likely that you will have already found yourself affected in one way or another, either as a debtor or a creditor.  Therefore, it’s vitally important that you address the issues you face. Here are a few things you may need to look at to help your business survive the next few months:

• Check through your business insurance to find out what, if anything, you may be able to claim
• Review your employees’ positions. By now you should have introduced measures to keep them safe. Make sure you’re clear about their rights and benefits regarding sick leave and other relevant factors
• If necessary, reach out to your sundry creditors to begin a dialogue. Cash will probably graduate from being King to being the Emperor, and everyone will want to be paid quickly for their products and services.  It’s far better for you to engage now with those you may have trouble paying, rather than waiting and risking matters becoming difficult to deal with later
• Remind your debtors that it’s time to pay up! Ask anyone that owe you money to settle their bill now, so that you have the cash in your bank rather than theirs
• If you’re concerned about paying your tax due to the impact of the Coronavirus, please note that HMRC are being proactive in helping self-employed people and businesses at this time.  They’re currently staffing a helpline with 2,000 call handlers who can discuss installment arrangements, suspend debt collection proceedings and offer general practical advice (the helpline number is 0800 0159 559)
• If things get really bad, don’t immediately consider entering into a terminal Insolvency appointment such as liquidation. There are other options, such as a CVA or even an Administration that could buy you some time via the statutory moratorium if necessary.

Our team of legal experts can help you with any or all of these things. We’re continuing to work throughout the pandemic with just some slight tweaks to our business practices for the time being.

For example, we’re not all office-based at the moment, but we are all still available to speak with you by phone, Skype or Facetime.

If things look bleak right now, remember – this is not a permanent situation and it will improve.  Nobody knows when, but hopefully life will return to normality by mid-summer. In the meantime, stay safe, well and positive – and feel free to get in touch for advice on any business matters.

However, if you have any questions or concerns, contact GSC’s Insolvency & Restructuring expert Richard Curtin directly on [email protected] or 020 7822 2224.

© 2020 GSC Solicitors LLP. All rights reserved.  GSC grants permission for the browsing of this material and for the printing of one copy per person for personal reference. GSC’s written permission must be obtained for any other use of this material. This publication has been prepared only as a guide to provide readers with general information on recent legal developments. It is not formal legal advice and should not be relied on for any purpose. You should not act or refrain from acting based on the information contained in this document without obtaining specific formal advice from suitably qualified advisors.