Business & Commercial Law
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Do some Contracts come to an end due to the Coronavirus (COVID-19) Pandemic?
The impacts of the Coronavirus have been profound. Supply-chains have been disrupted, businesses have ceased trading and basic services have been limited to the bare essentials.
The impact on the economy will be hard felt by consumers and business alike. Many business’ will be left wondering what their options are if the performance of a contract has been put on hold or is not able to be performed because of the Coronavirus.
Supply, infrastructure, building and service contracts are examples of contracts that may be impacted or interrupted.
If a contract has been effectively drawn, a Force Majeure clause may have been inserted that anticipated an event not unlike the Coronavirus that may guide the parties as to their respective rights under the contract, and may be able to put a pause on a contract that otherwise may have come to an end.
Force Majeure clauses are creatures of contract and are therefore liable to interpretation based on the text and context of a particular clause. They are also clauses that are “read-down” so as to limit their applicability to those who wish to rely on them. The effect of this is that the meaning of each Force Majeure clause will be assessed on a case by case basis; however, there are recurrent themes lawyers have used in drafting Force Majeure clauses, including terms such as “natural disaster” or “act of God”. It is arguable that the Coronavirus pandemic will fall into these categories.
In times of great uncertainty, Force Majeure clauses may serve as great tools through which businesses may plan for the future and develop a strategy to come out of the Coronavirus pandemic, or any unforeseen event, unscathed.
If you require the drafting of a Force Majeure clause, our team of qualified Legal Professionals will be able to assist in drafting a clause tailored to your needs and one that is broad enough to protect you into the future.
If you have an existing Force Majeure issue, our team of qualified Legal Professionals are able to review your contract and advise you of your rights and any remedies you may have under the contract.
If Force Majeure is a creature of contract, Frustration is founded in the principles of Common Law. The Principle of Frustration operates to terminate a contract if there is a Frustrating Event that:
- makes a contractual obligation impossible to perform; or
- transforms a contractual obligation into a fundamentally different obligation.
Frustration is not a release-all. In fact, the courts have historically been reluctant to order that a contract has been Frustrated.
One example is that a supplier contract will not be Frustrated merely because goods cannot be sourced or can only be sourced at great (and generally unprofitable) expense to the supplier.
Its relevance and applicability will depend upon the terms of each contract and the particular impact the Coronavirus has had on the performance of the contract.
One further implication of a Frustrated contract is that the contract is deemed to be terminated from the date of the Frustrating Event. This may have major implications to the parties. The performance of the contract prior to the Frustrating Event is still enforceable.
In certain circumstances, this may mean that deposits and part-payments may have already been made towards the contract price and may not be recoverable.
However, in general terms, the full amount of these payments can be recovered under the principle of restitution and the Consumer Law to the extent there has been no performance of the contract.
If you believe that your contract has been Frustrated by reason of the Coronavirus, please contact our team of qualified Legal Professionals for an assessment of your contract and your legal potential options and remedies.
Essential to the running of all businesses are strong agreements between the parties.
These parties may include a variatey of different entities:-
- and any other entity with whom the business interacts.
Our experienced Business Lawyers can advise and draw up the necessary documents and agreements that you can rely upon in business.
Listed below are some of the types of Business contracts available:-
- Building Contracts
- Consultancy Agreements
- Confidentiality Agreements
- Co-ownership Agreements
- Distributor Agreements
- Employment Agreements
- Franchise Agreements
- Licence Agreements
- Liquor Licence Agreements & Liquor Licence Applications
- Loan Agreements
- Managed Investment Schemes
- Partnership Agreements
- Related Party Agreements and Related Party Loans
- Sale of Business
- Share Holders Agreement
- Share Sale Agreement
- Service Agreements
- Sponsorship Agreements
- Disclaimers – Trading Terms (back of invoice)
- Unit Holders Agreements
- Unit Sale Agreements
If another party defaults on any of the terms of a contract, we can swiftly act to protect your interests and mitigate your damages. For more information see our heading under Litigation.
It is also essential for your business to trade in a well-constructed group of legal entities to ensure you maximise the options to distribute income in order to minimise the charges and taxes levied upon your business. We discuss building sound legal entities in the next section headed Legal Structures.
Please do not hesitate to contact our experienced Commercial Lawyers on +61 3 9500 1722, request a cost estimate or email an enquiry.