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As a business owner, you may wonder if you can still use a COVID-19 clause in your contracts. It is fair to say that the COVID-19 global pandemic truly changed the world. While most people want the world to return to normal, the virus remains in transmission in high numbers in the UK. Despite the Government’s removal of most measures, the virus is still impacting businesses through staff absence and transmission risks. This article will explore whether your company can insert wording into its contracts to safeguard necessary cancellations due to COVID-19 infection.
Why is COVID-19 Still Impacting Companies in the UK?
The virus continues to spread in the UK, and infection rates remain high. While vaccinated individuals appear to suffer reduced symptoms of the virus, it can still cause staff to become unwell and unavailable for work. Moreover, even when an individual feels well enough to work, some companies prefer to stay at home and avoid infection within the workplace or transmission to a client.
Why Should Contracts Mention COVID-19?
When drafting contracts, it is essential to include wording that specifies how one party can end the contract. In this way, it can sometimes be risky to end a contract due to COVID-19 infection (particularly at the last minute) unless the written agreement specifically allows this.
However, because some cancellations were outside the scope of such clauses, many businesses found themselves in unexpected legal disputes.
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What is a Force Majeure Clause?
Force majeure wording is used within contracts to try and protect businesses from circumstances beyond their reasonable control. However, there is the potential for some individuals to misuse these clauses to quickly get out of unwanted contracts. As such, their use is restricted to very narrow scenarios.
A typical example involves a client hiring a company to provide catering services for an outdoor party, and the weather report forecasts wind and rain. Naturally, many clients would prefer to cancel the event and avoid payment under the contract. However, this is not an event covered under a force majeure clause. In this scenario, the bad weather was a foreseeable and predictable event.
Inserting COVID-19 Clauses in Contracts
The simplest way is to mention COVID-19 within any force majeure clause explicitly. Thus, a force majeure clause stating contractual provisions will no longer apply upon any ‘act of god’ will be insufficient. This is because an ‘act of god’ is usually defined as an extraordinary, rare and completely unforeseen event. Naturally, COVID-19 transmission is far from rare or unpredictable anymore.
Some businesses mention ‘transmission of infectious disease’. However, this widens the clause, making it too wide to be enforceable. As nearly any illness, even a common cold, could arguably come under this definition and create loopholes, this creates uncertainty in the contract.
As such, the relevant clause should detail your company’s ability to cancel the contract if the appropriate person tests positive for COVID-19. It may state, for example, that such unforeseen circumstances would naturally end the contract without repercussions.
What if the Client Does Not Want the Contract to Be Cancelled?
It may be that the client is happy for the individual to recover from COVID-19 and then perform the work. If so, you can negotiate to change the work date within the contract and amend the contractual agreement.
Nothing in a COVID-19 force majeure clause stops the parties from making common-sense decisions and re-scheduling to a later date.
Other Considerations
Other considerations would be if a client wishes to end the contract due to someone in your business testing positive for COVID-19. For example, a care home may not wish an electrician with COVID-19 to attend the building for maintenance work.
Again, this is where a well-drafted COVID-19 force majeure clause would assist you in avoiding any obligation to perform by classing COVID-19 diagnosis as a force majeure event.
Key Takeaways
Generally, English courts aim to protect business deals struck within written agreements. However, they also preserve genuine force majeure clauses that seek to protect individuals from severe injury. COVID-19 transmission can still result in devastating illness for many individuals. Therefore, if the wording is there, your company can consider using a COVID-19 clause. In practice, drafting and using force majeure clauses, including those tailored towards COVID-19, can be difficult. In this way, it is important to strongly consider expert legal advice because any weakness within the wording can result in such clauses being unenforceable.
If you need help with COVID-19 force majeure clauses, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Your contract must expressly mention and include a force majeure clause if you wish to rely on it. Without a suitable clause, your company may have to argue that a COVID-19 diagnosis is a frustrating event (makes it impossible to perform the work). However, relying on frustration to end a contract is a risky approach and should proceed following legal advice.
No, the contracting parties can agree to amend the contractual obligations within the written agreement. For example, they could agree to some reasonable steps to get the work back in action (such as the individual performing it within three days of negative testing).
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