Are Your Business Contracts Ready for the Cold Snap?

27/02/2018

With wintery conditions sweeping the nation, it is all too easy to overlook the significant commercial impact of a cold snap. Corporate Solicitor Ed Garston explains.

Heavily reduced rail services and treacherous driving conditions all serve to slow down or even temporarily restrict the deliveries which form the backbone of our nation’s industries. Have you ever considered what happens if the regular and predictable deliveries that your business depends on are interrupted? A retail outlet with empty shelves cannot serve its customers. Likewise, many other industries must have prompt deliveries of essential parts and components in order to perform.

For those commercial contracts which explicitly state that “time is the essence”, some redress may be available if a delivery is delayed. Depending on the actual contractual terms, such a provision could entitle the party expecting a delivery to claim damages, or in extreme cases terminate the agreement altogether. But neither of these are likely to offer much comfort. Damages may not fully compensate for the loss, and termination simply means you would be left searching for a new supplier who, in all likelihood, would face similar issues.

In the absence of such a clause, some relief may be offered by a “force majeure” provision. This deals with a situation where a party suffers circumstances beyond its control and as a result, it is prevented from performing its obligations. This would usually serve to suspend the contractual requirements of one or both of the parties without a breach having occurred.

Reference to adverse weather conditions are often, but not always, included as part of force majeure. If it is then an acknowledgement should be made to the location where the contract is to be performed – adverse weather in one part of the world may be less adverse in another.  Also, the effect of the weather on the parties needs to be clear.  It is rare enough that the weather itself is a force majeure event, rather, that the weather makes performance dangerous or impossible to perform.

MORE INFORMATION 

If you are concerned that your contracts fail to offer your business adequate protection from adverse weather conditions, contact our Corporate Law Department who can advise you further.  Only once the provisions are incorporated into the agreement are you able to rely on them.This article was written by Edward Garston, a company commercial solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of February 2018.

27/02/2018

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