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Coronavirus - a checklist for business
Many of us are already experiencing severe challenges and almost all of us are likely to do so in the coming days and weeks ahead due to the uncertainty created by the coronavirus (COVID-19). So, what should you be doing now to be prudent and to ensure any disruption is kept to a minimum? We have set out below some key points for you to consider:
As ever you should be mindful of individual employee circumstances, especially so if they are within a vulnerable category or have family or care duties. Whilst some employees may be facing particular pressures at home there may be others who are well placed and willing to do more in terms of work. Your employees may be looking for leadership, support and guidance from their employer and you should be doing all you can to maintain trust and confidence. You should also consider and have an approach outlined for health and safety, cleaning, working from home, communication and leadership, and mobility. Keep up to date as the situation is changing almost daily - Statutory Sick Pay (SSP) is now payable from the first day of sickness absence. Be aware of the circumstances when you need to pay someone SSP and possibly also company sick pay. You also need to understand the implications of a voluntary shutdown of your workplace as opposed to a mandatory shutdown – in terms of pay entitlements and your options for staff at a very difficult time. Your workplace may need to adapt to reduced or different demands so temporary measures may need to be implemented and the workforce consulted.
Now is the right time to review your significant contracts to ensure you are familiar with any notification obligations, excusable delay events, material adverse change, frustration and termination provisions. Plus, you should very carefully review any force majeure provisions. It remains really important that you understand your legal position and rights before you communicate with your suppliers or customers.
Given the sensitivity of the markets and larger than usual movements in share prices, listed companies will need to be particularly alert to the need for accurate, and timely, announcements of material events. Whilst raising money on the markets may be more difficult at this time, suppressed share prices offer an opportunity for acquisitive clients to invest in companies at a very attractive valuation. Share for share transactions are still possible and allow clients to take advantage of current low price.
With remote working now prevalent alternative ways of executing documents should be considered and in particular the attachment of ‘eSignatures’ to documents. In general, there are two main types of contracts (i) simple contracts and (ii) deeds. (i) Most simple contracts do not even have to be in writing. Therefore to signify agreement to a contract the attachment of an eSignature will satisfy the execution formalities. (ii) Some contracts (such as transfer of land or powers of attorney) are required by law to be executed as a deed. Deeds generally require two signatures (either the principal and a witness or two authorised officers of a corporate entity). Witnesses must “genuinely observe the signing” of the deed and could not do so by video conference for example. It is also not possible to complete a deed by exchanging only the signature pages - over email for example. Parties should therefore bear in mind that execution of deeds will become harder and take longer in the current circumstances – they will have to consider creative practical solutions to ensure that deeds are correctly executed and completed.
The Courts are still open and litigation deadlines are being enforced as normal. It is likely that the position will change in the coming weeks and litigation timetables will be significantly delayed. We expect that clients may well see increasing numbers of breached contracts and urgent legal advice can help to mitigate the impact and reduce losses – it’s particularly important to consider whether to accept any breaches and bring contracts to an end.
We recommend that you check all of your policies for the level of cover you have in place for business interruption, third party claims and, for some, losses resulting from disrupted travel.
Compliance and data issues
Working from home may have an impact on your compliance with data policies. Therefore, you may wish to remind your employees that such policies are as important now as they ever were.
Fraudsters use every opportunity. So, please be extra vigilant given the current circumstances.
Prevention of access to a building will have serious implications to both landlords and tenants as to whether rent becomes suspended or a tenant is entitled to withhold payment. Equally many tenants are seeking to agree rent concessions/freezes for rent which falls due on the next quarter day (25 March): landlords need to be careful that concessions are drafted correctly without inadvertently varying the lease on a permanent basis. Landlords also need advice on their remedies where tenants simply refuse/are unable to pay rent.
Real estate development
Local authority shutdowns could endanger subject to planning transactions as it is unlikely longstop dates were agreed with this situation being considered.
Site closures, lack of labour, access for labour to sites and deliveries could all be very substantially interrupted and delayed putting construction projects at real risk of additional costs that will not be recoverable. Contracts will need to be reviewed for risks including, extensions of time for force majeure and government intervention if the government orders the shutting down of sites. The closing of schools and public transport is not a reason for a project to be extended.
Please get in touch with your regular Goodman Derrick contact if you require assistance on any of the issues raised in this note, we are all available to help on our usual emails and phone numbers.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice.