COVID-19: Are you behaving responsibly?
Responsible behaviour applies not just to our social contacts during the COVID-19 lockdown – in light of new non-statutory guidance published by the Cabinet Office and Infrastructure Projects Authority, it also extends to the performance and enforcement of contracts.
The objective of this non-statutory guidance is to encourage all contract parties, from both the public and private sectors, to act responsibly and fairly in performing and enforcing contracts. The aim is to support the response to the pandemic and to project jobs and the economy.
The guidance emphasises the importance of contract parties acting in a spirit of co-operation and aiming to achieve practical, just and equitable contract outcomes having regard to the impact on the other party or parties to the contract, the availability of financial resources and the protection of public health and the national interest. The guidance identifies those aspects of a contract where the concept of responsible and fair behaviour is most likely to be relevant.
These aspects include:
- Relief for impaired performance.
- Making and responding to claims of force majeure and frustration.
- Requests for extensions, including in relation to for performance or payment.
- Returning deposits or part payments.
- Change control or contract variation requests.
- Claims for breach of contract and enforcing events of default and termination.
- Exercising remedies, dispute resolution procedures, and enforcing judgments.
The guidance is not intended to override specific guidance or procurement policy notes or applicable legal obligations. There are therefore possible limitations of the guidance, as some commercial parties are likely to prioritise their own interests above the wider economy and will avail themselves of whatever support the contract offers in order to do so.
The guidance can be viewed here: https://www.gov.uk/government/publications/guidance-on-responsible-contractual-behaviour-in-the-performance-and-enforcement-of-contracts-impacted-by-the-covid-19-emergency
The guidance was reviewed in June 2020, and a short update was published on 30 June 2020. The update deals primarily with the issues of payment, extensions of time, and the avoidance and resolution of disputes. The update to the guidance can be viewed here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/899175/__Update_-_Covid-19_and_Responsible_Contractual_Behaviour_-_30_June__final_for_web_.pdf
If you would like further information and advice on your contractual obligations at this difficult time please do contact a member of the Commercial & Technology team.