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COVID-19: Termination of a Commercial Contract

Terminating a contract

Do you need to terminate a contract or is a customer intending to terminate a contract due to COVID-19?

Avoid disputes and litigation by contacting our specialist team for advice on your rights and next steps including:

  • are you lawfully entitled to terminate a commercial contract?

  • is the other party lawfully entitled to terminate the commercial contract?  If they have served you with notice to terminate and are not lawfully entitled to terminate the commercial contract, you must reject their notice however the agreement should be reviewed carefully by us before you act - this could be time sensitive so do not delay.

  • has the contract been frustrated by COVID-19 automatically discharging the parties' obligations under the contract?

  • is there an appropriate clause temporarily disabling the parties' duties to perform under the contract?

  • whether a breach of contract has been committed (including advice on how to mitigate and reduce your risk)

  • are you or the other party entitled to seek damages for unlawful termination and potential breach of contract?

How can we help?

Complete the enquiry form above to get in touch with our specialist team

Our specialist solicitors

BPE’s litigation department is a highly experienced team led by two Partners.  We offer this specialist advice in a full range of business contracts including property, company, commercial (supply and distribution), finance and employment.  See below under Legal Information for more information.

Legal information

If you are a party to an active commercial contract you should be immediately checking whether you or the other parties can lawfully suspend or terminate the contractual obligations under the commercial contract due to COVID-19 or some other unforeseen event.

Commercial contracts may entitle parties to be excused for not performing their obligations. If it does, it will inevitably have unpredictable consequences for businesses’ finances, personnel and risk profile.

The opportunity to lawfully terminate a contract may expire, such as the right to terminate under a break clause within an agreement, particularly if you delay in exercising that right. The wording under the agreement is therefore very important and needs to be carefully considered.

Commercial contract may also contain a force majeure clause where the specific wording of the clause will need to be carefully considered to ensure that the meaning of the clause was precisely what the parties to the contract intended it to cover at the time of signing up.  

If commercial contracts do not contain an express break clause or a force majeure clause, either party may be entitled to argue that a serious unexpected event has occurred (perhaps the impact of COVID-19 or some other event) after the formation of the contract which has been both unexpected and it has been beyond the control of all the parties to the contract - rendering the commercial contract commercially impossible to adhere to.

As a result of COVID-19 and the consequential events, many in the supply and distribution chain may also be affected. However, unless a careful factual and legal analysis has been undertaken to identify whether these rights exist and, if so how and when they need to be exercised, you may lose a valuable tool that will assist with business continuity in these difficult and uncertain times. 

Complete the enquiry form above to get in touch with our specialist team