COVID-1: EFFECTS ON TRANSACTIONS AND OTHER COMMERCIAL CONTRACTS.
The current COVID-19 Pandemic situation has had a significant impact on commercial transactions, and many standard agreements do not contemplate an event of this kind. Listed below are some key matters to be considered. Please contact us if you require further advice, reviews of documents, or if you would like special conditions drafted to minimise your risk.
- Frustration is a legal concept which operates to end a contract where it is incapable of being performed not due to a party’s default, but due to unforseen events.
- Even if a contract can be performed, it may still be frustrated if the end result at completion would be radically different from what was contemplated and promised when the contract was entered into.
- A contract will not necessarily be frustrated just because performance of a party’s obligations is more expensive or onerous.
- A relevant example during the COVID-19 Pandemic of when a situation could lead to frustration of a contract is where performance of the contract is made illegal due to changes in law.
BUYING/SELLING BUSINESS OR COMMERCIAL PROPERTY
- Even if you obtain finance approval, most financial institutions reserve the right to withdraw the approval at any time prior to settlement. If this happens, you will still be obliged to complete the Contract.
- Time periods and obligations under Contract may be delayed or more difficult to comply with, and you won’t necessarily have a right to extend the time for conditions or settlement, or have remedies under the Contract to help you.
- Regulations to provide relief to commercial tenants are in place, and may be relevant to purchases with a lease involved.
- You should also consider the following risks:
- Exposure to supply chain disruption;
- Any suspension/termination rights under material contracts;
- Compliance with employment laws; and
- Insurance policies and coverage for losses arising from COVID-19.
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For any commercial and property law enquires please contact the team at Miller Sockhill Lawyers Maroochydore.