How to deal with crises and civil emergencies: the 'legals' (Part 2)

How to deal with crises and civil emergencies: the 'legals' (Part 2)

Be Prepared... the meaning of the motto is that a scout must prepare himself by previous thinking out and practicing how to act on any accident or emergency so that he is never taken by surprise: Robert Baden-Powell

There cannot be a crisis next week. My schedule is already full: Henry Kissinger

Watching the news in 2014 was sobering. Sadly, 2015 has not started well either.

There have been countless crises, catastrophes and disasters: some at home; some overseas.

How should businesses prepare themselves? What planning should they make?

Last time we looked at the key risks for businesses; regulatory compliance issues and HR considerations.

Today we set out the final excerpts from Lexis®PSL Commercial’s Practice Note on what businesses (and those legal practitioners that advise them) can do to understand and deal with the risks posed by unexpected crises and civil emergencies.

We'll concentrate on:

  • contractual considerations, and
  • business continuity planning

Contractual considerations

Litigation may be a risk for a business where it becomes difficult to fulfil contractual obligations or where mistakes are made because staff do not have appropriate skills. This could result from staff absences or lack of qualified staff largely due to sickness, looking after ill dependants, or fear of infection.

Just because a pandemic or civil emergency may affect many businesses does not mean that a business which is unable to fulfil its contractual obligations (because, say, it is under staffed or cannot get access to its supplies) will be able to avoid its contractual obligations.

Force majeure and frustration

Businesses are well-advised to review the force majeure, business continuity and disaster recovery provisions which apply in their contracts, both in the context as supplier and as customer.

Where such provisions are inadequate for their needs, they should be renegotiated where possible. Going forward, new contracts should include provisions which provide appropriate protection.

Clauses dealing with force majeure:

  • may not provide exoneration for acts or God, or where Government enacts emergency legislation
  • may not include a right to terminate where long-term performance becomes untenable
  • should be subject to a requirement to implement a business continuity work-around, unless this itself is precluded by the fo

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