COVID-19: Our checklist for businesses to navigate the uncertainty

24 March 2020

The COVID-19 pandemic is an incredibly stressful time with so much uncertainty about what the future holds. When events are out of our control, it can help to focus on what you can control about your own business. Here at Mahoneys, our Commercial Law experts have come up with a list of key tasks that businesses can and should be concentrating on right now.

Direct your energy into our COVID-19 ‘To Do List’ for businesses.

1. CONFIRM KEY CONTRACT DETAILS

Confirm the key dates, milestones, notice times and requirements, and other tasks in your contracts.

(a)  List these important details

(b)  Consider how they will or could be affected by current events

(c)  How are your upstream suppliers impacted, or how could they be affected?

2. REVIEW YOUR CONTRACTS

Review all your upstream and downstream contracts and consider having your key contracts reviewed by a lawyer.

(a)  Check for ‘force majeure’ clauses:

(i)  They can relieve parties of contractual obligations where there are unavoidable or unforeseeable events;

(ii)  They operate differently in different jurisdictions (both Australian jurisdictions, and those overseas) so we recommend you have force majeure clauses in key contracts reviewed by a lawyer;

(iii)  Carefully consider contractual limitations to the force majeure relief;

(iv)  If your ‘upstream suppliers’ can trigger force majeure clauses, develop a contingency plan (for e.g. canvass different suppliers).

(b)  Does the ‘doctrine of frustration’ apply to any contracts? This occurs when circumstances the parties cannot control make contractual obligations ‘incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract.’[1]

(c)  Check for ‘changes in law’ clauses:

(i)  They can relieve parties of contractual obligations where there are changes in the law that affect the ability of parties to perform those obligations;

(ii)  They can provide the affected party with recovery of costs, extensions of time or suspensions;

(iii)  Carefully consider contractual limitations.

(d)  Find out more about these issues by reading our earlier article on this topic here.

3. COMMUNICATION IS VITAL

Communicate with key customers, suppliers, contractors and employees (your Commercial Partners).

(a)  Report on delays or circumstances that your business is experiencing.

(b)  Subject to any obligations of confidentiality, don’t be afraid to give a lot of detail – that can help to build trust.

(c)  Extract as much information as possible from your Commercial Partners about the delays or circumstances they themselves are experiencing.

(d)  It’s OK to admit you can’t predict all the implications of this challenge.

(e)  Do you need to change the terms of your agreements?

(f)  Can you and the Commercial Partner agree on a new position or compromise?

(g)  Communication can give you the best opportunity to maintain a healthy commercial relationship when this is over.

4. TAKE DETAILED RECORDS

It’s very important to keep a good record of all your discussions:

(a)  Set the details out in an email, or a detailed file note that is stored safely and that is easily retrievable.

(b)  If you don’t record discussions then it may be difficult to accurately recall what was agreed to, or there might be uncertainly about what was agreed, during this stressful period.

(c)  Good record keeping now could avoid disputes in the future and save you a lot of money and time.

5. PROTECT YOUR BUSINESS

Check what assistance is being made available to help businesses, and also whether you have the right protections and processes in place. Make sure you consider the following:

(a) Are you entitled to Government incentives and assistance to businesses as they become available?

(b)  Check which documents you can electronically execute while everyone works from home. There have been changes to the law during COVID-19 to allow for this in certain circumstances.

(c)  Check the statutory process which protects directors from insolvent trading and whether that may be something your business needs to take advantage of. Find out more about this here.

(d)  Consider whether your equipment or other property leases, bailments and other security interests are properly protected.

(e)  Look at employment efficiencies and liabilities.

(f)  Consider your workplace health and safety obligations.

(g)  Investigate what your insurance covers and doesn’t cover.

6. COMPLY WITH PRIVACY OBLIGATIONS

Remember you must still comply with your privacy obligations about the collection, use and disclosure of personal information:

(a)  The Australian Information Commissioner has issued this guidance on these obligations during the COVID-19 pandemic.

(b)  You can use sensitive health information only for the purpose for which it was collected. For example, if you collect this type of information to mitigate the risk of the pandemic to your business, then you may use and disclose that information only for that purpose.

7. DEAL WITH TASKS YOU’VE BEEN TOO BUSY TO COMPLETE

Attend to matters you have been putting off until you have the time.

(a)  Register your trade mark:

(i)  it allows you much better protection against people stealing and/or damaging your brand’s good will and reputation;

(ii)  it will be an asset of your business, that you can sell or licence to third parties;

(iii)  it can provide you with some protection against your competitors suing you for trade mark infringement.

(b)  Review your business’s structuring arrangements for tax efficiency.

(c)  Finalise your shareholder’s agreement between you and all your other shareholders:

(i)  this can mitigate the risk of future disputes (including those that may arise as a result of this difficult environment);

(ii)  it can provide the scaffold for how your business makes decisions, which can be crucial during this turbulent time when different shareholders may have different views on how to best manage things.

8. SEEK SPECIALIST ADVICE

Now is the time to seek specialist advice from your advisors, such as your accountant, insurance broker, and lawyers. Getting the right information, tailored to your situation, will put your business in the best position to work through these unprecedented challenges.

Our sincere sympathies go out to the businesses struggling at this time. The team at Mahoneys is here to continue supporting our clients. If you have any questions about how you can best position your business to navigate this difficult time and prepare for when the markets do recover, then please reach out to us on (07) 3007 3777 and info@mahoneys.com.au

 

[1] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337.


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