Coronavirus (COVID-19) commercial issues for colleges

Commercial Contracts

We would advise you to assess the operational risks of coronavirus to determine what your rights are if the college or suppliers are prevented from performing contractual obligations such as cleaning, ground maintenance and catering. We have published a webinar to support you in this.

We advise that you take the time now to familiarise yourself with your contracts and business continuity plan. Commercial contracts typically contain force majeure clauses that allow a period of relief in performance where circumstances arise that are beyond the parties’ control. We would advise however that you seek legal advice before invoking a force majeure clause or where the other side is seeking to rely on force majeure, so that you fully understand your rights. Often more collaborative approaches will yield more beneficial outcomes for all concerned, including considering the extent to which Cabinet Office’s PPN 02/20 and associated guidance may be relevant – but crucially appropriately documenting any variations to contractual arrangements through a properly constructed legally enforceable variation.

If your contract does not contain a force majeure clause, this will not be implied but there may be other legal remedies available. If you are in the process of negotiating new contracts, we advise that you seek legal advice before signing them off so as to ensure your college is as protected contractually, as much as it can be, from service disruption.

Electronic signatures are valid under English law, although this is subject to the proviso that any execution formalities are satisfied.

Some further practical tips:

  • Ensure your list of authorised signatories is up to date and readily available. If your usual signatories are unavailable, do any additional approvals need to be put in place, including any approvals for the use of electronic signatures?
  • Is it sensible to add extra persons to the list of authorised signatories?
  • If the usual signatories are working remotely do they have access to a printer and a scanner in order to print and return signed documents?
  • Has your IT team considered if using a cloud-based e-signing platform is appropriate?

It is important that you check your college’s insurance policies to determine the extent of the cover (if any) in the event of coronavirus disruption (including college closure). In terms of coverage, some things to look for are whether your insurance policy covers unforeseen costs, e.g. supply staff, or also alternative arrangements such as when college events have to be cancelled.

You may also have business interruption insurance, and should check what is covered. For example, you may also suffer loss of income from lettings, hiring premises for events and exams.

Which contracts are the most problematic for colleges?

Depending on the relationship between the college and its suppliers, pragmatic solutions can be reached but each scenario will depend on a combination of the contract terms and any commercial arrangements reached between the parties.

Another key area of concern involves contracts that depend on an element of parental income, such as catering and transport contracts. With college closures, there will be little income from students to cover outgoings, and it will be important for the colleges to understand their contractual rights. As with lettings, it may be that a pragmatic solution can be reached during the college closure period. The key facet of our advice is to understand your rights and use them to negotiate your position.

Managing supplier arrangements

Education providers understandably need clarity on their contractual rights under essential business and supply contracts, but are also mindful that they will need their suppliers when a semblance of normality resumes. The Chancellor’s announcements have offered a potential lifeline for some suppliers, and we expect many education providers will look to vary their contracts with suppliers quickly to take into account some of these mitigation measures in a way which supports fairness and continuity for all.

While it is important to understand the scope of any rights to terminate or suspend contracts, other innovative contractual provisions might also be considered to try to help create significant social benefit in the midst of this crisis and to support everybody in powering out of it when conditions begin to improve. This position is supported by the Government which has issued a briefing note to all contracting authorities advising them to urgently review, and if necessary amend, their contracts and put in place contingency arrangements with suppliers during this time.

If you would like to discuss your commercial position, please get in touch with us. We can work with you to help agree a practical solution with your suppliers, and then - importantly - to document it. Taking these steps should help to provide a more secure footing from which to deal with the current crisis and to support a return to normality once the current threats recede.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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