To sue or not to sue, that is the question...

As the coronavirus crisis continues to wreak havoc on our lives, the number of commercial disputes will inevitably increase. It is an unfortunate by-product of any economic downturn. Contracts are cancelled, breached and renegotiated leaving parties out of pocket and inevitably aggrieved. To reflect this, professional advisors write countless articles on evading, escaping or protecting contractual arrangements, including how to exercise force majeure clauses, the use of injunctions, archaic common law provisions such as the doctrine of frustration and even the importance of retention of title provisions.

There are stories of major shopping brands cancelling or suspending supply chain contracts, manufacturing contracts being halted, businesses failing to pay rent (irrespective of whether they can take advantage of Government protections or not) and companies turning to their legal advisors to find ways out of contractual commitments they entered into during much more prosperous times. All of these moves are understandable in a time of crisis, but is such an adversarial approach the best way forward?

The COVID-19 crisis will eventually subside, and the world will begin to find some form of normality. Whether “normal” looks the same as pre-crisis is another debate, but as businesses look towards the future, they will inevitably have to rebuild relations, or create new ones. It is with this in mind that we should consider how we operate now will help determine and structure what the new ‘normal’ landscape will look like in the future.

Litigation, or alternative forms of dispute resolution may be inevitable, or the right course of action. Access to justice has been assisted in the UK by a huge increase in third party litigation funders, which creates welcome options for funding litigation, arbitration and mediation. However, before businesses look to invoke dispute clauses, force majeure provisions or turn up on the doorstep to enforce retention of title rights, businesses should (where practical) re-evaluate their commercial relations and work in collaboration with their contractual counter parts to review how they interact. In the same way that the pandemic has accelerated an acceptance for working from home, so does it provide an opportunity for us to review how we contract with each other.

Businesses should be carrying out reviews of their current contracts to look for opportunities for renegotiation or amendment. Not necessarily with the intent to exploit the crisis but as an opportunity to work with contractual counterparts to facilitate the relationship to everyone's benefit. Contractual reviews may identify ways to vary terms, from simple things such as changing an ordering process and allowing more open and transparent information flow to considering more complicated risk and reward sharing infrastructures or allowing more innovative and creative solutions around supply chain and service standards.

Right now with work patterns changing, and businesses have more time to look at their structure and carry out business planning, we have a perfect opportunity to engage and consider our current and future contractual arrangements. It may not reveal the answer or resolve disputes, but it is certainly worth exploring. Lets take the chance while we have it.