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Contractual Disputes and Covid-19

22 May

Contractual Disputes and Covid-19

The Covid-19 pandemic has had a significant impact on employment rights and responsibilities for employer and employee alike, and understandably that has received a lot of publicity.

What is less well reported is the impact of the pandemic on the everyday working of the civil courts, and the impact that has had on disputed cases currently within the court system. 

Numerous courts throughout England and Wales are currently closed, whilst others are open purely for the purpose of carrying out administrative works. Many civil trials have been postponed and whilst a small number of hearings continue in person at court, and remote working methods are being employed, allowing hearings to continue to take place to a certain degree, naturally the number of cases being heard at court has dropped significantly. The strain on the justice system now, and for the foreseeable future, is huge. 

This may be one of the (unspoken) reasons why the government has issued guidance requesting that parties to contracts act responsibly and fairly, and in so doing support the response to the Covid-19 pandemic and protect jobs and the economy. The principle is that by so doing, parties will secure better long-term outcomes for jobs and the economy. Businesses, supply chains and business opportunities will be protected. 

The guidance requests that a reasonable and proportionate approach be taken by contracting parties to performance issues, enforcing contract terms, dealing with disputes etc. A spirit of co-operation is requested, with a view to parties achieving practical, just and equitable contractual outcomes. The guidance makes specific reference to areas in which parties can put into practice that reasonable approach. 

It should be said that this is non-statutory guidance and so is not binding. It is necessarily fairly vague in content. It tends to replicate the approach taken by courts, as a general rule, when considering the reasonableness of approach taken by parties to contractual disputes anyway. Parties are expected to be reasonable, to avoid issuing legal proceedings wherever possible, and to be alive to the possibility of settlement at all times. To that end, the guidance issued does not contain significant new information. 

In the wider sense though, the guidance provided is a helpful reminder of the principles of reasonableness that apply in contractual matters, the importance of which hasn’t lessened.  It is also worth noting that whilst the guidance seems to be aimed at preventing disputes from arising, that shouldn’t be seen as a green light for parties to simply avoid carrying out their obligations under a contract due to the current pandemic. Reasonableness is a two-way street.   

For further information or advice, please contact Dax Keeling on 0114 249 5969 or email