Following the Government's lockdown on 23 March 2020 preventing people from leaving their homes (save for a list of limited purposes) and ordering the indefinite closure of non-essential businesses, there will no doubt be a number of issues arising.
Our Litigation Team have considered some of those potential issues to try and shed some light on questions many businesses may be concerned about.
What happens if I have prepaid for undelivered goods and the supplier goes into administration?
This situation may arise where the supplier is a non-critical business according to the Government's guidance, and the contract provides the supplier is responsible for delivery goods to the buyer's premises. In this situation the seller may propose that the goods are stored by the supplier until after the current COVID-19 restrictions are relaxed.
Generally, the contract between the parties stipulates when title (ownership) of the goods passes to the buyer. If the contract states that title (ownership) passes on delivery, then even if you have paid for the goods, you will not be the legal owner until the goods are delivered by the supplier.
It is therefore important when pre-paying for goods to ensure that the contract includes provisions about when ownership transfers to the buyer, for example, that ownership in the goods will pass on payment and that the goods are identifiable. If you are considering pre-paying for goods and would like a contract reviewed our Commercial Team can assist to ensure your business is protected.
A supplier going into insolvency will inevitably create additional delay and expense. It is all too common to find that goods are not in fact adequately marked, that they have been moved, or that accounting records and stock inventories do not tally.
In addition, if the seller's warehouse is rented, a Landlord could try to enforce commercial recovery rights against the goods you have paid for if the seller falls into arrears of rent.
If you are concerned that you or your business may be affected by these issues, our Commercial Team will be happy to advise you.
What happens if I have to suspend a supplier's services due to COVID-19?
If you are a non-essential business forced to close due to COVID-19, and you have to ask your supplier to suspend or terminate services, the effect depends on the facts and the contract terms. In commercial contracts, non-performance constitutes a breach, unless some other principle of law excuses the failure. Whether the failure of performance was fair, equitable or morally excusable is not decisive and may not even be relevant. A party may be in breach of contract without fault, unless the contract says otherwise.
Other points to consider include:
- Force majeure.
- Was the request justified by the contract terms or by English law?
- Is there provision to vary the Contract?
- Is there provision to terminate under the Contract?
If you are in this situation speak to one of our Commercial Team who will be happy to review your contract and advise you about your rights so your business is best protect.
My business is 'essential' but can I insist on card payments online?
Yes. Currently UK businesses are not obliged to accept cash from consumers: there is no regulation which requires them to do so.
For more information or to arrange a telephone appointment, please contact us on 01603 693500 or email us using the 'Make an enquiry' form. Click here for more information on the litigation services we offer.
*This article is provided for general information purposes only and does not constitute legal advice or other professional advice.
