What if you want to terminate the contract completely?
If changed circumstances mean that a business wants to exit from a contractual arrangement, then before trying to terminate it, a careful review should be carried out to see whether a right to terminate actually exists. For example:
- Not every contract for the sale of goods contains the right for the buyer to terminate in circumstances where the supplier hasn’t done anything wrong. If a business has entered into a contract on the supplier’s standard terms, it is unlikely to contain any such provision
- A contract for the provision of services is unlikely, if drafted by the customer, to contain a provision that allows the supplier to walk away from the arrangement at short notice, or perhaps at all
If a party tries to terminate a contract when it doesn’t have the right to do so, the other party will likely claim breach of contract and could sue for damages. In the case of a long term or high-value contract, this could amount to a very significant liability.
Even if the right to terminate the contract does exist, there might be particular rules about the following:
- How much notice has to be given
- How such notice has to be served (for example, it might have to be in writing to a particular address)
- When the notice can be served (perhaps on an anniversary of the start of the contract)
- How much a party has to pay if it cancels (for example, for raw materials, for work done to date, or even the whole contract price)
All of these factors must be taken into account, and any contractual processes for termination are followed.
Related FAQs
The outbreak is certainly going to have an impact on new lease negotiations.
Undoubtedly many transactions will be put on hold or indeed stop entirely. Where matters are ongoing, tenants may well look to strengthen rent suspension provision.
It is also possible that tenants and their representatives will also now seek to include termination rights for unseen events. In this regard, the concept of force majeure may start to appear more often in leases.
In both of the examples above, such attempts are not likely to be well received from landlords who will undoubtedly suggest that tenants ensure that their business interruption insurance policies are robust enough to protect the tenant in the event of any future pandemic events.
Another approach tenants might adopt going forwards in negotiations for a new lease (or indeed seeking to vary existing leases), is to move away from the traditional market rent model to a turnover rent arrangement. This will offer some protection going forward if trading conditions deteriorate, but again getting institutional landlords to agree such an approach may prove difficult.
Yes. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme.
If the employee’s contract has not already expired, the contract can be extended or renewed. The employee may be furloughed provided that they were employed on or before 30 October 2020. You must also have made a RTI submission to HMRC between 20 March 2020 and 30 October 2020.
If the employee’s contract expired on or after 23 September 2020, the employee can be re-employed and furloughed. Please note that the employee must have been employed by you on 23 September 2020 and you must have made a RTI submission to HMRC between 20 March 2020 and 30 October 2020.
Yes. Government guidance now confirms that employers can be required to take holiday during a period of furlough, so long as they are given minimum notice to do so. The notice required is double the length of the holiday.
Employers are also able to cancel employees’ holidays (or require them not to take holiday) if they are on furlough, for example if they are not in a position to pay the additional 20% top up to their normal wages (or more where they earn in excess of the £2,500 monthly cap on furlough payments). Again, employers are required to provide a minimum period of notice of cancellation, which in this case, is the length of the planned holiday.
Employers can ask employees to take or cancel holiday with less notice but they would need to get their agreement to do so.
Government guidance has been updated to state that “Employees should not be placed on furlough for a period simply because they are on holiday for that period.” If a period of furlough happens to coincide with an employee’s holiday then you should ensure that there are business grounds to support furlough being used in that instance so that it isn’t just being used as a means to fund holiday utilisation.
The amount an insurer charges for providing cover is a critical aspect of the underwriting process. The premium must be sufficient to cover expected claims but must also take into account the possibility that the insurer will have to access its capital reserve –it is risk assessment based and the greater the risk, the higher the premium. Historically, insurers of high-rise buildings would have only had to prepare for a loss caused by damage to just a few flats within a building. That is because the design and construction of that building, with the right materials and fire safety provisions in place, should have limited the spread of fire and allowed the damage to be contained –or at least make this an extremely low risk. Now we know that many buildings have been designed, built and signed off in a regulatory system that an independent Government review has found was not fit for purpose. Premiums will reduce overtime but will be dependent upon the perceived level of risk reducing as the regulatory regime, BSA and BSR become more established.
The Government assured parity for the self-employed but it has since accepted that this would be difficult to achieve. The Association of Independent Professionals and the Self-Employed (IPSE) has worked closely with the Government on implementing the current self-employment income support scheme. IPSE has confirmed that it will continue to work on helping to extend measures to all freelancers in need as a result of Covid-19.
The Government announced an extension to the Self-Employment Income Support Scheme from 1 November 2020.