What will be the impact of the proposals on suppliers?
The change in the law has the potential to place much greater financial risks on suppliers, making it more difficult to exit a contract with a customer of doubtful solvency. This will place increased emphasis on appropriate financial due diligence and credit checking before entering into supply contracts.
In addition to the obvious issues around financial risk, suppliers will also need to think carefully about how their contracts are drafted. For example, any form of right that is drafted so as to be triggered on customer insolvency will clearly be problematic. These could include:
- Retention of Title provisions, which are commonly drafted so that the right to enter premises and retake possession of the goods is triggered on insolvency;
- Provisions for brand protection, which seek to control how goods are dealt with on termination of the contract.
This is potentially a very significant development for many businesses. We would strongly recommend specialist advice be obtained so that:
- businesses understand the potential increased risks faced; and
- where possible, contracts are updated so that appropriate protections are maintained.
Related FAQs
The coronavirus outbreak has seen State support being given to businesses on an unprecedented scale.
This issue is likely to be increasingly relevant as Governments seek to protect and stimulate their economies as they emerge from lockdown.
How have the rules been relaxed in the context of the crisis and what facets of the existing law can be used for the State to provide support to undertakings?
Because they all have devolved governments, when there are changes to spending levels in England, the Government makes adjustments to the amount of public expenditure allotted to Scotland, Wales and Northern Ireland. In this case £60 million will be made available for all of the devolved administrations as a result of the £370 million funding allocated to charities in England. This is broken down as follows:
- £30 million for the Scottish Government
- £20 million for Welsh Government
- £10 million for the Northern Ireland Executive
There may be further allocations, dependent on the final projects funded, through the £360 million direct grant pot.
This is critical. The guidance remains clear – IF YOU CAN WORK FROM HOME YOU SHOULD CONTINUE TO DO SO. Bringing people back into work unnecessarily is a big mistake.
Think about how many employees should physically return to the workplace – the fewer the people on site, the lower the risk AND the less pressure on public transport.
Employers will need to be very careful to recognise workers in vulnerable groups or who develop or live in a household with someone who develops symptoms of Covid-19 – again, look at government guidelines. You should understand that this will mean a higher number of staff absences and consider how this might be managed.
Look to keep smaller teams of workers together, minimise physical meetings and if you MUST have them, keep them short and under 15 minutes. Be imaginative – use online platforms like Teams and Zoom wherever you can.
The current guidance issued by Mr Justice Hayden confirms that remote hearings may be conducted using the following facilities and that this will be the default position until further direction:
- By way of an email exchange between the court and the parties;
- By way of telephone using conference calling facilities;
- By way of the court’s video-link system, if available;
- The use of the Skype for Business App installed on judicial laptops;
- Any other appropriate means of remote communication, for example BT MeetMe, Zoom or FaceTime.
An employee on Flexible Furlough can take part in volunteer work during hours which you record your employee as being on Flexible Furlough as long as it is for another employer or organisation.
To be clear, if on Flexible Furlough and you’re claiming the grant for them, then they cannot work for you.
As people work part-time and ease back into the business, this is likely going to be a key risk area. You need very clear lines as to working time and non-working time. No replying to emails on days off.