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
Yes. The Land Registry published a new service update on 14 May, here:
https://www.gov.uk/guidance/coronavirus-covid-19-impact-on-hm-land-registrys-service
Importantly, the Land Registry will process registrations where documents have been executed using the Mercury signing approach:
For land registration purposes, a signature page will need to be signed in pen and witnessed in person (not by a video call). The signature will then need to be captured, with a scanner or a camera, to produce a PDF, JPEG or other suitable copy of the signed signature page. Each party sends a single email to their conveyancer to which is attached the final agreed copy of the document and the copy of the signed signature page.
To summarise some further points:
- Most information enquiries are experiencing minimal delays
- Registrations of new titles, such as on sales of part or new leases, and applications to update existing titles, are experiencing more significant delays but can be expedited via the expedite service
- Cancellation dates for replying to requisitions are extended until further notice
- Access to free documents on the land registry portal has been extended to 90 days from completion of the transaction
- Identity requirements have been relaxed. The Land Registry will now raise a requisition for identity documents, and not cancel applications
- Requests for extensions to a notice or objection period will be granted if lawfully possible
- Land charges searches can be submitted electronically with PDF documents
As long as you can demonstrate that you have exercised reasonable care in determining status you have discharged your obligations in that respect. However, if you are unable to demonstrate this, you may as the end user client be responsible for the contractor’s tax and NIC’s.
The Government introduced shielding in the peak of the pandemic. Current advice is that shielding is not required. However, those who have been shielding are likely to be the most vulnerable and will likely be nervous about a return to work. They may also be disabled under the Equality Act 2010. You should therefore consider any concerns that are expressed and take action to mitigate any risks. For example, it may be possible to keep these employees on furlough until the scheme runs out or they may be able to work from home. If you would like to discuss any specific scenarios then please contact one of the team.
Small suppliers (defined by reference to certain financial indicators) are temporarily exempt from these new restrictions until 30th March 2021 in order to account for the difficulties to small suppliers during the Covid-19 pandemic.
There are also certain industries that are exempt from these restrictions (for example financial services). The Secretary of State may also create further exemptions framed by reference to kinds of company, supplier, contract, goods or services or in any other way.
- Be alert to the fact that guidance on treating Covid-19 may change with emerging knowledge/scientific data and this may require subsequent modifications to treatment.
- Critical care staff should support healthcare professionals who do not routinely work in critical care but need to do so.