May 18, 2020

The overarching message in the Guidance is that parties to contracts impacted by the COVID-19 emergency should “act responsibly and fairly, support the response to COVID-19 and protect jobs and the economy”.

The Government’s rationale behind the Guidance is that, at a time when individuals in the UK are being asked to act responsibly in their personal and work lives by staying at home, social distancing and self isolating, individuals, businesses (including funders) and public authorities who are parties to active contractual arrangements that are materially impacted by Covid-19 should also “consider their behaviour as part of the national response to the public health emergency we are currently facing”.

In the Government’s view, responsible and fair behaviour in contracts now, in particular in dealing with potential disputes, will result in “better long-term outcomes for jobs and our economy”.

The Guidance is non-statutory and does not apply in devolved administrations.

The Guidance is not intended to override: (i) specific guidance or procurement policy notes issued by the Government (or any public or regulatory authority); (ii) any specific support or relief available in the relevant contract, in law, custom or practice (including any equitable relief), or from the Government in response to the Covid-19 emergency; and (iii) any other legal duties or obligations with which a party to a contract is bound to comply and any national security interests.

It is also not intended to override specific contracts whose primary purpose is to make express and clear provision for, and allocate risks in respect of, the effects of global or national public health emergencies or pandemics, although the Government encourages responsible and fair behaviour where possible.

The Guidance explains that responsible and fair behaviour includes being reasonable and proportionate in responding to performance issues and enforcing contracts (including dealing with any disputes), acting in a spirit of co-operation and aiming to achieve practical, just and equitable contractual outcomes having regard to the impact on the other party (or parties), the availability of financial resources, the protection of public health and the national interest.

In particular, responsible and fair behaviour is “strongly encouraged” in relation to the following:

1. requesting, and giving, relief for impaired performance;
2. requesting, and allowing, extensions of time, substitute or alternative performance and compensation;
3. making, and responding to, force majeure, frustration, change in law, relief event, delay event, compensation event and excusing cause claims;
4. requesting, and making, payment under the contract;
5. making, and responding to, claims for damages;
6. returning deposits or part payments;
7. exercising remedies in respect of impaired performance;
8. claiming breach of contract and enforcing events of default and termination provisions;
9. making, and responding to, requests for information and data under the contract;
10. giving notices, keeping records and providing reports under the contract;
11. making, and responding to, requests for contract variations and consents;
12. commencing, and continuing, formal dispute resolution procedures, including proceedings in court;
13. requesting, and responding to, requests for mediation or other alternative or fast-track dispute resolution; and
14. enforcing judgments.

To access the Guidance in full, click here.