The Cabinet Office has issued new guidance to the private and public sector calling upon parties to contracts impacted by the Covid-19 emergency to act "responsibly and fairly, support the response to Covid-19 and protect jobs and the economy".
The 'Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by Covid-19' states that the government is strongly encouraging individuals, businesses and public authorities who are parties to contracts materially impacted by Covid-19 to consider their behaviour as part of the national response to the current public health emergency.
A number of specific examples where responsible and fair behaviour is strongly encouraged are provided within the guidance document. These include:
- Requesting and making payments under the contract
- Making and responding to force majeure and frustration claims
- Requesting and giving relief for impaired performance – e.g. time for delivering goods and services
- Making and responding to requests for contract variations
- Making and responding to claims for damages
- Returning contractual deposits and payments
- Enforcing events of default and termination provisions
- Initiating or continuing insolvency processes
- Commencing or continuing formal dispute resolution processes
- Enforcing judgments
It should be noted that the guidance is non-statutory and it does not override contractual duties, obligations, rights and remedies. The guidance also does not apply in the devolved administrations.
Parties are being encouraged to follow the guidance for their "collective benefit and the long term benefit of the UK economy" but at this difficult and uncertain economic time, some parties may consider that individual commercial interests take precedence.