How are businesses managing Covid-19’s impact on supply contracts?

by Ian Grimley, November 2020

Quite a bit has happened since I wrote my note on force majeure a few weeks ago. Some of what has happened has made the whole issue rather academic. Further restrictions on movement and the closing of shops, bars and restaurants have put us in the position where a lot of supply contracts are no longer capable of being performed.

From what I can gather, the majority of affected companies in the food and drink sector have braced themselves and tried to get on with things as best as they can. They are all hoping they will come out the other side and are not having arguments about force majeure clauses. Some of our food and drink clients have been doing a bit more than crossing their fingers and hoping for the best - they have been trying to help out during this crisis. For instance, Boston Tea Party and Friska are both using their kitchens to help produce meals for vulnerable people who would normally be relying on free school meals and the Suncraft team are cooking meals for NHS workers at the BRI.

We also work with a lot of technology suppliers who are generally faring better, as they are not prevented from delivering their services. Unfortunately, some of their customers are not playing nicely. I’ve had to help out with quite a few customers who have tried on a force majeure argument as an excuse for not paying. One client’s customer (a well-known blue chip) had put a blanket ban on paying all suppliers. We all know that preserving cash is key in a scenario such as this, but trying to save your own skin at the expense of your suppliers is very poor.

Happily, I’ve also been helping out with a few sensible re-negotiations. Some client’s customers have been asking nicely for flexibility in difficult times - this more collaborative approach has been much more effective. When we get back to whatever normal might be and these two types of customer are demanding help to ramp back up, which one will you be more inclined to help out?

Relationships built on trust and collaboration will be strengthened by this crisis. Those who try and save themselves at the expense of others will not be forgotten.

We are all rightly concerned about our businesses at the moment, but it’s worth putting closures, reduced earnings and furloughing into perspective - there are a lot of people going through much worse.

Discussing business issues generally and sharing information is helpful. I’ve had lots of really nice conversations with clients over the last couple of weeks, finding out how businesses are coping with furloughing and funding but also a lot of chat which has not been about work, and that’s been great. So please keep calling, even if it’s only to tell me you’ve completed your latest 2,000 piece jigsaw (you know who you are) or which biscuit you’ve rediscovered in the last few weeks (for me, it’s the Blue Riband).

For any questions that you may have on force majeure or contractual obligations, please email or call on 07788 584308 / 0117 9281915.

For more information on Covid-19, contracts and force majeure, you can download our guide here:

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