COVID-19 – Why education institutions should consider renegotiating their contracts
As institutions discover how their current and upcoming projects might be impacted by COVID-19, many institutions will need to consider renegotiating the contracts they have in place and their terms, including project dates, timelines, key personnel and deliverables.
As we do not have a full picture of what the consequences of the current crisis might be, it is more important than ever to ensure that any changes made to contracts are documented in the correct format. This is not only to ensure clarity between contractual parties, but also to ensure that any changes made are enforceable and legally binding.
We would always recommend making any contractual changes to a contract via an addendum or additional agreement whereby each party clearly documents how the original contract should be changed, the date the change will take effect from and requiring a signature from each party’s authorised signatory. Read our article on executing commercial deeds and documents.
In many instances, documenting a change to a contract in writing is not just a recommendation, but a necessity.
Some contracts may determine that a change to the contact shall only be valid if it has been documented in writing (noting that email may be specifically excluded as a form of legally binding communication) and signed by the contractual parties.
It is therefore imperative that any discussions taking place to renegotiate or change contract terms are documented correctly in order to avoid arguments later in connection with enforceability, which can cost both unnecessary time and money.
Protecting your future contracts
In addition, there is usually no automatic right to require the renegotiation of contractual terms. For contracts currently being negotiated and entered into, our recommendation would be to include automatic renegotiation clauses (triggered directly as a result of consequences of coronavirus), which could provide useful contractual protection in the near or distant future for projects or contracts which are impacted.
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General advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.