Impact on Contract Compliance
Companies are experiencing an impact on sales, production and supply chain, among others, as a result of COVID-19-related issues from business interruptions. These impacts have a cascading effect on the ability to meet contractual obligations.
We recommend that companies consult their legal advisors and review their contracts to determine what, if any, contractual obligations may be impacted and the rights and remedies they have as a result of the delayed performance of contracts.
Companies should also take (and document) reasonable steps to mitigate the impact of COVID-19. If companies cannot fulfil their contractual obligations, they may need to quantify the amount of financial damage and the impact on their long-term business relationships.
Companies should review their existing insurance policies to find out whether any losses they incur relating to COVID-19 can be covered under existing terms or whether they need to adjust their coverage for additional protection.