Covid-19, impact on commercial contracts

23 MAR 2020

The Covid-19 outbreak has already proven to be a source of uncertainty and an immense challenge for businesses. As many businesses now face disruptions of their contractual arrangements with other businesses and consumers, this note looks at the main legal issues and considerations under the law which parties should be alert to as the situation develops.

Depending on businesses’ individual contract terms and the specific way in which Covid-19 impacts their arrangements, different parts of our note may be more or less relevant to their situation.

Breach of contract terms

Consider which obligations under the contract (i.e. terms) are most likely to be breached – this is when a party’s performance does not match their obligation under the contract, or, if the obligation is only due in the future and the party indicates that it does not intend to perform it.

Where either party has breached a term, what does this mean for the other party?

Unless the contract mentions any express remedies triggered by such breach, this depends on the type of term breached. Some terms allow that innocent party to terminate the contract and claim damages, and others to only claim damages. It depends on how a term is described in the contract and how important the term was to the innocent party when the contract was created.

For instance, Covid-19 disruption may make it difficult for suppliers to comply with time-limits for delivery of goods under a given contract. If the contract makes it clear that timely performance is vital to the customer business, this will be a condition and enable the customer to terminate the contract. If, however, this is unclear in the contract, termination rights will depend on, e.g., the delay’s significance to the supplier and how prolonged it is.

Since damages are merely meant to place the innocent party in the position it would have been in had the breach not occurred, this does not affect the continuity of the contract. Therefore, being able to terminate a contract (or at least to leverage this in re-negotiation) because a condition has been breached can have a significant impact on a business’s ability to withstand the current crisis situation.

Business continuity obligations

Often contractual terms require critical suppliers or service providers to implement business continuity arrangements to ensure that they can continue performing the contract.

In case of the supply disruption and shortages of staff and materials caused by Covid-19, businesses should carefully check continuity obligations specific to their contracts. They should particularly keep detailed written records of what they have done to ensure continuity in order to demonstrate compliance should problems arise down the line.

Even if it looks like your business is in breach of a term, you may still be able to rely on the following defences:


‘Frustration’ is an English law concept that arises where something occurs after the contract has been formed which either (a) makes it impossible or illegal to fulfil, or (b) radically changes the nature of the obligation into something entirely different from what the parties contemplated when entering into the contract.

As frustration is a doctrine, it will not be found in contracts. However, parties must reach a very high threshold in order to rely on the doctrine: the mere fact that Covid-19 has deprived a party of the benefits it anticipated under the contract or rendered performance physically impossible, might not be enough.

Nevertheless, given the extreme situations of Covid-19 and consequential Government measures, such as The Health Protection (Coronavirus, Business Closure) (England) Regulations 2020, some parties may be able to rely on the doctrine successfully.

Force majeure

Many commercial contracts will contain ‘force majeure’ clauses. Such clauses might release  parties from continuing to perform their obligations due to events outside of their control. Often such clauses will refer to pandemics and epidemics.

If there is a force majeure clause in the contract, whether a party can rely on it depends on its context. Businesses should carefully scrutinise the following: how triggering events are defined; any causation requirements; precisely how the innocent party must be notified of their reliance on the clause; and any duty to mitigate.

Further practical considerations

Review contracts early – review contracts early to understand the position regarding any disruption that may be experienced, and the impact that it may have on parties’ contractual arrangements. This applies to both customer and supplier contracts since businesses need to understand their supply chain risks, as these are likely to feed into their customer contract risk assessment.

If it is considered that existing contracts pose unacceptable levels of business risk, businesses could seek to vary or update the terms applicable to existing contracts – how this is done and whether or not it can be done unilaterally or will require consent will depend on the contract terms.

Businesses are likely to feel the effect of Covid-19 and its aftermath for some time – if it is identified during the contract reviews that existing relief mechanisms are not sufficient, standard terms & conditions and contract templates should be updated and rolled out as soon as possible.

Follow the contract process

For example, force majeure clauses often contain formal notification requirements and formal timescales for making such notifications. If the requirements of the relevant clause(s) are not followed, the business may lose the ability to trigger the protections that the force majeure clause would otherwise have provided. Keep appropriate documents and records to show that the various processes and procedures have been complied with.

Document any newly agreed terms

It is not uncommon for businesses to agree alternative solutions when faced with supply challenges or business disruption – indeed it makes good commercial sense in many cases, particularly where many businesses are likely to be similarly affected (e.g. in the case of a pandemic / epidemic). Many commercial contracts will contain clauses stating that changes will not be valid unless in writing and signed by or on behalf of the parties – it is important that any such requirements are complied with to ensure that changes are valid and binding on the parties.

Contract management

Whether a business is a customer or a supplier in the context of the relevant contract, it should understand the applicable contractual terms – in particular ensuring that the available contractual relief mechanisms are understood and are properly implemented at the appropriate time. It is important to monitor performance against the agreed contract terms so that issues and potential issues are spotted early, and contingency plans are implemented in a timely manner.

For my advice please email us on

Yulia Barnes

Managing Partner

Yulia Barnes is our Managing Partner. She is an experienced solicitor and advises on a wide range of contentious and non-contentious matters for both private and corporate clients.

Experience Yulia started her legal career at a large international Magic Circle firm. She then became a partner at a regional law firm and headed a Dispute Resolution Department. She then moved in-house before starting her own Boutique practice, Barnes Law, with the aim of providing exclusive services to high net-worth individuals and privately-owned businesses. More details can be found on her LinkedIn profile.

Expertise Yulia and her team are widely recognised for their professional and practical approach to matters. She is committed to ensuring that her clients’ objectives are achieved in the most cost-effective way possible.

Approach Yulia has a wealth of experience working with businesses of all sizes: from large multinational corporations to start-ups. She has particular expertise in a hospitality industry, investment funds, private and corporate clients, and focuses on startups and technology-driven companies. Yulia brings the same level of attention to detail, professionalism and a personal touch to every case and client, and truly immerses herself in her clients’ businesses. She prides herself on her problem-solving, commercially astute approach and her track record of partnering with clients to help them achieve their strategic objectives.

Will Moran


Will joined Barnes Law as an Associate Solicitor in Spring 2023, shortly after qualifying in September 2022.

Will works mostly on real estate and corporate/commercial matters. Will enjoys providing advice on transactional matters.

Away from the office, Will can be found reading or playing golf. While he played rugby until university, and rowed throughout his degree, he now tends to watch both from the sidelines. During the winter he can also be found skiing.

Will plans to continue developing his legal skills and experience at Barnes Law, under the expertise and guidance provided by Yulia.

Mark Corran


Mark is an experienced solicitor whose practice areas include intellectual property (IP), IT, data protection and general commercial law.

Mark advises businesses of all sizes – from sole traders to corporations. Among his clients are: clothing and lifestyle brands, restaurants and food suppliers, IT companies, banks, hedge funds and venture capital firms, education providers, medical and pharmaceutical brands.

Outside of his practice, Mark also advises members of the Institute of Directors as part of its Directors’ Advisory Service.

Recent transactions
  • Prosecuting a UK trademark application on behalf of an education provider and representing them in related UK IPO opposition and revocation proceedings;
  • Advising a publisher and a delivery business on data protection matters, B2B and B2C Ts & Cs of sale, website and app Ts & Cs, all aspects of global brand protection;
  • Advising footwear brands, alternative asset managers and hedge funds on their global brand protection, including overcoming various refusals, representing them in opposition proceedings and settlement negotiations;
  • Representing a central bank in opposition proceedings before the UK IPO;
  • Advising a lifestyle brand concerning trademark clearance and protection, negotiations for a website/app development and maintenance agreement.

Ioulia Tatawat

Family Law Adviser

Ioulia has a solid background in family law and offers guidance, clarity, and support to clients during one of their most challenging times in their life.

She advises on all three pillars of separation: divorce, children matters and financial settlements. Ioulia is a member of Resolution and is keen to try to settle matters at early stages.

Ioulia is dedicated to assisting clients and navigating them through their legal matters with clarity and support.

Alex Reidy


Alex joined Barnes Law in September 2023 after finishing his master’s degree in law. Prior to joining Barnes Law, Alex worked in property litigation at Ashfords. Alex assists Yulia on a variety of both contentious and non-contentious matters.

Outside of the office, Alex enjoys reading and hiking. Prior to working in law, Alex was a competitive tennis player.

Alex continues to develop his skills in legal practice under Yulia’s guidance, he plans to sit the Solicitor’s Qualifying Exams (SQE) in 2024.


Mehves Selamoglu


Mehves joined Barnes Law in August 2023, right after graduating from Queen Mary, University of London (LLB Senior Status). As part of her qualification journey, Mehves is currently pursuing her Legal Practice Course (‘LPC’) at the University of Law. She also holds a degree in European Union Law from Maastricht University, Netherlands.

Mehves works closely with Yulia on a variety of contentions matters and also writes Barnes Law’s legal blogs, manages social media accounts and is responsible for marketing.

Outside of work and studies, she enjoys running, tennis and yoga.

Mehves is looking forward to developing her legal skills at Barnes Law.


Julia Podgornova

Investor Relationship Manager

Julia guides clients in making important business decisions based on comprehensive risk assessment and strategy. She supports investors in devising strategies designed to maximise each business’s potential from pre-seed to IPO.

Julia’s particular area of expertise are IT start-ups at different stages. Julia supports business through their fund-raising journey. As an Investor Relations Manager, Julia communicates with investors to facilitate a smooth round and legal part of each transaction.

In her free time Julia enjoys sailing, ballroom dancing, art exhibitions and travel.