How to manage (new) contractual relationships during the outbreak of the coronavirus?

In our previous e-zine, we mainly focused on the impact of the coronavirus on existing contractual relationships. In this e-zine, we will look at the future, as it is highly important for companies in these difficult times to continue concluding contracts with their customers and to be able to deliver goods and/or services to their customers.

1.    Including specific provisions in your contract to protect yourself against the consequences of the coronavirus

When your company concludes (new) contracts with its customers, it can, in principle, no longer invoke the coronavirus as an act of God (“Force Majeure event”) to justify a possible non-performance, such as the failure to meet a binding delivery deadline. Indeed, the coronavirus and its impact on the contractual relationship are no longer an unforeseeable event at the time of the conclusion of the contract, which is required for the legal qualification as an act of God under Belgian civil law. 

Therefore, it seems appropriate to include the following specific provisions in new (still to be concluded) contracts: (i) a tailored act of God provision and (ii) a tailored provision regarding the delivery terms and liability. 

a)    Tailored act of God provision

Firstly, it is advisable to include an act of God provision in all new contracts, whereby a pandemic (with reference to the coronavirus), an epidemic and/or a quarantine measure are listed as non-exhaustive examples of force majeure events and in which it is expressly stipulated that the general legal application condition of “unforeseeability” relating to an act of God does not have to be fulfilled.

Although such a tailored act of God provision still requires a case-by-case assessment in which the unattributability of the act of God and the causal link between the act of God and the non-performance must be proven, this provision in any case provides a first important tool for the company to suspend its obligations temporarily or permanently. 

b)    Tailored provision regarding the delivery terms and liability

Furthermore, it is advisable to use the coronavirus as a circumstance, which justifies in new contracts the use of a merely indicative delivery deadline against the client. If this is not possible, a very long delivery period can be agreed upon, of which your company knows in advance that it leaves sufficient margin in case of, amongst other things, possible supply problems due to the economic impact of the coronavirus. Of course, this does not exclude the application of (a) force majeure (provision). 

Moreover, a company can further limit its potential liability for late delivery (as a form of non-performance) by stipulating that, in the event of delivery problems, the contracting parties must first undertake a negotiation attempt to come to a renegotiated delivery date.

An additional possibility in any case is to contractually limit the liability of a company for this type of contractual non-performance to a relatively low amount (it should be noted that this limitation cannot undermine the contract in general and cannot deprive the contract of its content) and to exclude defined consequential and indirect damages (e.g. loss of profit) on the part of the customer. 

2.    Delivery of goods and/or services during the corona crisis

Companies also have practical questions regarding the particular execution terms of current deliveries of goods and/or services.

The Ministerial Decree of 23 March 2020 provides that, in the case of the performance of a non-essential profession, a company may continue to operate, and thus supply goods and/or services to its customers, insofar as teleworking is the starting point. If for the performance of a certain function teleworking is not possible, a company may only continue to carry out its non-essential professional activities insofar as the social distancing rule is safeguarded, both during the performance of the activities and during the transport organized by the employer. The aforementioned rule does not apply to a company active in a crucial sector and/or engaged in an essential service, as listed exhaustively in an annex to the Ministerial Decree of 23 March 2020. These companies are, however, obliged to apply the system of teleworking and the social distancing rule to the greatest extent possible, but do not have to close down if this rule cannot be maintained. 

In particular, this means that a company may continue its activities and that there is no general prohibition imposed by the public authorities on exercising a specific profession, if a company introduces appropriate safety measures. A company will be able to continue to supply goods to its customers and customers will be able to continue to collect goods from a company, if the social distancing rule is maintained. For example, goods are preferably delivered or collected at the door. If a signature of the customer is required for the delivery of a specific good, the supplier can sign on her or his behalf, provided that it occurs in the customer’s presence. These measures can be introduced to safeguard the social distancing rule.

Also during transport of goods, a company will have to be vigilant and safeguard the social distancing rule in order to protect its own employees/carriers such that, for example, only one person per means of transport is admitted. A possible consequence of this is that a company may, for example, stipulate that it currently only delivers goods that can be delivered by one person. 

Hence, a company will only be able to invoke the Ministerial Decree of 23 March 2020 as an act of God if it demonstrates that it is (relatively) impossible for the company to carry out its activities while safeguarding the social distancing rule. 

3.    Support measures for companies in difficulty

In the meantime, a large number of support measures have been introduced for companies in difficulty. For an overview of the various support measures available for companies, we refer you to the websites of the Flemish Network of Enterprises (Dutch), the Walloon Union of Enterprises (French), BECI (Dutch/French) and the Federation of Belgian Enterprises (Dutch/French).