What Coronavirus has Taught us About Contracts
I’ve been talking about the importance of contracts long before Coronavirus appeared on the horizon but there are a few lessons that the pandemic has brought to the fore that I want to discuss in this blog.
So, I’ll be covering the key legal steps we can take as business owners and freelancers to ensure our contracts protect us and our clients, now and into the future regardless of any pesky pandemics ruining our plans.
What does a contract do?
Let’s go back to basics for a second here and remind ourselves of why we use contracts in our businesses. A contract is there to act as a legally binding agreement between yourself and your client stating specific rights and obligations you both agree to fulfill.
For a more in-depth look at contracts and why they’re vital to your business, have a read of my blog here.
Covid-19 presented a unique challenge to many of us and it was something most contracts hadn’t allowed for. Situations such as:
- Needing to go into a client’s workplace to complete the agreed work but unable to do so due to lockdown measures
- Not being able to use your business premises and not having the required equipment at home (or space for it)
- No longer being able to deliver a hands-on service (such as holistic therapy)
- Needing time to change your service delivery from in-person to online (like Pilates classes)
were common during the initial weeks and months of the pandemic. It wasn’t a case that we couldn’t do the work due to ill health, death, or adverse weather events but that we were prohibited from carrying out our usual work activities to prevent the spread of covid. And our contracts simply were not designed for that eventuality.
So, what has covid specifically taught us to do? Ensure our contracts are as futureproof as they can get against further pandemics?
The right to organise our own work
As freelancers, and according to IR35 regulations, we have the right to organise how we manage our own work as we see fit. This is the where and how of the work we do along with the timescales involved.
Situations, where a client insists you work from their premises or use their software/equipment, isn’t compatible with this and certainly didn’t work during lockdown! One clause you may want to add to your contract is around ‘new conditions’ (such as covid) requiring a new means of delivering your service, such as:
- Requiring your client to enable cloud-based software enabling you to work from home (or being able to use your own preferred software)
- Having access to materials at home (either through the cloud or courier delivery of documents)
- Being provided with equipment from your client to do the work in your own home (i.e., a laptop with their pre-installed software on it)
What the work will look like under this new condition should be discussed between you and your client. You may find your clients are more accommodating of the idea of you working from home and using your own equipment and software to do so than before the pandemic!
The Force Majeure clause
Contracts, in principle, are breached when either the contractor or freelancer is unable to fulfill their obligations (such as illness or having to self-isolate due to covid) resulting in termination of the contract.
Covid-19 certainly made some work impossible due to no fault of either party but should it have resulted in the termination of the contract? A contractual exception to work being impossible to fulfill is the Force Majeure clause.
A Force Majeure enables you to suspend the performance of the contract for a period of time (or it can permit termination of the contract with details of what happens to past/future payments and work already undertaken).
In the context of a pandemic, temporary suspension of work is the better outcome for both the freelancer and the client. Generally, for this clause to come into effect, you need to show that:
- A Force Majeure event has occurred (like lockdown measures due to covid)
- The event was beyond your control (i.e., governmental measures)
- It has prevented, hindered, or delayed your performance of the contract (such as having to self-isolate due to a positive test result)
- You’ve taken all reasonable steps to avoid or mitigate against these circumstances (such as adhering to government-imposed measures).
If these stipulations have been met, you can enact the Force Majeure clause and suspend the contract until such time as you are able to do the work again.
Cover communications in your contract
I think Covid-19 has taught us that we need to be flexible with our work but that we also need to ensure that we communicate quickly and effectively with our clients. The usual “14/28-day notice” for changes to come into effect cannot apply in rapidly changing circumstances like an emerging pandemic, thus adding a clause to cover events like these and how changes to work or enactment of the Force Majeure will be communicated to all parties involved is important.
If you know your client only uses their email on their desktop computer on site of their work premises, you may need to discuss another means of communicating changes to your work via phone or text message as emails may be delayed.
Whatever the situation may look like for you and your client, ensure you’ve thought about it, discussed it, and added it to your contract.
I hope this blog has given you some food for thought and prompted you to check over your contracts bearing these lessons in mind. Have you learned any other lessons from Covid-19 and how it affected your ability to deliver your work as contractually agreed with your clients? I’d love to hear about them!