Some contracts allow a company to terminate, for some reason („convenience“), for non-performance of a party („violation“) and/or in the event of force majeure. Companies should be cautious in exercising these rights when considering the impact on the rest of the business and the entity`s relationship with the other party and third parties. For example, if you are a sponsor and you are now terminating your sponsorship agreement, will that company wish you as a sponsor in the future? If you are a lender and you refuse to repay a customer now, will the customer hire you later? A customer terminating a lender contract should assess not only the impact of the cost of finding a replacement seller, but also the loss of potential efficiencies that the existing creditor can bring to the client`s operation. The creditor can be integrated into the client`s various activities and perform activity terminations that may need to be carried out internally when the creditor is terminated. As an alternative to termination, the customer may consider pushing the troubled supplier to waive fees or provide a „make good“ during the suspension of services. Suppliers who decide to terminate a contract with a customer because of a case of force majeure may wish to examine how this decision is perceived by others in the market. When a creditor terminates its contract with a customer, other customers may be concerned that the lender will terminate its contracts or that the lender may not be financially sound and look for alternative suppliers. In addition, before terminating the contracts, the company will want to check how the contract addresses the compensation after the termination. In addition, in sponsorship agreements, the language often provides that the sponsor receives an agreed credit (or perhaps a refund or proportional credit) in the event of a loss of sponsorship benefits due to a force majeure event. Given the league`s many blockages (z.B. NBA, MLB, NHL) due to COVID-19, sponsors may be in a „wait-and-see“ position for now, but should proactively look at their agreements and consider whether the goods are working if/if the corresponding sports season is resumed, and not whether a proportional refund (or credit) would be more appropriate.
With regard to production agreements, it is also necessary to determine who must bear the costs of an aborted production, whether as a result of the manufacturer`s termination or the refusal of the talent to show following concerns of COVID-19. This problem is often addressed through a separate business discussion and trust in the relationship between the parties (as opposed to respect for a particular legal language). 4. A prior agreement between two or more entities to provide support to the parties to the agreement. Strategies may include contracts with third parties, entering into partnerships or mutual agreements, or crowding out other activities within the company. Employees with in-depth knowledge of business functions and processes are in the best position to determine what works.