202003.27

How do I do this right?

Commercial activity and the general economy in Quebec are increasingly affected by the situation caused by COVID-19 and, if we can be certain of one thing, this will not be resolved tomorrow. This is leading several companies to react by adopting exceptional measures in regards to the management of their operations.

Perhaps you already anticipate future difficulties, in particular concerning the payment of wages, the rent, or the repayment of loans? Perhaps you will not be able to fulfill certain obligations that are incumbent upon you. In particular: certain contracts with your suppliers, customers or other business partners? Perhaps you have already contacted these people to discuss exceptional and temporary measures that could be put in place to help everyone get through the situation?

We would like to inform you of the fact that, in general, the vast majority of the contracts that you conclude and the obligations arising from them may be subject to modification, whether or not you are in a crisis, whether or not your contract provides for the possibility of modifying the terms. Obviously, such modifications can only be adopted and take effect if they have been previously discussed and approved by all the parties of the contract in question. In addition, the specific situation in which you find yourself influences the balance of power in the context of a possible negotiation. In a position of strength, you are more likely to benefit from better bargaining power, but the opposite applies as well. Thus, the importance of strategically preparing the way in which you will bring your proposals or requests to your interlocutor.

No matter the extent of the changes you may agree to, we cannot stress enough the importance of confirming the terms in a written document duly signed by the parties. Such a written document will not only survive time and provide you with proof, should it become necessary, but by developing your thoughts and confirming them in writing, you give yourself the tools to better define the scope of your agreement and you reduce the risk of misunderstandings and differences of interpretation.

We also invite you to reflect on the impact that exceptional measures taken with one business partner may have on another. For example, could agreeing to relax a supplier’s delivery terms affect your own obligations to your customers? If so, you potentially expose yourself to retaliation from your customers for doing something good (for you) with your supplier. It is therefore important to anticipate the overall impacts that all of your decisions will have and, if necessary, plan all the exceptional measures that you will take to ensure that you do not unnecessarily expose your company to subsequent issues.

Whether it is to represent you in negotiations, to help you develop your strategy or simply to advise you in making your business decisions, the Force-Legal team remains available to help you overcome these difficulties.

An article by Lawyer Sébastian Proulx-Garcia
Photo credit: photo by Cytonn Photography on Unsplash