Bad behaviour in contract disputes will hit economy

Will Green is news editor of Supply Management
19 May 2020

The UK government is urging parties to contractual disputes across the public and private sectors to resolve them through negotiation and mediation.

In guidance, the Cabinet Office (CO) called for “responsible and fair behaviour” in performing and enforcing contracts affected by the coronavirus pandemic, including “acting in a spirit of cooperation”.

“The government would strongly encourage parties to seek to resolve any emerging contractual issues responsibly – through negotiation, mediation or other alternative or fast-track dispute resolution – before these escalate into formal intractable disputes,” said the guidance.

The CO said responsible and fair behaviour in contracts would “result in better long-term outcomes for jobs and our economy”. “In complex contracting arrangements, this should apply throughout the contracting chain,” it said.

“It will in the long term protect businesses, supply chains and opportunities in the economy. Bad behaviour will be bad for jobs and will impair our economic recovery.”

The guidance said responsible behaviour included requesting and giving relief for impaired performance, requesting and allowing extensions of time, returning deposits or part payments, and making and responding to requests for contract changes and variations.

“Contractual arrangements play an important role in the functioning of our country and our economy – including providing vital works, goods, services and premises, supporting our public services and enhancing and maintaining our national infrastructure,” said the CO.

“The continued provision of vital services and support through contracts (and supply chains) is essential as part of our national response to the Covid-19 emergency, including to the NHS and care homes.

“It is recognised that parties to some contracts may find it difficult or impossible to perform those contracts in accordance with their agreed terms as a result of the impact of Covid-19 – including through illness in the workforce, the effects of restrictions on movement of people and goods, revised ways of working necessary to protect health and safety, the closure of businesses or the reduction in a party’s financial resources available to make payments otherwise due under the contractual arrangements.”

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