Although the Olympics is only a few months away few companies have given any thought to the impact the Games will have on their day-to-day business.
The Olympics could result in a number of practical difficulties for businesses including contractual and employee issues.
Companies may face transport difficulties or absent staff. You need to consider what happens ifyou can’t meet your obligations, how to minimise the risks (both contractually and from an employment perspective) and how to avoid facing huge claims if things do go wrong.
The starting point, as always, is the need for a good contract, both with clients and suppliers. This doesn’t mean a one-sided document drafted purely in one party’s favour. Such contracts notoriously end up as the subject of a dispute.
Instead the parties should aim to draft a clear, concise document, which deals with unusual or extraordinary situations, such as the Games.
However, many contracts don’t contain such a clause and the parties rely on the common law principle of “frustration”.
Far more preferable is a “force majeure” clause which deals with the situation where one party can’t perform their obligations. It goes beyond mere “acts of God”. Non-performance could be caused by a whole succession of reasons, so long as they are beyond the reasonable control of the non-performing party.
So, in our Olympic Games scenario, what is the effect of such a clause if, for example, staff can’t travel to visit a client because the Tube is overcrowded or if a supplier can’t deliver vehicles because the roads are too busy?
Under a force majeure clause, neither party is liable for non-performance.
Depending on the wording of the clause, the contract will terminate automatically, or either party can choose to terminate the contract.
If you can’t provide staff or a supplier can’t deliver vehicles or goods because of the Games, you won’t face a hefty damages claim against you.
And you can’t make one against the supplier, which is why it is useful to back off the force majeure clause in all contracts between clients, suppliers or service providers.
It could provide a high degree of protection at times such as during the Games.