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FIRE, FLOOD, VIRUS: WHAT IF I CAN’T DELIVER? It’s important to be proactive and check your contracts if you find yourself in a position where you may be unable to meet orders. ABy Bird & Bird Partner Lynne Lewis and Special Counsel Megan Edwards. LEGAL ustralia is experiencing the latest in a trifecta of disasters that have caused considerable pain and hardship. On the back of drought, the end of 2019 and early 2020 will be remembered for fire, flood and this devastating virus. The fire threat eased and the rebuilding began, but parts of the country suffered under high levels of rainfall and associated flooding. The effect of COVID-19 globally is still to be understood, with higher infection rates reported constantly, travel restrictions increasing and quarantine enforcement widening. Stock markets are suffering significant damage as the world is gripped by the pandemic. Aside from the significant personal distress felt across the country, economic strain is rising. When roads are closed due to fire threats, flood or disease containment efforts, and when severe disruptions to inbound and outbound shipments occur, companies may not be able to fulfil their order obligations. Associated supply issues experienced by major trading partners in Asia will have a flow-on effect in the Australian economy. What do I do? Be proactive. If you’re in a situation where you foresee your ability to meet orders may be in jeopardy, or the orders you’ve made are not being fulfilled, first you should review your contracts. Contracts often have a force majeure clause. This sets out the contractual obligations and liability of the parties when specified events, or those beyond the control of the parties, occur that result in a party being unable to comply with the obligations under a contract. Often the force majeure clause will specify that the events triggering the ability of a party to rely on this clause include natural disasters, war, terrorist attack, acts of God, strikes or acts of regulatory agencies, but each contract will be different. The force majeure clause can provide for what will affect the parties’ contractual obligations should a force majeure event occur, and can include an extension of time for performance. The clause will often specify that the party affected by the force majeure event will not be liable for their non- performance of their contractual obligations. Force majeure clauses may have notice obligations that require the party affected to notify the other party promptly. Force majeure clauses are not, however, a catch-all for every company affected by a disaster. The reliance on a force majeure clause requires contract interpretation principles to be applied. It’s unlikely that the clause could be relied on in circumstances where the effects of the disaster have resulted in an increase in costs for one party, rather than a total inability to comply with their contractual obligations. It may be that you’re unable to rely on a force majeure clause, or your contracts may not have one at all. If this is the case, a review of your rights to terminate the contract should be considered, as it may be necessary to curb future liability. Further, there are other legal doctrines, such as that of the doctrine of frustration, that may apply. In NSW, for example, the Frustrated Contracts Act (1978) applies to circumstances where promises under frustrated contracts were not able to be performed. This applies only to some contracts and excludes others, such as those for carriage of goods by sea. To avoid potentially opening yourself up to damages claims, seeking legal advice promptly is recommended. About Lynne Lewis Lynne leads the firm’s Australian consumer law and brand practice with more than 23 years’ experience specialising in consumer law with emphasis on advertising law, consumer protection and brand development. About Megan Edwards Megan has extensive experience advising clients on legal issues affecting the marketing and sale of their products and provides advice should a dispute or complaint arise. About Bird & Bird Bird & Bird is one of the world’s leading international law firms advising industries where technology, regulation and intellectual property are driving change. With its strong Australian presence, clients enjoy global reach across various practice areas. APR, 2020 RETAIL WORLD 61