Hello, we are being asked similar questions by a number of members. All FM clauses in new contracts should include a reference to the ongoing pandemic. As you point out there is a risk still that there will be continued fallout from this both on the buy and sell sides. We are advising members to be as prescriptive as possible in thinking about and addressing in their FM clause any future risks that could put the services or goods to be delivered at risk. Think beyond the usual FM remedies of suspension or termination. You may need alterntive remedies which could include a reduction in scope of what is being deliverd together with any associated pricing. You may also wish to consider a phased approach to ramping up obligations after a reduction period due to ongoing uncertainty. It is difficult to cater for all future uncertainties. Thus, we advise that you also build into the contract further agility to cater for complete unknowns that still might arise. IACCM has developed a framework called the VCU to help our members to map out uncertainty within their contracts and ensure that appropriate terms and conditions are used for each contractual relationship. Please contact us if your organisation is interested in participating one of our workshops around this.
I think also important to make the point that when an event is known and on-going, in itself it cannot really be a Force Majeure event! So I'm not sure that either party could invoke coronavirus in a contract being agreed now.
We have also launched a survey today which has already generated hundreds of responses and we will be putting out a report on the results early next week so please watch out for that.
I hope this helps and please do let us know if you have further specific questions.
• Cadent Gas Ltd
There are multiple ways to be honest, including Force Majeure clauses and Business Continuity obligations on the supplier which are regularly tested.
• Vaisala Inc.
We have recently added a statement to all quotes to customers with regard to COVID19, namely that it is now a 'known' event and given that the environment is ever-changing that status of your order may change, including for example the time from submission of order to delivery/performance. We will use all commercially reasonable efforts to notify you as soon as possible of any change. So perhaps something along those lines? Our sales and executive teams seem pleased that we are addressing it directly.
erdemir engineering management and co...
• Parker Hannifin Corporation, Aerospace Group
I would say yes. This 'Act of God' is causing many companies to shut-down temporarily.
• GKN Aerospace
Yes - in most cases it will be ( unless of course the contract excludes medical issues or similar)
• Norfolk County Council
Might be worth considering what your response was to previous pandemic flu etc and treating similarly
yes, I considered a supervening fact, would be impossible to predict the existence and its effects when signing a Contract...
for me it depends, if the party is from Wuhan, China where the local authorities have declared shutdown or curfew then it may be considered. however if the party is from somewhere not directly impacted with the virus then No. They need to show evidences of the impact which is hindering their obligation to perform the work.
• Pacific Gas and Electric Company
I would describe COVID-19 as an unforeseeable event. It would depend on the nature of a unique good or service to determine if a force majeure clause would apply.
Product replacement or discontinuation is obviously quite usual - but that doesn't alter warranty obligations. The manufacturer should have stocked sufficient to meet likely needs. Without knowing the value. It is hard to know whether it is worth pursuing them; right now it sounds like they are ignoring you in the hope you just give up.
Thanks for your viewpoint and I couldn't agree more with you on this.
However, they have actually discontinued the product and their revised e-catalogue confirms this. I am sure they understand that a Purchase Order from us would just add on to their revenue in multiples at best, to risk such ignorance. Of the 28 product categories they have supplied, the issue affects only 1 of the 28.
The query deals around with
(a) non availability of spare parts of the product and
(b) non availability of the product itself.
• Isle of Man Government
Experience suggests this will boil down to the terminology used within your warranty document. It may be unreasonable to expect a supplier to maintain full stocks for all warranty potential on discontinued products (Tim already mentioned value...). More commonly, suppliers offer repair or replacement with the direct alternative product. If the 'standard' warranty were considered unacceptable at the outset it would be appropriate to develop the warranty model to include a recommended spares holding based upon MTBF, or more onerously full replacement of the product range used including mobilisation costs. Either way both parties are fully aware of expectations and obligations from the outset.
Contractually speaking if the warranty document is deficient you are really only left with negotiation. An option being to approach the supplier for access to the original product production drawings and look to have bespoke replacements made.
As a compromise and considering the actual failure rate seems quite low (5# out of 1500#) - though in no way trying to belittle the frustration you must feel - are there visual aspects where use of the replacement product may be viable and use the original products from those locations for the more visible locations ?
1. Reply - Yes It happens when contractor's payment is to be made based on milestone basis and where delay from contractor's side concurrently delay from employer's side also during contract administration stage both parities contracts manager and PM don't sit to-gather to establish the delay attributed to which party, on other hand employer want the work to be completed with in laid completion dates. with found delay employ deploys third party manpower to complete work and adjust this cost from Contractor's Accounts under Employer's Claims.
2. Reply - can be replied based on type of contract is formed.
You can reach me offline over the email: email@example.com (Rajit Shah - Founder and Director, RPCPL)