Legal insight: how Covid-19 may affect your business

We hear from commercial law experts, Keebles LLP about some of the likely impacts on tech companies.

The effect of the coronavirus (Covid-19) outbreak is being felt across society, and as well as the severe consequences for health and wellbeing, attention is now turning to the likely impact on business and the economy. In this guest blog, solicitor Tom Rook from our Associate Sponsor, Keebles LLP, looks at the challenges and concerns for companies in the digital sector.

This is unknown territory for all businesses, including those in the digital industries. Business owners and managers will be paying close attention to cash flow, employee management and customer retention.

The economic effects of the virus outbreak are likely to be amplified where start-ups or fledgling digital businesses are concerned. They may not have the well-established customer base or lines of credit that a bigger market player has. Their policies and procedures may not be as well-developed, and so it is vital that they refer to government and other industry guidance when implementing measures to deal with any implications of Covid-19.

However, smaller businesses may benefit from being more adaptable than their larger counterparts, and government support may also be available (cash grants and assistance with sick pay will be offered to eligible small businesses).

Challenges along the supply chain

Regardless of size, all firms will face challenges along the supply chain. It may be that a supplier has let you down, or your business might be struggling to deliver a contract. Practical steps can be taken to minimise the impact, for example, stockpiling hardware and sourcing alternative providers. The legal terms of trading will play a large part in determining who bears the financial risk in the event of a breach of contract.

Cancellation of advance bookings

One issue that is becoming widespread is the cancellation of advance bookings. This may be the cancellation of a venue-hire (by the venue or the hirer) or a pre-booked service such as IT maintenance. Consumer laws generally afford a consumer a high level of protection in the case of cancellations, however under a business-to-business contract the position is a little less certain.

The balance of risk will be determined by the legal agreement between the parties. Businesses should check the terms of the contract and, in particular, the ‘force majeure’ clause (or ‘events outside of our control’ clause), to see where the relevant losses will fall.

Many businesses must now adapt to this changing environment, operating remotely perhaps for the first time. This could create unexpected demand for tech and digital services, and may go some way to relieving strains on your company.

Microsoft and Google are playing their part by offering free trials of their Hangout and Teams tools. Virtual events are likely to become more widespread and sectors such as health and education will increasingly rely on technology, for example, video consultations and remote learning.

By meeting this demand with existing products and developing new solutions, a tech or digital service provider can play their part in helping the country through this difficult period, and put themselves in a stronger position to handle the inevitable challenges that will come.

We will have a legal expert from Keebles LLP joining us on the next episode of the Sheffield Digital podcast when we can get more specific details on the issues you are facing. If you have any questions about legal matters relating to the COVID-19 crisis and your business, please send them to claire@sheffield.digital.

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