The U.S has been under corona quarantine for some time now. Given that various contracts have been negotiated by parties, and some have performed on the agreed contracts and others have not as agreed. Fully discuss the implications of quarantine on the contractual obligations.
Contractual obligations refer to duties that every party is legally responsible for in an agreement. Every party exchanges something that is of value, be it a service, products or money.
Mainly, owing to the travel, export, transport and import restrictions as well as other measures being taken across the world by governments to curb the spread of COVID 19, there is a high possibility that contracts signed by various parties may either be temporarily or permanently not possible to perform. I believe that quarantine brought about by the COVID 19 pandemic will have adverse impacts on the existing employment contacts as well as independent contractor arrangement;
The following are the effects of quarantine on the contractual obligations;
Salary Reductions
An employer cannot whatsoever unilaterally change the terms of agreements with their employees where such a change will be detrimental to the employee. Again, if the boss wishes to implement deductions of salary, he would need to obtain his employee’s written consent. In this regard, if the boss unilaterally implements changes in salary reductions, the worker may succeed in a claim for constructive dismissal.
Redundancy
There is a high likelihood that employers will need to declare some of their employers redundant. Usually, the Employment Acts contain specified provisions on the process to be followed when declaring workers redundant. Again, the associated tax implications on payouts would also have to be considered.
Place of Work
Mainly, the Employment Act requires that all employment agreements should state the place of work. Besides, most of the existing employment contracts may have provisions of the place of work. Where workers opt to work from either home or remotely from the workplace because of the pandemic, then they are likely to breach the provision under their employment contracts unless they agree with their employers.
Performance
Some of the employment agreements may require their workers to travel for work whereas this may not be possible as we anticipate that such workers may not be able to perform their employment obligations as a result of restrictions as well as territorial lockdowns worldwide.
Productivity
The other impact is that there will be knock-on impacts as a result of absenteeism as well as difficulties caused by damaged supply lines. These effects will be felt in different sectors, for instance, the construction and infrastructure sector. This may be mainly contributed by the fact that some suppliers may not be able to stick to their contractual obligations due to the lockdown.
To sum up, the COVID 19 pandemic is currently uncertain. Well said, there are obvious risks that the disease may if it has not, move to pandemic levels and have fundamental contractual impacts. Businesses should, therefore be careful in the assessment of their existing contractual arrangements and also comprehend risks as well as opportunities that may be presented mainly if the contractual agreements are severely impacted. Again, businesses should thoroughly prepare for possible changes in both the normal and the pre-existing assumptions surrounding and underlying risk allocations mainly in a range of contracting structures. Lastly, if the parties are having contract negotiations, they should without a doubt, consider the inclusion of a force majeure regime that will significantly protect them from facing the consequences brought about by being unable to perform their contractual obligations due to the COVID 19 and its knock-on impacts.
Fully discuss what constitutes a valid contract and factors that will negate the contract from being enforceable legally and otherwise.
Typically, a valid contract is either an expressed or written agreement between two parties to provide a service or a product. A valid contract constitutes the following;
Offer and Acceptance
A valid contract must have an offer as well as acceptance. One of the parties makes an offer, for instance selling services or goods for a quoted price while the other one accepts the terms of that offer, usually through providing their signature in writing or by often making a payment.
The Capacity of Parties
Mainly, the law uses age as a fundamental threshold for capacity, starting from 18-21 years as the age of adulthood. The law also considers adulthood as the period when mental competence comes into play. In this regard, the parties involved must demonstrate their full legal capacity to agree. This means that the two parties have a complete comprehension of the nature as well as the effect of the contract.
Consideration
Consideration refers to a value or price that is exchanged for a certain offer. Even though it is usually monetary, consideration can be any benefit, interest or right as long as there is something of equal value in exchange. Notably, consideration does not have to designate a good deal for either of the two parties; that is usually a matter of judgment for the parties agreeing.
Factors that will negate the contract from being enforceable legally and otherwise
At common law, several aspects may negate a contract. They include legal incapacity, undue influence, misinterpretation, illegal contact, and unwritten contact.
Legal Incapacity
Capacity refers to the mental capacity to comprehend as well as being accountable for agreeing. If one agrees with someone who lacks legal capacity, then the individual can easily get out of the contract without a penalty. A good example is an individual who is under the influence of alcohol, has very little or no capacity to understand the terms of agreements and may make resolutions that are not in their best interest.
Duress/Undue Influence
Mainly, a concept of a good contract means that the two parties are making a contract of their own free will, hence no one has been forced to enter into a contract. Again, if there is duress, the court may not consider the lawsuit. For instance, an individual cannot be forced to enter an agreement with violence or threats.
On the other hand, undue influence involves influence in the relationships in which the two parties are not equal. For instance, an employer may have undue influence over his work and this may force the employee to sign the contract that only benefits the employer. In this regard, this may become difficult to prove.
Misrepresentation/Fraud
Mainly, a fraud is a deliberate action that is intended to deprive a person of their right or to cause them harm. In agreements, deception about a material is usually part of the contract. Again, fraud can either be positive or negative and hence if it can be validated that one of the parties commits fraud, then the contract can be unenforceable.
Misinterpretation refers to an untrue statement of a fact that induces a person to enter an agreement. The injured party must, therefore, prove that they relied on the false statement when making a contact, leading to some kind of loss. All kind of fraud is a misinterpretation while misinterpretation is not always a fraud.
Illegal Contract
Illegal contact involves actions that are against the public policy. For instance, a contract to either purchase or sell illegal drugs is unenforceable. In this regard, it is a contract that puts a person in a position of breaking a law.
Unwritten Contract
Generally, a contract does have to be in the form of writing. However, some contacts have to be in written form to be enforceable. In various states, this requirement is different. Some examples of contracts that have to be in the written form include contracts for either sale or transfer of land or prenuptial agreements. State laws vary hence it is essential to check the statute of frauds in your country or contact an attorney to familiarize yourself with the laws in your country. In this regard, even if a verbal contact is proven to exist, it can cause serious consequences since it is unenforceable in the court, especially if the law requires a written contract.