Resolving Business Disputes Created by COVID-19

We are currently living through a defining time in history with the COVID-19 pandemic. But history does often repeat itself, many times with a new twist, and we should take this opportunity to learn and grow from the difficulties we are experiencing. There has been an unforeseen supply chain disruption due to the shutdown of nearly all businesses, along with directives to stay at home.


Compared to any other crisis in history, the coronavirus pandemic has had a more significant effect on the world. Therefore, this situation warrants a different response. Supply chain professionals who are responsible for internal workflows and external networks must understand not only what will occur during this pandemic, but also how the actions we take right now will impact the future.


Measures to Prevent, Manage and Control Disputes


When businesses ultimately resume normal operations, companies will require an array of dispute resolution mechanisms. To meet this need, Alternative dispute resolution (ADR) experts offer various mechanisms, such as arbitration (a neutral party issue a binding resolution) and mediation (a neutral third-party helps the disputing parties to arrive at a decision, and the parties retain ultimate control of the decision).


A wide array of dispute management mechanisms can be considered to address broken or challenged supply chain relationships and develop a robust buyer-supplier network. It is best to adopt a comprehensive and practical solution for long-term business survival, where possible.


Other mechanisms for dispute resolution include early-stage mediation. The process of mediation encourages individuals and enterprises to seek dispute resolution quickly and discreetly with the assistance of a neutral party.


Ways Companies can Minimize Business Risk


Review your contractual obligations


During the ongoing COVID-19 crisis, many companies have been revaluating their contracts to understand whether they have force majeure clauses, what those clauses involve, and how they could impact the business. Companies are also assessing whether other provisions could allow parties to suspend or excuse performance in the present situation.


Also, businesses should evaluate contract language on material adverse events or changes, the difference between defaults and circumstances of default, service levels or threshold amounts, and precursors for termination rights.


This crisis has led many counterparties to make concessions, and discussions with business partners usually yield the most effective solutions. But when involved in these negotiations, remember to preserve your common law and contractual rights as well as document the particular facts that are impacting you and bring about a change in performance.


For instance, what are the primary reasons for disruptions in your supply chain? Is it due to a government-ordered shutdown, the inability of another counterparty to uphold its obligations or an increase in pricing?


The nuances can be essential to avoid disputes in the future that may occur after the dust settles. Additionally, when considering that the coronavirus crisis has occurred, it may be hard to argue for more changes or accommodations, as the pandemic is no longer an unprecedented event.


Assess your Financing Documents for Cross Defaults


In present circumstances, borrowers and lenders should evaluate all credit and debt agreements, not merely those that seem to be at risk of default at first glance. The borrower’s exposure can be increased significantly through cross-default clauses being triggered by a breach of contract or an obligation to pay.


The issue of cross-defaults can be particularly worrisome for companies that have complex capital structures. It is vital to identify the issues at the earliest and take steps to reduce or remedy defaults to avoid severe consequences.


Evaluate all Relief Options


It can take months, or even years, to obtain a court judgment from a contract dispute arising out of the coronavirus pandemic. Therefore, as always, first understand whether negotiating a resolution can offer longevity and preserve clients and counterparty relationships. Besides, evaluate all other possibilities for relief.


Assess what funding programs your company may be eligible to apply for. It is not only vital to apply for relief as you may be entitled to useful benefits, but it is also crucial to show efforts towards mitigating damages occurring due to the breach of an obligation by a counterparty.


Further, review all your insurance plans and consult your attorney, not only your broker, to assess your insurance coverage. The “fine print” of insurance plans often contains significant hidden details. Today, many new concepts emerging regarding the available insurance coverage under present circumstances.


Facing Supply Chain Disruptions? Consult an Experienced Attorney Today


If you are a business owner who is facing supply chain problems due to disruptions caused by the COVID-19 pandemic, consult a skilled corporate attorney at Davis, Bingham, Hudson, Buckner, P.C. today. Our lawyers will thoroughly assess your supplier agreements and insurance policies and guide you on the most effective measures to minimize your losses. For a detailed consultation, call (334) 821-1908 today.


How is The Coronavirus Affecting the Real Estate Market?

The real estate market across the country is bracing for an unpredictable season following the economic challenges created by the Covid-19 pandemic. Some analysts are of the view that extremely low costs of borrowing may not be enough to attract home buyers until the current climate of economic uncertainty begins to improve.


The job market that had been going all guns blazing has come to a screeching halt, which could set the stage for a sluggish housing market in 2020. However, housing sales is not the only challenge for real estate agents and investors right now, but also a host of commercial and legal issues may also need to be addressed going forward.


Mortgage Modifications


As many economists and large financial institutions are expecting the economy to go through a recessionary phase, the job losses across the country may mount further before the business and economy begin to stabilize. When people get laid off or their business gets shut down, they may quickly start missing their mortgage payments.


Lenders will have to facilitate mortgage modification programs requiring homeowners to repay their loans in smaller monthly installments. Experienced mortgage modification attorneys can assist homeowners in negotiating with their lenders for more conducive and manageable mortgage payment plans in the new economic scenario triggered by the coronavirus.


Impact on Existing Real Estate Sales Contracts


Many real estate buyers and sellers who have already entered into a contract may be wondering whether they could terminate the contract citing Covid-19 as an “Act of God” or in a situation where they are directly affected by coronavirus illness or quarantine. In these cases, it is best to consult with a real estate attorney who will assess the terms of the contract and provide appropriate legal advice.


A standard residential real estate sales contract is not likely to have a provision for termination of the contract due to a pandemic situation. The contract typically will have a clause that allows termination of the contract by one party if the other party fails to meet the conditions of the contract.


A reasonable solution may be for both parties to mutually agree to an extension of the closing date because of Covid-19 related illness, quarantine, local lockdown or shelter-in-place orders. A knowledgeable real estate lawyer can advise how to maneuver an extension in carrying out the legal obligations under the contract due to the pandemic.


Protection against Real Estate Fraud


During times of stress and uncertainty, fraudsters are the first ones to start taking advantage of individuals and businesses by perpetrating sophisticated scams, including real estate transaction frauds. They may send offers of distress sales of prime real estate at attractive prices, and ask for advance payments, or present fake documentation to lay an elaborate trap.


It is prudent in these times to exercise more caution than usual, and scrutinize the claims, offers and documentation offered by an unknown party. Any personal data or financial information should not be provided without first being sure that you are dealing with a legitimate buyer, seller or broker.


Real estate transactions involve large amounts, and it makes sense to have strong representation from a real estate attorney. They will be on your side and will protect your interests and your rights at every step of your deal. That is the kind of assurance and security you should have, particularly in the wake of the complications arising from the prevailing Covid-19 crisis.


Legal Advice on the Risks of Racial Discrimination


Covid-19 is an infectious disease, and when the origin of such diseases is associated with a certain geography or population, it can lead to unfortunate situations where a party gets wittingly or unwittingly charged with discriminatory behavior.


In the times of coronavirus illness, landlords, property managers, real estate agents and brokers as well as investors should be conscious about their legal obligations under state laws as well as the Fair Housing Act. No such action should be taken that gets perceived as discriminatory against particular segment of the society or an ethnic group.


While you are free to ask prospective clients, tenants, or associates whether they have recently traveled to areas with high risk of exposure to Covid-19, you have to be uniform in this type of screening for all potential candidates or prospects. And based on their responses, you should treat all parties equally.


It is best to consult with a seasoned real estate attorney who can help you cover all the legal bases in this unprecedented situation that has occurred due to a global pandemic.


Astute Legal Guidance is Available for You

Davis, Bingham, Hudson & Buckner, P.C. is one of the premier law firms in the greater Auburn community in Alabama for commercial and residential real estate transactions. For nearly four decades, we have been providing dependable and highest quality professional services to individuals, families and businesses.


We have the skills and the resources to get some of the most complicated matters resolved, especially with regards to real estate closings. To schedule a consultation with one of our real estate lawyers, call us today at (334) 821-1908.