Coronavirus: Managing the risk of breach of contract

The rapid spread of COVID-19 (Coronavirus) throughout the world and the impact of administrative measures to contain it represent a growing challenge for the management of companies. On 11 March 2020, the World Health Organization declared the existence of a pandemic. The main focus is now to guarantee the safety of workers and employees. However, the potential repercussions for the activities of companies – in the short and medium term – are vast, complex and, in certain cases, they conflict with each other.

Businesses must assess the extent to which the impact of the Coronavirus could affect their ability to comply with the contractual obligations they have assumed. They must also evaluate the mechanisms available to them to react if the other party breaches a contract. This analysis should have a double focus: (i) on the contract the parties have made with each other, and (ii) on the legal rules that apply to it on a supplementary basis.