Red, orange and green - the traffic light system and your contracts

10 December 2021

 

You’re seasoned professionals handling Covid-19 changes now, we all hope that it’s the fourth innings of a test match, or the last 5km of a marathon – but we want to recap what to think about in your contracts under the traffic light system so you don’t “hit the wall”.

The Covid-19 Protection Framework (CPF or traffic light system) is now in place.  Your setting will depend on where you are in New Zealand. Find your region’s setting here: https://covid19.govt.nz/traffic-lights/traffic-lights-map/

We realise there are lots of operational matters going on under the traffic light system – it’s important to ensure that what is happening in the day-to-day is consistent with what your contracts and T&Cs say.   

Think carefully about how Covid-19 might impact on a contract you’re entering into and what practical result you would want to try and achieve in the event Covid-19 interrupted your obligations.

Performance obligations

The traffic light system might impact on your ability to meet your obligations under contracts. 

  • What might happen if you have restricted capacity, or can only have one group (rather than multiple groups) in your venue?
  • How will you be impacted if some of your workforce are not able to come to work?
  • Have you allowed for additional staff to meet the traffic light obligations such as controlling entry and sighting vaccine passes?

 

Refunds

If you’re not able to meet your obligations under a contract, or people are unable to use your goods / services, what are your refund obligations?   Also consider your obligations to your customers under the Consumer Guarantees Act. 

Delays and cancellations

It’s a harsh reality, one we’ve faced before, that events do get postponed or cancelled.

Do your contracts and your event terms and conditions set out what will happen if there is a postponement or a cancellation?  Consider this from both a supplier and customer perspective. 

Think about the ways in which you can mitigate your risks – that might be through insurance, the Government’s Event Transition Support Payment scheme (https://www.mbie.govt.nz/business-and-employment/economic-development/events-transition-support-payment-scheme/), through structuring your payments to suppliers and through your customer terms and conditions around refunds.

A specific Covid-19 clause

When negotiating new contracts, we’re now all acutely aware of the risks presented by COVID-19 and that it may continue to impact us for some months to come. This means that consideration must be given to managing that risk in your new contracts.

Consider including a separate term in your contract that acknowledges and addresses the realities of the Covid-19 situation.

You’ll want to think about:

  • How far you have to go in mitigating the impact of Covid-19 on your obligations under the contract
  • What you need to communicate to the other party to your contract about the impact of Covid-19 on your contract
  • Whether payment obligations still continue
  • If the contract can be terminated because of the Covid-19 situation. If so, how long do you or the other party to your contract need to be impacted by Covid-19 before an end to the contract can be triggered?

 

Health and safety

Are there any additional health and safety requirements you want to include in your contract or your T&Cs?  For example, these could be extra safety measures that you would like your suppliers or customers to take when they interact with you or your workforce and in your venue. 

As much as we have all been here before, the “new normal” of the traffic light system requires careful consideration.  It’s always best to consider the realities and risks of Covid-19 and plan for how you can mitigate those risks.

If the information in this article has raised some questions for you or you would like any further advice, please contact us through the Nuku Ora Shared Services: business-support@nukuora.org.nz

BSS GS Legal Speak