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Be Prepared for Anything with Detailed Agreements

Published: 31 Jul 2020

The coronavirus has made it painfully clear how important it is for agreements to be as detailed as possible and to account for exceptional circumstances in order to avoid legal disputes.

The coronavirus has made it painfully clear how important it is for agreements to be as detailed as possible and to account for exceptional circumstances in order to avoid legal disputes.

Save for a small number of restrictions, contract law starts from the assumption of contractual freedom. It is for the parties to settle on the terms of any contractual agreement. While it is generally not necessary for agreements to adopt a particular form – oral agreements, for instance, are also possible – we at the commercial law firm MTR Rechtsanwälte nonetheless recommend that agreements be concluded in writing and include as much detail as possible on the rights and obligations of the contractual parties in order to avoid legal disputes wherever possible.

Many contractual agreements cannot be implemented at the present time due to the coronavirus pandemic. This raises the issue of liability, which in turn paves the way for force majeure to swiftly – but in many cases also prematurely – take center stage. However, even in the midst of the current crisis surrounding the coronavirus, it is not the case that every breach of contract justifies invoking force majeure. For instance, the debtor must not have deliberately or negligently precipitated the circumstances that make it impossible to render the agreed contractual services.

The inclusion of provisions that deal with force majeure and, in particular, the scope of its application, ought to be considered before the agreement is concluded, as it is not always a requirement for the terms to cover, for instance, the outbreak of a pandemic or government-imposed quarantine.

The same level of attention should, of course, be paid to all other contractual terms and to ensuring that the rights and obligations of the contractual parties are clearly defined. The parties ought to plan for proactive action, possible scenarios, and the resulting consequences in order to avoid being faced with nasty surprises at a later date. In this way, potential problems can be reduced to a minimum thanks to clear and unambiguous contractual arrangements.

Violating contractual obligations may have legal consequences such as price reductions, withdrawal from the contract, or even give rise to claims for damages. At the same time, both domestic and international regulations need to be observed.

Agreements obviously have to comply with legal requirements, extensive contractual freedom notwithstanding. Provisions that are illegal or contra bonos mores have the potential to render the entire agreement null and void.

Lawyers with experience in the field of contract law can offer advice.

https://www.mtrlegal.com/en/legal-advice/commercial-law/contract-law.html

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Marc Klaas

Firm: MTR Rechtsanwaltsgesellschaft mbH
Country: Germany

Practice Area: Corporate

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