Debate Topic: Can Coronavirus (COVID-19) be an Excuse for Non-performance of a Contract?
Introduction
The emergence of the Coronavirus has developed a global health crisis which has heavily impacted on the world’s economy. In relation, countries have developed measures to mitigate the spread and the effect caused by the disease based on their mode of contraction. The move has overseen the restriction of people’s interaction and standard way of living to prevent the contraction of the virus from one person to another. The limitation has further enhanced the adoption of the online business system to minimize the contact of various business stakeholders. However, companies that offer face to face services have witnessed the restriction of their activities based on their susceptibility to contracting the COVID-19. In particular, their services have been shut down as a control measure to limit the spread of Coronavirus. Among the most affected sectors include transport, hospitality, sports, theatres, and areas that oversee a large gathering such as schools and churches (United Nations Development Programme, 2020). In return, most companies within the outlined industries have incurred severe losses owing to their closure. The impact has further reflected through a decline in the economic performance of various countries around the globe. Based on this review, COVID-19 can serve to be an excuse for non-performance of a contract. However, some companies have developed changes in their service delivery system to ensure continuous running despite the effects of Coronavirus. In this regard, some companies have developed online systems upon which clients can acquire their services and products.
Similarly, companies have adopted new services to replace the restricted services; for example, human transport vehicles have adjusted to cargo transportation to compensate for the limited social movements. In relation, the adaptation of a company to the changing society can deter the justification of non-performance based on the Coronavirus pandemic. The paper develops a debate on whether Covid-19 can serve as an excuse to justify the non-performance of a contract.
Definitions
Contract – entail business agreements that are legally bided between companies and their employees that outlines the duties assigned to an employee and the expected company performance in the course of employment. The contract further outlines the rights and benefits of the employees while serving within the company and the repercussions that may result whenever either of the parties breaks the agreement.
Non-performance of a contract – consists of a case where the parties involved fail to fulfill their obligations as outlined under the contract (Fishman & Fitzpatrick, 2020). In relation, the company may fail to perform as agreed under the agreement, or the company may withhold the benefits of its employees. The failure to abide by the contract terms facilitates the development of the outlined repercussions.
Justification – a convincing explanation that seeks to support a particular behavior or performance.
History
Covid-19 crisis has developed several challenges on businesses which inhibit the normal operations within a company. Among the key challenges include decreased company production owing to the restriction imposed in the workplace. In consideration, governments have issued a directive restricting the gathering of employees within their working premises upon which companies have been forced to limit the number of employees within their working stations. Based on the low production rates, most companies have developed a deficiency in offering services to their customers that further promote losses. The restrictions also restrict the development of services that involve human contact upon which companies providing such services have been forced to shut down their businesses.
Similarly, companies have witnessed the rise of labor costs despite a decline in company sales. In this regard, companies must ensure the safety of working employees through developing safe working conditions and offering employees with high-quality health protection (Qian and Chu, 2020). In cases where employees work from home, companies must provide employees with the necessary equipment and offer them training on how to use them to deliver various services. Companies have further incurred logistics problems that affect the stable supply of products and services to consumers. In relation, various restrictions have been imposed within the transportation sector that limits free movement between different geographical areas based on their vulnerability to contract Covid-19. Among the limits include the imposition of curfews and restriction of access to areas with high chances of infection.
Furthermore, the decline in sales and increased labor cost has facilitated the emergence of financial crises within various companies upon which they cannot fund their operations. The effect is evident within China’s economy, upon which 43% of the companies within the country have suffered from insufficient liquidity. The outlined challenges may facilitate the non-performance of a contract since companies incur added costs of production to ensure continuous operation. In particular, companies may fail to realize projected profits owing to the uncertainty within the market and work environment.
Despite the existence of the outlined challenges, companies can adopt various measures to ensure continuous performance and limit the effects generated by the pandemic. The various standards should get developed as fast as possible upon the confirmation of the epidemic to regulate its impact and help the organization to adapt to the changing environment. The most crucial measure includes the development of a crisis team that will direct the transition of the business in line with the pandemic. The team will acquire the responsibility to ensure the continued functionality of various company departments and develop measures to help mitigate the risk involved with the disaster (Ganado & Attard, 2020). Also, companies can control low production rates by developing a contingency plan to ensure that critical roles keep running. In relation, companies should identify positions that present a risk owing to the condition of their holders upon which they will identify the skills needed and acquire a replacement to fill the gap. To ensure the safety of employees’ companies should develop measures such as adjusting the work premises to ensure proper distancing among employees.
Furthermore, organizations should develop health measure measures such as frequent employee monitoring and increased hygiene within the working premises. Concerning the development of business activities, organizations should identify the needs of consumers upon which they can expand their investments to offer solutions to the need. In this regard, they will help maintain the sales of the company and develop platforms for future growth. Companies should further adopt new ways of operation to ensure consumer satisfaction; for example, companies can take virtual sales upon which they provide the safety of their employees and consumers and meet the expectation of their customers (Hernandez, 2020). At the same time, companies can adjust their operating territories to align with the restriction imposed on the movement that restricts customer movements. Based on the economic conditions of the consumer’s companies should develop measures to ensure that they mean every available client to prevent sales downfall. In particular, sales leaders should develop pricing disciplines upon which they create favorable prices and offer discounts on their products to increase uptake. To ensure financial stability, companies can also identify their current liquidity options upon which they can develop a management plan (Nimmo, 2020). The adoption of the outlined strategies will help maintain the resilience of a company and help maintain its profitability. In relation, the adjustment strategies adopted by a company may deny the relevancy of claim that Covid-19 has facilitated the non-performance of a contract.
Argument
The contrasting scenarios present different views on the legibility of Covid-19 in justifying the non-performance of a contract. On one side, the argument explains the role of Covid-19 in destabilizing the market conditions that further affect the operation of a company. On the other hand, contrary evidence denies the relevancy of the claim outlining the possibility of operating alongside the development of the pandemic based on the measures adopted to ensure continued operation.
About the first argument, the claim has relevance since some companies might lack the capacity to adjust to the new working environment. In this regard, some services demand the involvement of both the consumer and service provider for them to be viable. In return, the aspect of distancing in the course of service delivery cannot apply to facilitate the closure of such services. Massage, hair salon, tattoo parlors, and other beauty companies serve as a critical example of companies that have been ordered to close by the government owing to the risk involved with contracting the virus in the course of service delivery (Alcorn, 2020). The move oversees the breach of the existing business contracts since employees get laid off temporarily, whereas companies incur losses.
Furthermore, companies may oversee the decline of their revenues owing to low service uptake based on the restriction imposed by the government. The transport sector serves as an example upon which the number of passengers has significantly reduced based on the curfews imposed by the government. Similarly, people have restricted their movement to limit the risk of contracting the virus. The move has facilitated job losses among drivers who drive passenger vehicles and losses related to a smaller number of passengers. The regulation of company revenues affects their financial stability upon which they get forced to shut down their businesses. Most restaurants have shut down their services owing to the increased cost of production and low sales that develop financial instability (McCarthy, 2020).
On the other hand, some companies have proved their stability through adequately adjusting to align with the demands developed based on the pandemic. Among the key companies that have changed their operations include Amazon Company. In relation, Amazon company has restructured its working space to enhance social distancing and improve hygiene through frequent spraying of disinfectants and cleaning (Amazon.com, 2020). Furthermore, the company has urged employees who can work from home to do so until 2nd October to help maintain the distancing within their working premises. Also, the company has offered employees with protective clothing and undertakes frequent checks to identify the health conditions of their employees. The company further provides comprehensive health benefits to its employees to ensure they have access to proper medical care and limit their chances of contracting infections. The company also ensures the safety of its customers by offering them masks and cleaning services in all physical stores. Amazon has further identified the essential products in the course of the pandemic upon which it highly stocks them to meet the high demand. To further increase the number of consumers, the company has restricted price gouging to ensure fair prices for their products. The company has further adjusted its online services upon which it incorporates a front-porch delivery system that limits the contact of employees and consumers. In this regard, the development has replaced the signing options upon which goods get delivered without the demand for a sign from the consumer. The move has overseen the development of company operations and maintenance of its market share. The strategies further seek to improve the future performance of the company by enhancing existing services to attain the satisfaction of consumers.
Critique
The argument that Covid-19 cannot be used as a justification for non-performance of a contract is biased since it an also fit for giant companies that can adjust their services to meet the requirement placed to mitigate the risk of contracting the virus. Furthermore, government restrictions may inhibit the adjustment through the closure of an entire industry. In relation, the impacts of Covid-19 can serve as an excuse for non-performance of a contract more since most companies have witnessed adverse effects upon the occurrence of the pandemic. In consideration, companies suffer from financial incapability owing to reduced sales and increased production. The factor has further lead to losses and regulation of working staff to minimize the cost of production.
Conclusion
The impact of Covid-19 varies within various companies upon which giant companies have taken advantage of their financial capability to develop changes within their organization and enhance continued performance in the course of the pandemic. On the other hand, small and medium companies have identified the impact of Covid-19 owing to their incapability to transform their businesses to align with the demands posed by the Coronavirus disaster. In return, they incur various business challenges that facilitate losses and develop the need to lay off some of their employees to reduce the losses incurred. Similarly, other companies have been forced to shut down their services owing to their vulnerability in contracting the virus and high losses that affect average performance. Based on this review, Covid-19 pandemic can serve as an excuse for non-performance of contracts within medium and small companies. However, the epidemic cannot serve as an excuse among giant companies since they can adjust to the required working environment.
References
Alcorn, C. (2020). Hair salons, tattoo parlors, and other beauty shops ordered to close indefinitely in four states. Retrieved from www.google.com/amp/s/amp.cnn.com/cnn/business/coronavirus-barbershops-salons/
Amazon.com. (2020). Amazon’s Covid-19 blog: daily updates on how we’re responding to the crisis. Retrieved from www.google.com/amp/s/blog/aboutamazon.com/company- news/amazons-actions-to-help-employees-communities-and-customers-affected-by- covid-19
Fishman, S. & Fitzpatrick, D. (2020). Breach of contract and Non-performance. Retrieved from www.layers.com/legal-info/buiness-in-law/small-business-law/breach-of- contract-and-non-performance.html
Ganado, M. & Attard, C. (2020). Covid-19 workforce challenges and tips. PWC Malta. Retrieved from www.pwc.com/mt/en/publications/humanreosurces/covid-19- workforce-challenges-and-tips-business-continuity.html
Hernandez, J. (2020). Covid-19: Balancing cost and experience to emerge resiliently. KPMG. 1-4
McCarthy, A. (2020). These Dallas restaurants have permanently closed during the Coronavirus pandemic. Retrieved from www.google.com/amp/s/dallas.eater.com./dallas-restaurants-closed-permanently- during-coronavirus-pandemic
Nimmo, B. (2020). Business continuity in the Covid-19 world. KPMG. Retrieved from home.kpmg/xx/en/home/insights/buiness-continuity-in-a-covid-19-world.html
Quin, Y & Chu, E. (2020). Business challenges and considerations for the C0vid-19 outbreak: Mainland China and Hong Kong SAR. ACCA Member survey. 1-26
United Nations Development Programme. (2020). Covid-19 pandemic: Humanity needs leadership and solidarity to defeat the Coronavirus. Retrieved from www.undp.org/content/undp/en/home/coronavirus.html