The COVID-19, and the various restrictions that have been implemented in response to it, are causing extraordinary business disruptions. Many organizations have had to modify their operational controls and accommodate a shift to remote working (among other adjustments). One key impact of COVID-19 involves an organization’s relationships with its IT service providers, which often play important roles in securing their data and systems. Under current conditions, some service providers may face challenges in performing this work, especially for engagements that require significant personnel resources or that require personnel to be on-site. Potential non-performance has significant consequences for service providers and their clients alike.
To prepare for these challenges, entities that have contracts with service providers (and service providers themselves) should carefully review their existing agreements and any force majeure-type provisions in particular. Although force majeure provisions in existing contracts may not specifically contemplate a global pandemic such as COVID-19, these provisions are often broadly-worded and based on events beyond a party’s control and may excuse non-performance under the contract or allocate risks and costs differently when such an event occurs.
To read our COVID-19 service provider risk mitigation checklist, click here.
Visit the Hogan Lovells’ COVID-19 Topic Center for resources and guidance on responding to the crisis