COVID-19

challenges &
Solutions

For Businesses & Startups

 Preface

The emergence and accelerated spreading of coronavirus disease (COVID-19) has weakened markets and weakened supply
chains, disrupting the global economy. It also forces companies to answer a host of tough questions about how they can and
should conduct business in the midst of a global public health crisis.

Below, we outline the issues that companies and their boards should consider as they navigate this uncertain era. Many of
these concerns are sector-agnostic, but all organizations must also resolve problems relevant to the sector and the
regulatory environment in which they function.

LexCollar also established a multidisciplinary task force to resolve the wide range of administrative, transactional and
enforcement problems that companies face when reacting to COVID-19.

This Article is for informational purposes only. The information and/or observations contained in this newsletter do not
constitute legal advice and should not be acted upon in any specific situation without appropriate legal advice. The views
expressed in this newsletter do not necessarily constitute the final opinion of LexCollar – Advocates & Consultants and
should you have any queries, please feel free to contact us at offices@lexcollar.com
 Recommendations for Company Policies
A CHECKLIST OF ISSUES TO CONSIDER
Recommendations for Company Policies
1. Review and update company policies: 2.a) Communication Plan: Develop/Update a
communication plan to communicate information to your
a) Ban non-essential travel employees.
b) Monitor employees for symptoms
c) Require employees who exhibit symptoms to stay b) Infectious Disease Outbreak Response Plan: Create an
home, or send home immediately if symptoms Infectious Disease Outbreak Response Plan (IDORP) for
develop at work the company. Every company should have an IDORP in
d) The company may not require COVID-19 testing place.
e) Communicate expectations to employees regarding
behavior for prevention of spread of the virus IDORPs should include:
f) The fact that the CDC has labeled this a “pandemic”
means there is a different set of rules that govern • Evacuation procedures
what the company may do as compared to regular • Communication policies including who should
ADA policies that must be followed by the company disseminate the information
g) You must continue to keep employee health • Prevention plans for the spread of the disease
information confidential • Policies for employees who contract the disease
 Recommendations for Company Policies
A CHECKLIST OF ISSUES TO CONSIDER

Recommendations for Customer/ Client Policy

a) Review contracts: you should review contracts for

provisions related to force majeure to determine if COVID-
19 would invoke this clause. If force majeure does apply,
determine your requirements to invoke same.
c) Assurances from Suppliers: Consider requesting
assurances from your suppliers that they are putting
contingency plans in place to fulfil their contractual
obligations with your company.

b) Review fulfilment requirements: evaluate whether the

company could fulfil their obligations under the contract
with a certain percentage of employees off work to
determine your critical levels.
 ”
“TIMELY legal action is the best remedy against
potential law-suits and non-compliance”

—Arvind Sehdev, advocate - partner ( LExCollar )

 Force Majeure
Clause
Force majeure clauses are contractual clauses which alter parties' obligations and/or liabilities under a contract
when an extraordinary event or circumstance beyond their control prevents one or all of them from fulfilling those
obligations.

What about contracts negotiated now? Force majeure clause may not be of benefit to the parties since the
existence of coronavirus COVID-19 is already known. A better approach would be to incorporate a provision
wherein a specific relief with regard to coronavirus COVID 19 is duly captured, whether this is a disruption to
supply chains and labour resources or the result of the government introducing any emergency powers. The exact
relief and provisions therein would depend on the precise nature and location of the project and therefore the
legal experts would have to ensure mindful drafting and capturing of the relief.
 Practical steps if seeking to rely on a force majeure clause
01 02
Consider in detail the Explore alternative means of
precise wording of the force performing, reducing delay, or
majeure clause minimising any loss to the
other party.
04 05
Do not attempt to rely on If there is no force majeure
increased costs to excuse clause, consider frustration,
non-performance or delay, as but be aware of the high bar
this will not usually be for establishing that a
sufficient contract has been
frustrated.
03
Serve any notices as
required under the contract,
as soon as possible and in
accordance with the notice
provisions.
06
Consider other routes and
remedies, either under the
contract or through agreeing
binding variations to
contracts with other parties.
E-Contracts
and their Validity
 What are e-contracts

Electronic contracts or e-contracts are

contracts which are not entered on physical
papers but which are executed in the
electronic form. The same has emerged due
to the need for ease, efficiency and speed.
An electronic or a digital contract (e-
contract) is an agreement which has been
drafted and signed in an electronic form.
Examples or types of electronic contracts:
i. Employment Contracts
ii. Consultancy and Contractor Agreements
iii. Sales and Distributor Agreements
iv. Non-Disclosure Agreements
v. Development and Licensing Agreements
 3 Categories of e-contracts you will face when online
01
BROWSE WRAP
AGREEMENT
This agreement is considered as a browse wrap
agreement that's supposed to be binding upon
the contracting party with the aid of the usage of
the website, those encompass the consumer
policies and phrases of service of websites along
with Flipkart or E-bay and are in the shape of a
“terms of use”, a “person settlement” or “terms
of service”, which can be used because the
hyperlinks at the corner or backside of website.
02
SHRINK WRAP
AGREEMENT
These contracts are the license
agreement via which the terms and
conditions of the agreement are enforced
upon the contracting events and are
commonly present on the plastic or in
manuals accompanying with the
software program merchandise which
the customers buy.
03
CLICK WRAP
AGREEMENT
These contracts are the license agreement
via which the terms and conditions of the
agreement are enforced upon the
contracting events and are commonly
present on the plastic or in manuals
accompanying with the software program
merchandise which the customers buy.
INCREASE IN THRESHOLD

At the media briefing held on 24 March 2020, the

Finance Minister announced that the monetary
threshold of default for filing an application for
initiation of corporate insolvency resolution
process under the IBC shall be increased to INR
1,00,00,000 (Indian Rupees One Crore) from the
Possible
effects of
current threshold of INR 1,00,000 (Indian Rupees
One Lakh), "so that we can prevent the triggering
of defaults against MSMEs”

This change has been brought to force with

immediate effect vide Notification dated 24 March
2020 (Notification) by the Ministry of Corporate
COVID-19 on
insolvency
Affairs. Hence, section 7 (Initiation of corporate
insolvency resolution process by financial creditor),
section 9 (Initiation of corporate insolvency
resolution process by operational creditor) and
section 10 (Initiation of corporate insolvency
process by corporate applicant) applications can
be filed under the IBC only if the amount of default
proceedings
by the corporate debtor is INR One Crore or more.
 The economic and legal impact of COVID-19 and the measures taken to prevent its spread could see
many otherwise profitable and viable businesses undergoing financial distress. Already, businesses
across all industries are reporting cash shortages, sparking fear of failure amongst the companies and
its employees. While businesses of all sizes are likely to suffer, MSMEs may have a more difficult time
surviving. The measures announced by the Government have been designed to give confidence and
assurance to the industry to continue their trade without the pressure that they might enter their
enterprises into insolvency.

However, as of now, the full impact of COVID-19 and lockdown measures is not known. Other than
economic relief packages, large scale bankruptcy reforms may need to be undertaken, to help both big
and small companies that may become distressed in the very near future. Simultaneously, impetus and
reforms are needed in the financial sector to not only prevent any bankruptcies in the sector but to also
aid them in giving relief to the businesses. Besides this, the debtors and creditors would need to work
together to find solutions that allow distressed companies to weather the crisis.

Ordinance restricting any new case under Section 7,8,9 IBC is a BIG relief
 REAL ESTATE

The rapidly developing coronavirus disease 2019

(COVID-19) pandemic, commonly known as the
“coronavirus,” is having widespread impact on
INDIAN businesses and the real estate sector.

This presentation further draws together a number

of key issues affecting owners and occupiers of
commercial/residential properties in India to
consider as part of their contingency planning.
 Issues surrounding Real estate Sector

Rent Suspension or Raw Material

Business Insurance License Renewals
Amendment Supply Chain

Terminating or Employee
Break Clause Future Sales
Avoiding Leases Agreements

Non-Payment of Future
Force Majeure
Schedule Based Labor Acquisition Development
Plan
Government
Bank Payments
Construction work Frustration of Compliances
suspended Agreements
 CONCLUSION

• For businesses likely to be affected by coronavirus COVID-19, the following steps could be beneficial:

• Be up to date with the latest guidelines issued by the WHO and the Indian government;

• Review any obligations in leases, construction contracts and other real estate contracts;

• Insert epidemic wording into any new real estate contracts;

• Provide adequate cleaning measures to frequently touched surfaces;

• Make suitable arrangements for laptops to be taken home on a pre-emptive basis for remote or
homeworking for employees;

• Prepare IT systems for potential additional remote-access usage and capacity enhancement.
THANKS!
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