Practical Tips for Contracts in Uncertain Times
Copyright © 2020 Deborah J. Hylton
Continuing impacts of the COVID-19 pandemic leave organizations across the globe facing uncertain forecasts.
The unpredictability of economic recovery makes managing current and contemplated contractual commitments
challenging. Drawing on my experiences as a corporate executive, director and transactional lawyer, here are
practical tips for contracting in these times.
Expand the view of value. One’s own organization needs to benefit from the transaction, and so does the other party. Now more than ever, economic viability of all participants in a supply chain is critical. Business
leaders(1), strategists(2) and legal experts(3) alike call for delivering value to all stakeholders, including community and employees. Data demonstrates that successful negotiators “cared as much about the other party’s success as their own.”(4)Plan for uncertainty with dispute prevention processes. Shifting circumstances—the status quo for the
foreseeable future—increase the risk of disputes due to differential impacts. Mitigate that risk with dispute
prevention arrangements that commit to open communication, regular and meaningful review of performance and relationship, early identification of situations that may lead to dispute, and avoiding litigation or arbitration.Utilize tailored dispute resolution solutions. Supplement traditional escalation clauses with a pre-selected
neutral to preserve good will and save valuable time.Appoint a standing neutral or relationship facilitator. The relationship facilitator is selected for industry familiarity, mutual respect and confidence as a facilitator and mediator. The facilitator
participates in regular meetings of the parties and may, only if requested, facilitate escalating
management discussions of conflicts. Alternatively, designate a standby mediator pre-selected on the
same basis, to be briefed only when mediation is required.If impasse arises after escalated management discussions, the relationship facilitator or standby
mediator can quickly step into the classic role of mediator. If the parties still can’t agree an outcome,
the mediator may offer a non-binding recommendation that the parties may accept or reject.Submit discrete issues to binding arbitration on an expedited basis, with a pre-selected arbitrator
empowered to decide the issue. Resolving disputes promptly returns the parties to focusing on
successful performance and shared value.
Tailor solutions for classes of contracts. For companies with many existing contracts upended, efficiently
managing restructuring and amendments is essential. Develop bands of solutions for categories of
agreements, tailoring the dispute prevention and resolution techniques according for each category.
1 Business Roundtable, “Statement on the Purpose of a Corporation,” August 19, 2019.
2 Porter, Michael E. and Mark R. Kramer. “Creating Shared Value.” Harvard Business Review 89, nos. 1-2 (January-
February 2011), 62-77.
3 Eccles, Robert G, Leo E. Strine, Jr. and Timothy Youmans, “3 Ways to Put Your Corporate Purpose into Action.”
https://hbr.org/2020/05/3-ways-to-put-your-corporate-purpose-into-action
4 Grant, Adam. “In Negotiations, Givers are Smarter Than Takers.” New York Times (2020, March 27).