Official calls for legislative interventions

Business

By DALE LUMA
AN emergency declaration to allow contractual obligations by businesses to be broken or renegotiated will help businesses during this time.
Micro Small Medium Enterprise (MSME) Council president Desmond Yaninen said State of Emergency (SOE) Controller David Manning had the powers to make such a declaration
Yaninen was responding to queries from The National on whether the Government needed to amend laws to protect individuals, businesses and companies who might not fulfil contractual obligations due to the Covid-19.
He said all contracts should have a “force majure” clause in them that frees parties from liability or obligation when circumstance beyond the control of the parties happens.
“If they don’t, I believe the SOE controller can make an emergency declaration during this period that allows contracts to be broken or renegotiated as a result of the Covid-19,” he said.
“After the SOE, and when things returned to normal, it would be very difficult for the Government to make laws that hinder economic freedom.”
Yaninen said in the case of MSMEs, contractual obligations would include:

  • Provision of products or services under any form of supply contract. This would also include construction, etc; and,
  • Payment contacts like rentals, loan repayments, lease payments, etc.

“Covid-19 may hinder an MSME’s contractual ability to supply or make payments,” Yaninen said.
“For example, an MSME might have a three-year lease and has only operated for one year but can’t afford the rentals during this time and wants to terminate the lease with two years left.
“In that instance, there might be a clause in the lease agreement that demands full upfront payment of the balance of the two years.
“In this case, an emergency declaration might provide some cover but lawyers can correct me if I’m wrong.”

One thought on “Official calls for legislative interventions

  • A very valid point. Government need to take on board this very important issue and part of the Governments SME loan arrangement or pumping money into a commercial bank is something policy makers need to properly accommodate such situation Mr. Yalinen is highlighting.

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