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Common COVID-19 Business Law Issues

With the COVID 19 pandemic and the necessary government response dramatically affecting businesses in Alberta, business owners and managers need legal advice now more than ever.  This applies whether their businesses are closed, able to operate in a limited way, or in full operation providing what the Alberta Government has indicated are essential services or products.   Even though the primary focus is on the economic challenges that most businesses are facing, ignoring the legal aspects of such challenges could be detrimental. Business owners and managers should seek legal advice regarding their legal relationships that are a part of their businesses, as the effects of the current situation are sweeping.  Lawyers can also assist business owners and managers to negotiate satisfactory resolutions to the conflicts that arise in these difficult times. 

The legal relationships business owners and managers may need to address include but are not limited to the following:

  1. Employees
    1. If a business has employees, there are legal obligations that continue in crisis, whether there is a layoff or an increase in overtime.  Business owners and managers must consider many factors in both these scenarios.  
      • The starting point would be the employment contracts that are in place. If necessary, then to seek legal advice regarding employment contracts, or in some cases, to take the necessary steps to ensure that there are written employment contracts in place.  
      • The employment contracts must also comply with the applicable legislation, which is also an important consideration. 
    2. If a business has employees who continue to work, then the employer must also be mindful of the need to ensure that there are appropriate measures in place to protect them.  Some examples of this would be ensuring that employees are able to practice social distancing, with each other as well as any customers or clients, setting up appropriate barriers between employees and customers, and ensuring facilities for handwashing and hand sanitizer are available.   In some circumstances, providing personal protective equipment such as gloves and masks may be necessary, depending upon the occupation or role of those employees. Employers may also be obligated to take preventative measures or even to shut down if any of the employees are not well or have symptoms of the COVID virus.  If businesses fail to take appropriate steps in such circumstances, even in situations in which there is a reasonable doubt, there is a possibility it may face claims from employees and their families or from others who could trace their infection to an association with the business. Whether or not such civil claims are successful, many such businesses may still have difficulty recovering the good will enjoyed before. 
  2. Landlord Tenant issues
    1. The dramatic downturn affects businesses that are landlords, whether they are leasing commercial or residential properties, as well as businesses that are tenants of such landlords.  
      • Ideally, both the landlord and the tenant would negotiate a reasonable arrangement that leaves them both in the best possible position until the COVID pandemic crisis is finally over.   Depending upon the circumstances, in general, it is better for both the landlord and the tenant to maintain their relationship if possible so that they both are in a position to continue and to recover, though this will likely take some time.  
    2. Business owners and managers, and Landlords and tenants should review whether they have any insurance coverage available for this kind of situation.  They may also qualify for some of the government assistance programs available to lessen the dramatic economic downturn that the measures needed to prevent the spread of the COVID 19 virus has caused. 
    3. After checking to see whether negotiation or taking advantage of insurance coverage or government assistance programs is helpful, then the next step would be to review the formal written lease that is in place.   Lawyers can assist with this process as necessary. 
      • Many commercial leases have relevant provisions or clauses that refer to times when the tenants are not able to operate their businesses, some of which could apply to the situation created by the COVID  pandemic.  
      • A word of caution is that the possibility of businesses closing because of a pandemic was not likely contemplated when most existing leases were drafted.  Many provisions may also not apply because the measures taken to prevent the spread of the COVID virus are temporary; at least we hope at this point that the situation will not continue longer than a few months.  Business owners and managers would be wise to seek legal advice regarding how the courts may interpret such clauses and how such clauses apply to their situation.   
    4. For residential leases, even though the Alberta government has temporarily suspended the enforcement of evictions for nonpayment of rent and utilities, tenants must comply with other aspects of their lease agreement such as maintaining the property, and not damaging it, and keeping reasonably good relationships with the landlord and their neighbours.   If payment arrangements are required, then these should always be in writing and signed by both the Landlord and Tenant. 
  3. Supply and Receipt of Services
    • Whether the supply of services is for an industry not considered essential or not, businesses may still have more difficulty providing services or complying with timelines and demands.  
    • Again, the best approach would be to attempt to negotiate a variation on any existing contracts to accommodate the challenges that both the supplier and recipient are experiencing.  Lawyers can assist with this negotiation and with the variation of the existing contracts if an agreement is reached. Any variation of a contract should be in writing and signed by both the supplier and the recipient or by all parties to the original contract.  The hope is that everyone will act reasonably during these difficult times. 
    • If negotiations are not successful, then business owners and managers should review their contracts and obtain legal advice as necessary.  
    • Worth noting is that many contracts have terms that include remedies for default, though if litigation results, then the Courts may consider the extraordinary circumstances, depending upon whether the COVID pandemic measures were the primary reason for the default, but business owners and managers should keep in mind that there is always a cost and no guarantees.  That said, protecting everyone’s else is everyone’s primary concern right now.  
  4. Supply and Receipt of products and materials
    • Even though the transportation industry is still operating, there may still be situations in which businesses cannot fulfil contracts for supply of products and materials cannot for reasons related to the COVID pandemic.  In those situations, the recommended steps for business owners and managers to take are similar to those for the supply and receipt of services, to negotiate a variation to the existing contracts if possible, and to seek legal advice and help before the problem becomes more difficult to deal with.   

We hope that this article has provided a helpful guide for our local business owners and managers.  

Our lawyers who practice business law are also available for a consultation at a reduced rate to help you with your legal matters related to the COVID pandemic. 

​About Simone

Simone has a general practice based upon her broad range of experience that includes civil litigation, wills and estates, real estate, commercial, business, and family law.  Her more than twelve years experience as a paralegal has helped her to focus on the practical and theoretical aspects of the law, the details.

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About Shim Law

Shim Law is a multicultural law firm that provides legal services to clients in Calgary and around the world. With lawyers fluent in up to 20 languages, we can provide accurate legal representation regardless of language barriers. Our practice areas include family law, real estate law, and more.

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