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Ireland prepares for Covid-19 effects

following the outbreak of the sars/corona virus COVID-19 in Ireland, and following the measures taken and recommend by the Irish Government and the Health Protection Surveillance Centre the important points for business in Ireland are:

  1. Schools, colleges, universities, creche and child care services in Ireland are all closed by order of the Government. This could persist for up to sixteen weeks.
  2. Bars, pubs and clubs are closed until the 30th March. This deadline is expected to be extended.
  3. Retail businesses are allowed to operate albeit large retail stores are closing voluntarily. Some questions remain as to whether these are commercial decisions as much as public health concerns.
  4. Online business is not so far affected. Face to face aspects of such business e.g. deliveries are being restricted on a business by business basis.
  5. Postal services remain fully operational with restrictions in place within the post offices
  6. Members of the Banking Federation of Ireland are introducing payment holidays for affected businesses.
  7. The banks are so far committed to maintaing operational processes during the crisis. So far there is no impact on the drawndown of loans or mortgages for transactions due to complete.
  8. The Court Service of Ireland are closing to all but urgent business daily updates are posted here
  9. The Irish Government has introduced a range of supports for impacted businesses.
  10. Medical practices and pharmacies are continuing. Pharmacies are restricting access to customers. Patients are being urged to stay away from GP practices if symptoms present themselves. Tests are being organised at the location of the patient in question.
  11. Professional services are continuing in tandem with business being done. Law practices such as the members of the Abacus Legal Network remain open with online services available.

The question of rental payments has become an issue for closed pubs and clubs. Under a typical commercial lease or letting agreement in Ireland there are no exceptions for payment of rent based on “force majeure” events such as the sars/corona virus COVID-19 in Ireland. Whilst each individual letting agreement should be looked at in its own case the usual provisions do not provide for payment breaks from rent other than in circumstances of destruction or partial destruction of the business premises by e.g. flooding or fire.

Arrangements therefore for the suspension of rent payments for business premises in Ireland are a matter of agreement between the Tenant and the Landlord. This was equally influenced by the obligation of any Landlord to bank finance affecting the property which itself was reliant on the rent being paid. Following the move by the pillar banks in Ireland, Landlords can and should now apply for payment breaks for businesses closed as result of the corona virus outbreak in Ireland. This may alleviate the need to pay rent in the short term. This also raises the question as to the legal position of the payment break vis a vis the terms of the lease.

Where parties agree to either rent freeze or a rent reduction the following options can be considered to deal with the legalities of such agreement:

  • The parties acknowledge the rent is waived for the period of closure.
  • The parties agree that the rent is suspended for the period of closure. On re-opening the rent remains due and the outstanding rent is added to the rent for the remaining term of the lease and apportioned over each payment.
  • The rent is suspended and the parties agree that it remains a liability to the Landlord to be discharged at a fixed point in the future e.g. following Christmas trade.
  • A combination of variation of the above

Any variation of the terms reserved by the lease should be properly reduced to writing as either an “open” or “without prejudice” agreement between the parties. Agreeing arrangements in direct exchanges of correspondence is classically an opening for litigation at a later stage. Where the context and terms of the agreement are not properly cited and recorded, any doubt as to what was precisely agreed may be exploited by either party.

If your business has been closed by the corona virus and you need assistance in reconciling your legal position with your Landlord or Tenant, or any other operational issues arise CONTACT US today for a consultation we have online video chat available with file sharing capacity. For general business information you can also consult our information section.