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God (or Devil) is in the detail: how one clause can give companies more grief during this crisis

Can the force majeure or Act of God clause for a standard contract and the material adversity clause for an M&A become a potential deal-breaker during Covid-19? ET Prime got in touch with a legal firm and an investment banker to break down the possible impact of these clauses. We also considered the possible solutions.
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debleena-majumdar
7 Apr 2020 10 Mins Read 4 comments
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A consultant or a vendor working with a company. A startup with its co-working space provider. An author with her publisher. Two companies negotiating a merger or an acquisition. Each of these relationships has one underlying tenet – a contract. Within a contract, there’s a clause that we often ignore, but
case by case. And clarifications, like that provided by Life Insurance Council, will help allay fears and mis-representations. In the short term, it is an early warning to relook at contracts, ask the right questions to check for applicability and wherever possible, even if applicable, renegotiate as the first course of action, to try and preserve the contracts.
A consultant or a vendor working with a company. A startup with its co-working space provider. An author with her publisher. Two companies negotiating a merger or an acquisition. Each of these relationships has one underlying tenet – a contract. Within a contract, there’s a clause that we often ignore, but case by case. And clarifications, like that provided by Life Insurance Council, will help allay fears and mis-representations. In the short term, it is an early warning to relook at contracts, ask the right questions to check for applicability and wherever possible, even if applicable, renegotiate as the first course of action, to try and preserve the contracts.

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CONTRIBUTORS WHO HAVE COMMENTED ON THIS STORY

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user Debleena Majumdar Kahaniyah, Mergers and Acquisitions Writer at ET Prime, Write on mergers and Acquisitions as well as on Education

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