Why business owners should renegotiate contracts during COVID-19

Strategy is like chess.

If ever there was a time to think about using legal strategy in contracts, now is that time. Hard times make value-based decisions all that more pressing and tangible.

Many who know me know that I am a fan of the value-enabling and strategic possibilities of contracts. As Fred Rosen, former CEO of Ticketmaster fame once told me during a recent in-person interview: “contracts let you create the rules of the game.”

Many small and medium-sized business owners have to make hard choices regarding expenses due to COVID-19. One big issue is real estate. Landlords and lenders are worried about the rising number of vacancies and bankruptcies so why not approach a landlord or lender to enable a private solution workout that takes into account reduced revenues? Many landlords would prefer making some concessions in exchange for maintaining the relationship. There could be beneficial exchanges on both sides but it would require negotiation, creativity and some work.

Another item to think about strategically is risk, and insurance contracts are one main aspect of this important side of business. Now is a great time to renegotiate insurance contracts to cover business interruption and offer more flexible terms. The time for relying on boilerplate language developed by insurance standard-setting bodies is over in my opinion. It is upon business owners to negotiate the best terms moving forward.

Yet another way to engage the new altered risk and value scenario we live in is to engage your local community and chamber of commerce. There is power in numbers and having the input on these issues and support of other businesses and community members can go a long way. Strategy, it turns out, is a multi-player game.

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