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The financial impact of your business from Coronavirus (COVID-19) and your options

COVID-19 and your Business

It has been a a difficult time form some small businesses that have been impacted from the pandemic of Coronavirus (COVID-19).

There are several incentives and stimulus package that will be introduced soon for eligible businesses. The aim is to cushion your losses so you are able to bounce back once the economy recovers.

If you cannot pay your rent for your business

If you cannot pay the rent due to the current crisis you are in breach of your lease agreement. There are consequences for breach of contract and penalties under the contract that will apply for the party who is in breach.

Intially laws were introduced to avoid evictions, this does not mean that you will not be held liable for the breaches under the lease. As per your lease agreement there are several actions that can be taken against the tenant for breaches under the lease.

If you are a Sole Trader or if as a Officeholders you have listed your personal assets as guarantors in the lease, then in such circumstances the assets that are held in your personal name (As a guarantor) or Sole Trader can become subject of the claim. The corporate structure you are operating under will determine your liabilities under the lease.

Force Majeure Clause

If your contract has a Force Majeure clause then in simple words this applies in unforeseeable circumstances that prevent the parties to the contract from fulfilling the terms. There are several conditions that are assessed on case-by-case basis.

Some contracts are specific on the events that would trigger the Force Majeure Clause. In the event your contract does not have Force Majeure clause then you will need to access if your contact has been "Frustrated". This can happen when events after signing your contract have occurred (Without fault of either party) that make it incapable for the contract being performed due to the unforeseen event.

What should businesses do

The first thing you should do is to get your contract reviewed from a legal professional to see the options available to you. There are several consequences under the lease agreement which may put you under risk in future in the event your Landlord pursues you for damages under the agreement. Your legal representative can also assist in negotiating with the Landlord for the best possible outcome.

There are several incentives available under the stimulus package and you should seek professional advice to see if you are eligible and if any relief can be offered for you to cope with the crisis.


There are legal and financial consequences that the parties to the contract should know when relaying on the applicable - Force Majeure or Frustration of contract.

This is a complicated area of law you must seek legal advice to understand your liabilities.


ZMK Lawyers,

Lvl 13, 227 Collins St, Melbourne, 3000

Phone: 0449 860 517

Disclaimer: The reader acknowledges that the information made available is for educational purposes only as well as to give you general information and a general understanding of the law, it is not to provide legal advice.

By reading our blog, “tweets” and monthly legal articles you understand that there is no client relationship created between you and ZMK Lawyers.

ZMK Lawyers legal blog, “tweets” and monthly legal articles is not legal advice. You should not act upon this information without seeking advice from a lawyer/solicitor.


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