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War, sanctions and need to amend contracts

War, sanctions and need to amend contracts

Negotiations to change the contract between the contractor and the client should be based on cooperation and readiness to reach a solution, not to present an ultimatum or maintain an inflexible situation, write Maria Veermäe and Ringo Heidmets from the law firm Glimstedt.

Following the outbreak of the COVID-19 virus pandemic in 2020, and for the time being, we can say that this is the second time in the last two years that businesses have to look for solutions quickly to avoid irreversible economic difficulties for their business.

The ongoing war in Ukraine and the additional sanctions on Russia are exacerbating, among other things, the construction sector’s concerns about ongoing projects and have certainly given rise to changes in the private sector and public procurement agreements between the parties. It is clear that the situation will not improve in the near future, which means that the negative effects of the war in Ukraine on 24.02.2022 and the accompanying Russian sanctions on the construction sector and other areas in the form of material and labor shortages will not resolve in themselves. An unexpected situation requires immediate, transparent and understanding communication between the parties, including consideration of each other’s interests and opportunities, in order to find a way to further perform the contract to the satisfaction of the parties.

In the Äripäev article Maria Veermäe and Ringo Heidmets cover the following topics:

  • Need to amend contracts
  • Opening of negotiations to amend the agreement
  • Possibility to amend public procurement contracts
  • War as an excusable circumstance

Read more on Äripäev’s website (article in Estonian) or contact our team: tallinn@glimstedt.ee: tallinn@glimstedt.ee

Link to the article: https://www.aripaev.ee/arvamused/2022/03/17/maria-veermae-ringo-heidmets-soja-ja-sanktsioonide-ajal-tasub-lepingute-muutmiseks-koostood-teha

Contacts: Maria Veermäe, Ringo Heidmets