What is an Operation Provision and Why is it Important?

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Lets face it, the global pandemic the world is currently battling has rocked everyone’s world. Especially that of business owners.

Not only have businesses been forced to shut down for periods of time, but they are now facing a race for survival as there are a range of rules that prohibit them from earning the normal capital they once could.

Many business owners are signed up to commercial leases—something that has really come under the spotlight since mid-March of this year. This is because the majority of businesses are legally contracted to these commercial spaces, but are now equally legally prohibited from operating from them (whether that be partially or fully, depending on what state the are in).

But the craziest part of this whole scenario is that it is not simply the businesses that are struggling. The landlords who own these commercial retail areas are also at financial risk, as they only have financial security if their tenants are doing well financially.

And this is where the continuous operation provision in commercial leases really come into play.

Defining continuous operation provisions:

So, what actually is a continuous operation provision? In short, it is an obligation for a tenant to oblige by certain operational standards and requirements in the commercial retail space they have rented. Some examples of what a continuous operation provision might require is that a business must have a certain amount of employees staffed in the space, they must utilize a certain amount of area with their stock and they must conduct the operations of their business for a certain amount of time each day.

Why is this important:

In a normal world, these expectations outlined by continuous operation provisions seem normal and completely achievable. But what is a business supposed to do when state government prohibit businesses from operating in public in an attempt to keep communities safe during a pandemic. It now becomes an impossible hamster wheel for the business—as legally they are expected to stay operational while also legally not allowed to be operational.

This is where the legalities of commercial contracts require expert advice and counsel. There are certain loopholes that experts can help businesses navigate their way through. This would eliminate the expectations and requirements businesses are expected to uphold during special circumstances—like the pandemic we are currently living through!

What you can do:

If you are a business trying to stay afloat during Covid-19, know that you are not alone and that there are plenty of ways you can continue to fight for survival. If you are in a similar situation that we have just described, where you are bound to a commercial lease with continuous operation provisions, but the pandemic is prohibiting you from meeting these provisions, then fear not!

There are a range of experts in the legal world who are well versed in commercial lease laws. You are not expected nor required to deal with this mess all on your own. Instead, you can seek guidance and clarity on what your options are any provisions you can now become exempt from.

It is important to note though that while there might be ways in which you can get out of operational provisions, you are likely to still need to continue to pay your commercial rent.

At the end of the day, businesses small and large are all in this similar peculiar situation together. No one really saw this crazy year coming, and boy did it hit us all like a speeding freight train!

But we hope that businesses find comfort in knowing it is not all doom and gloom for them. We just encourage them to read and understand the commercial lease they have signed, the expectations the provisions outline and know that help is never that far away!

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