The German business newspaper Handelsblatt ran an article (in German) last week discussing the issues facing German companies with US subsidiaries during the coronavirus. While a lot of business can be done remotely, much of Germany’s export economy is based on industrial goods, and those goods often require in-person service or installation. Given that most Germans cannot travel to the United States right now, in-person service is impossible. Since travel in the other direction is largely forbidden, US workers can’t be trained in Germany to do the work themselves either. That makes the inability to travel a massive thorn in the side of German business.
This thorn has a legal aspect as well – many sales and service contracts require in-person service, and mid-sized German manufacturers may not have enough (or any) technicians located in the US to provide the necessary services. They are used to sending technicians over as needed, but that’s obviously not possible now. Similar problems may arise where warranty service is needed on site, but cannot be provided due to the travel restrictions. In either case, companies are looking at both a customer service issue and a legal issue, and the resolution of one may in fact complicate the other.
Of course, contracts usually try to address these eventualities. For example, in some instances, force majeure clauses may allow for delays in service or termination of the contract in the event of certain disasters, but it’s not always clear if and when this particular disaster is covering, since the language in those clauses varies widely. On the customer service side, delaying service or terminating the agreement doesn’t help the end customer who may be sitting in the US with non-functioning equipment. It also doesn’t necessarily help the German vendor, since a customer which has experience this type of business interruption might favor a local (or larger) supplier in the future.
As a result, many mid-sized companies are getting creative with remote services. Unfortunately, sometimes those efforts also backfire. What happens if the instructions given over Zoom or Google Meet are unintelligible, or if the customer’s employee makes an error which damages or destroys the product which is being serviced? Some unwitting customers may find that they’ve voided their own warranty by accepting an offer to do the work themselves, even with the vendor’s assistance, and others just enter a gray area where the risk and liability issues are muddied, with no clear resolution when things go wrong.
Especially in high risk industries, manufacturers who agree to this type of service (and their customers) may want to consider a brief agreement or amendment to their sales and service contract which allocates those risks during the pandemic. That ensures that both parties can move ahead secure in the knowledge that the business relationship on which both parties rely survives the pandemic as well. If the risks are too great to reach agreement, maybe that’s a sign that you need to consider your options for termination after all, even if it does sour the business relationship.
Unfortunately, the travel limitations seem likely to stay for a while, given German skepticism of the United States’ handling of the coronavirus, so it looks like we might be dealing with these kinds of risks for a while as well. We might as well deal with them.