Businesses need to consider how Brexit may affect their agreements with suppliers, customers and other trading partners.
We have highlighted some of the key issues below, but for a more detailed discussion, see our briefing "Brexit: the Impact on Contracts".
What should you be doing now?
Consider whether contracts may need to be amended or contingency plans made to address any of the following concerns:
- Will Brexit or events associated with it adversely affect (i) your ability to supply customers; and/or (ii) any aspects of your supply chain? See further: Brexit: Supply of Goods and Brexit: Supply of Services.
- Could Brexit or events associated with it (e.g. market volatility) constitute an event of "force majeure", "material adverse change" or other event entitling one party to terminate or to be relieved of its obligations?
- Does your business have long term contracts which are likely to be affected by Brexit? Does the contract need to be amended to address any issues not anticipated when the agreement was entered into?
- Is there a significant currency risk? Can this be managed e.g. by hedging or by obtaining payment in euros on contracts with customers based in the EU and then using those funds to pay suppliers based in the EU?
- Is the "Territory" in relation to e.g. any distribution agreements or licences defined by reference to the EU? Does the contract need to be amended to make clear that, post-Brexit, the UK is intended to be included or excluded, as the case may be?
- Whose responsibility is it to comply with and/or to bear the cost of any customs formalities, import duties or other additional obligations which may be imposed as a result of Brexit (but may not have been anticipated when the contract was signed)? See: Brexit: Customs Arrangements.
- Are changes needed to any provisions dealing with VAT? See: Brexit: Tax.
- Will Brexit lead to uncertainty over dispute resolution mechanisms in the contract? See: Brexit: Dispute Resolution.