FEATURE CONTRACT MANUFACTURING


GET YOUR BREXIT PLANNING DONE Considering commercial contracts


With the fate of Brexit seemingly sealed, companies can now ask the vital questions on how to proceed. Karen Holden, founder of A City Law Firm, looks to settle nerves by asking key questions on the importance of securing commercial contracts


I


n the wake of the recent election result held on 12 December 2019, Boris Johnson, the Conservative prime minister, had promised to, in his words, “get Brexit done”. For or against him, Mr. Johnson rewarded patience and voters’ ultimate decision by securing the withdrawal bill in the House of Commons on 20 December 2019: this will see the UK leave the EU by the approximated end of January. In light of this, remaining in the EU is no longer a possibility; businesses should start making Brexit plans to ensure they are prepared. The initial concern might surround


the exact manner of the UK’s exit from the EU: it remains shrouded in mystery, whether it will be with or without a deal. Either way, businesses will benefit from thinking ahead to the possible effects and implications of Brexit on their commercial contracts, and should consider the insertion of Brexit clauses.


COMMERCIAL CONTRACTS AND WHAT TO TAKE NOTE OF For those uncertain business owners, there are relevant concerns for a contracting party, for both pre-existing contracts and contract arrangements that are upcoming. In order to safeguard the company’s position, its owners should have regard for the following issues, particularly if: 1. The contract holds a cross UK-EU border element, for business- to-business supply of goods or services, for example.


2. If a contract term will end after the UK’s expected departure from


26 FEBRUARY 2020 | ELECTRONICS


the EU on 31 January 2020, and as such, that contract will be up for renegotiation.


3. Asking if a commercial contract with a business in the EU will be affected by Brexit? Reviewing this is key.


If any of the above applies, one should consider inserting a Brexit clause or contractual Brexit addendum contract into any existing or future contracts, as failing to do so could have implications.


HOW WOULD A “BREXIT CLAUSE” HELP BUSINESSES?


A “Brexit clause” or a “Brexit addendum” is a contractual clause or document that


is a contractual clause or document that triggers some change in the parties’ rights and obligations as a result of a defined event occurring i.e. Brexit itself. his would state that, for


rights and obligations as a result of a defined event occurring i.e. Brexit itself. This would state that, for


example, Brexit would not act as a force majeure event and would not be able


and would not be able to end or frustrate a contract. The effect


contract. The effect of such a clause or agreement is very similar to any force


similar to any force majeure clause


that may attempt to govern what will happen, should the


at may attempt


happen, should the legal and business


environment change in the future.


Although Brexit


could affect almost every aspect of doing business,


A City Law Firm www.acitylawfirm.com www.acitylawfirm.com / ELECTRONICS


The contract that binds a British company and a European client does not have to break: ironic as it sounds, a Brexit clause could make or break it


its actual impact is still unknown for businesses. For some contracts, the most a Brexit clause may offer is a binding requirement that the parties must attempt to renegotiate aspects of the contract, and that business will continue as normal between the parties. For other contracts, where it may be possible to specify consequences of certain events, the risk remains that events may occur for which the parties have not made a provision.


A Brexit clause is not a ‘silver bullet’


that will solve all Brexit-related issues and problems, but at the very least, it provides parties with certainty that the other collaborator will not hold the contract to onerous terms without the possibility of negotiation.


it provides parties with certainty that the other collaborator will not hold the contract to onerous terms without the possibility of negotiation.


IS DOING NOTHING AN OPTION? The risk to a business, for failing to draft an address to Brexit, is that a party could be obliged t


he risk to a business, for failing to draft an address to Brexit, is that a party could be obliged to continue to perform its obligations in


termination by default; an action for damages or litigation could commence as a result.


could be unaffordable. An affected party may be unable to renegotiate its contract, and so may find itself in breach of contract and facing termination by default; an action for damages or litigation could commence as a result.


Brexit-related events, doing so has become commercially unattractive, or worse: the cost could be unaffordable. An affected party may be unable to renegotiate its contract, and so may find itself in breach of contract and facing


to perform its obligations in full, even if, as a result of Brexit-related events, doing so has become commercially


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