With the implications of Brexit still unclear, now may be the perfect time to review existing contracts and re-negotiate any new contracts as Britain’s departure from the EU could have a significant impact on your contractual obligations and profitability too.
Gavin Hesketh, solicitor in Wake Smith’s company commercial team looks at some of the contractual issues affected by Brexit and why your business may require legal advice.
“Will any references to the EU continue to include the UK once we are no longer a part of the Union?”
“If the EU’s definition takes into consideration any future changes in membership, the UK will no longer be included - even if this wasn’t the parties’ intention. This issue could apply to both domestic and international contracts.”
“Tariffs may need to be paid on exporting goods into EU countries, and Non-EU countries too depending on the terms of any new trade agreements. A contract will almost always state the price of the goods e.g. £100 plus VAT and this will be the price that the customer pays.”
“If the contract doesn’t explicitly state that the price is exclusive of any tariff charges then it is highly unlikely that a supplier will be able to pass the cost on to the customer, thereby reducing the profitability of the contract.”
“It may also be in your business interests to consider including a Brexit termination clause in future contracts.”
“Although the terms of Britain’s trade agreement with the EU remain unclear, an option to terminate when Britain actually leaves the EU could be beneficial. For example, potential border controls could cause increased delivery times and costs, making it preferable to swap to a Non-EU supplier.”
“Your terms and conditions may currently refer to EU laws that could cease to apply in the UK. Such clauses should be altered to take into consideration the relevant or deleted UK law. For instance, references to the EU VAT Directive 2006 may have to be replaced by the VAT Act 1994.”
If these issues have an impact on your business or you would like advice on whether they may in future please contact Gavin Hesketh on 0114 224 2097 or email [email protected]
