To support businesses consider the changes that might happen following Brexit, the British Chambers of Commerce (BCC) have developed a Business Brexit Checklist. This checklist aims to help companies at both operational and board levels.
Although the European Union and the UK have not yet reached a final agreement, there are a few steps that companies can already start undertaking to plan ahead.
Over the coming weeks we will be focusing on things to look out for to get your business ready for Brexit.
Number 4: Contracts review
Being part of the European Union only had a limited impact on British contract laws but some of the terms in existing contracts may no longer be relevant post-Brexit or may raise legal or practical questions in future.
What do you need to bear in mind and how can you get prepared?
- On certain subject, laws implementing EU legislation could potentially be repealed and new national regulations be introduced. Make sure you draft the ‘Applicable Laws’ definitions very carefully and when referring to the relevant authorities, remember that some EU bodies might cease to be relevant and that national bodies could take over responsibilities on the subject matter.
- It is very unlikely that Brexit will be considered as a ‘force majeure’ on most contract unless it is expressly stated. In some cases, you may want to make clear Brexit is included – or excluded – from the ‘force majeure’ definition. You could also add a ‘Brexit clause’..
- Add a ‘Brexit’ clause? This will especially apply to businesses with partners in Europe. To protect yourself, adding a Brexit clause in any new long-term contract you sign could be a good idea. Following the model of Material Adverse Circumstances Clause (MAC) which states that if a new and unforeseen situation arises, both parties will meet in a good faith effort to try to overcome the problem, probably by varying the terms of the contract and/or bringing the contract to an end, a Brexit Clause could focus more on specific risks linked to your business and be tailored to the potential impacts.
This is only a brief overview of what you can do to review your contracts, of course there will be a lot more to be done. Make sure you stay tuned with any Brexit news to ensure your contracts are ready for Brexit.
If you have any questions, please contact Pauline Puig at email@example.com or call 0161 393 4350.