Could Brexit exit your contracts?

Could Brexit exit your contracts?

13th March 2019

The United Kingdom is due to leave the European Union on 29 March 2019. With this in mind, businesses are urged to review their contractual documentation to ensure that they deal with the impact that Brexit-related events may have on the business-to-business supply of goods or services. This article highlights the key features to consider when reviewing your contracts following Brexit.

Which contracts will be affected?

  • New contracts post Brexit
  • Existing contracts which will continue in force after Brexit

Should you do nothing?

The parties to a contract formed before Brexit will be bound to the original terms of the contract and obliged to continue to perform its obligations in full. Given the uncertainty as to the effects of Brexit (tariffs, border delays etc), businesses should consider adding a clause to cover the possible effects and to avoid a potential claim for breach of contract where an affected party is unable to renegotiate the terms of a contract whereby damages are actionable.

What would a “Brexit clause” achieve?

  • Afford parties some flexibility by triggering a change in the parties’ obligations to one and other as a result of a defined event occurring (e.g. tariffs).
  • The option to renegotiate relevant aspects of the contract which are affected.
  • It can deal with a specified event which you predict will affect your business or market.

Should you include a “Brexit clause”?

To answer this question:

  • How much of your supply chain / customer base is overseas?
  • Do you have quotes outstanding that you may wish to vary to include new tariffs?
  • Does the force majeure clause in your contracts or terms and conditions apply?

Examples of predicted effects:

  • Change to tariffs on both imports and exports
  • Border delays which may affect ability to meet contractual commitments
  • Licences and consents – UK businesses may no longer benefit from EU-wide approval schemes or reciprocal arrangements between the EU and the rest of the world.
  • Freedom to provide services – new restrictions may be implemented with possible cost consequences.
  • Changes in law – EU Regulations will no longer have direct effect and the UK will be free to repeal or amend laws which implement EU Directives.
  • Uncertainty with the current exchange rates.
  • Freedom of movement for workers may be reduced affecting a business’ ability to perform contracts and have cost implications.
  • Implications with inflation and the costs of borrowing.


How we can help you?

Here at Brindley Twist Tafft & James LLP, we have a dedicated commercial department who can advise you on and assist you with any changes to your current contractual documentation to help to cover the potential impacts that Brexit may have on your business. Call us on 02476 531 532 to speak to one of our friendly solicitors.