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Brexit - How this will impact on UK contracts and trading relationships

Brexit - How this will impact on UK contracts and trading relationships

  • United Kingdom
  • Brexit
  • Commercial and IT
  • Competition, EU and Trade - Brexit

24-06-2016

Brexit and the legal implications for businessesAll businesses that trade with the EU, whether as a supplier or purchaser, will be affected.  All contracts that involve the supply or purchase of goods or services to or from the EU will need to be assessed, as will those whose pricing or risk allocation assumes tariff free access, EU funding or harmonised regulatory or licensing regimes.

Despite the fact that the future shape of the UK’s relationship with the EU is unclear, contingency planning involving contract review should start now a view to managing risks arising from the initial stage of uncertainty in which we now find ourselves.  Businesses will need to identify these trading arrangements, review standard contract documentation and embed Brexit risk identification and management into procurement processes.  Key issues to consider, within a general commercial context, include:

  • renegotiation rights or adjustment provisions to mitigate costs and management risks arising from regulatory divergence between the UK and the EU in the future, particularly where authorisations or licences are a contractual given;
  • review of pricing mechanisms which assume no tariffs, quotas or other barriers (non-tariff barriers being regulatory requirements, legal barriers and transaction costs) or which are tailored to take account of particular savings or levels based on EU free movement of goods and people;
  • the impact of market disruption and currency fluctuations on the cost of performance;
  • an analysis of the ability to perform if regulatory changes occur; and
  • an analysis of terms that could be triggered against you because of Brexit circumstances.

We have developed a Contractual Risk Analysis and Brexit Proofing tool which allows us to:

  • review your current trading relationships for potential areas of risk arising out of Brexit – be that pricing, currency, regulatory, tariff, people, data and so forth - and produce a red, amber, green (“RAG”) status rating;
  • review your existing contracts in light of the issues identified and RAG status ratings, comment upon the extent to which any of those risks are dealt with in the contracts and/or adjust the RAG status rating accordingly; and
  • suggest ways in which existing contracts could be amended and/or clauses which could be included in new contracts to deal with Brexit..

Please click here to read the Commercial team’s more detailed review - “What if?” has become “what now?” with suggestions of contractual tools you can use to manage your risk. 

We can provide health checks for existing arrangements, provide process mapping tools and strategic advice for mitigation strategies and advise you on new arrangements with Brexit in mind.

For more detail please see our Brexit resources on Contracts

Visit our Brexit Legal Advice Hub for in-house lawyers

For more information contact

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