1. Commercial Contracts – Get Brexit Ready!
As the citizens of the UK voted to leave the EU in June 2016 and we continue to await the trigger
of Article 50, it is imperative to SME’s to become Brexit ready in order to manage the risks faced
by their business.
By reviewing your business’s commercial contracts, you can assess your business’s exposure
and plan for the next few years in the run up to Brexit. Key issues to consider include:
1. The inclusion of renegotiation provisions enabling your business to renegotiate the
contract to mitigate costs should there be any departure from EU law by the UK
government or increased costs as a result of Brexit.
2. Your business should consider whether a break clause would be appropriate in the new
contracts being negotiated to align with the likely trigger of Article 50 and/or the UK’s exit
from the EU.
3. Review of pricing structures which may not currently include tariffs, quotas or other
barriers associated with the free movement of goods which may be introduced following
Brexit.
4. An assessment of the impact of the market disruption on your business’s finances and
that of your clients to evaluate whether currency fluctuations will be a significant factor
either in relation to the price of goods or the liquidity of the business. The contract should
include a mechanism for determining the currency rate.
5. Review which party will be liable to adopt any regulatory changes and the cost of
implementing the changes.
6. Assess which EU laws the business currently complies with and the EU laws applicable in
the contract which may be susceptible to change (if any) following Brexit. For example, if
you are in contract with a public sector body that is subject to the EU Procurement Rules,
any repeal or amendment to the Public Contracts Regulations 2015 (which derive from
EU Directives on public procurement) might mean a change to some of the common
provisions around termination for breach of these rules or variations to the contract.
7. Are there any trigger terms which you can exercise or which can be exercised against
your business on Brexit, such as, provisions concerning illegality or material adverse
change?
8. Assess whether your business or any of your client’s business relies on EU funding or
grants? What percentage of the business relies on EU trade?
9. Does the territorial application of the agreement refer to the “exclusive right to operate in
the EU” and need to be revised?
10. Your business should consider whether Brexit should be a termination trigger in the
contract in light of how Brexit will affect its own business.
These considerations are only a starting point when reviewing commercial contracts. The
Commercial team at Anthony Collins Solicitors would be happy to help with any review, strategic
or governance advice your business requires to get Brexit ready.
Laura Oseland, Solicitor in the Corporate Governance and Commercial Team. You can contact
Laura via telephone on 0121 214 3654 or via email at laura.oseland@anthonycollins.com.