Brexit, Brussels and Boris: Commercial Contract Considerations

In this blog, we will look at best practice in assessing where your business stands in preparation for Brexit, along with suggestions on how to do that and actions to take.

Contracts

How reliant are you on the EU single market for your business? It is likely that, to some extent, the underlying commercial negotiation that took place between any two parties will be strained by Brexit and one or both parties may look to renegotiate terms, particularly pricing. Currency fluctuations, however small, may put strain on the commercial feasibility of the arrangement. Is there scope for providing flexibility for pricing in that contract?

Look also at key customer contracts and critical delivery commitments around or immediately post-Brexit or planned for 2020/early 2021. Are key suppliers also going to be affected?

Some mitigation can be put into place by use of clauses updating contracts (or put into place during current contract negotiations), to make sure that if a contract subsequently becomes impossible to perform due to Brexit, there can be a termination provision. However, do note that a frustration claim won’t be successful due to Brexit.

Communications and staff training

Consider whether it may be appropriate to communicate to staff about negotiation of contracts. Would it be prudent to put a cap on the length of the contract or the price which the business can accept until the terms of Brexit are agreed?

Personal Data transfers

This is certainly an area that is worth keeping an eye on. In the event of a ‘no deal’ scenario (which is still possible if a trade deal isn’t reached by the end of 2020), the UK will become a ‘third country’ from the perspective of European Economic Area (EEA) and European Union (EU) data protection laws. This would mean that transfers of personal data from the EEA or the EU would be non-compliant unless certain transfer mechanisms are in place in relation to the specific transfer.

In practical terms, this may have the greatest impact on technology providers, as the transfer of data to or through the UK could become more complicated.

In the interim though, businesses should make sure that they continue to comply with the current regime (GDPR being part of that).

Action

If you haven't done so already, it's time to review and consider how Brexit is going to affect your business.