Does your contract refer to Europe?

There are endlessly longs list of things that might be required in order to prepare for Brexit for businesses. Because the type of arrangements to be put in place post-Brexit are not yet clear, many of the items of those lists are still uncertain.

 

However, one thing that can be done now, which will put firms in a more robust place post-Brexit, is to check their new and existing contracts that have implications in more than one EU member state. Quite often such contracts will define the EU or Europe as a territory – perhaps for a licence of rights or a restriction of some kind.

 

Look closely at how “EU” is defined. Is it “the EU as it is composed from time to time”? Is it “the EU as at the date of the agreement”? Is it just “the European Union”? The definition used may result in either the UK being excluded from it shortly, or remaining in it when it is not any longer a member state. Even worse, vague definitions might be unclear and result in dispute.

 

Whichever way it is drafted, there is a real risk of unintended consequences come 30 March 2019 (or possibly at the end of a transitional period).

 

In many cases, the parties are likely to come together and agree how things are to be dealt with going forward, and that will be much easier to do in advance of the withdrawal date. However, in less friendly relationships, there is a risk that a party tries to take advantage of such drafting. Either way, it makes sense to check your contracts and approach other parties sooner rather than later.

 

It goes without saying that the other step to be taken is to look at any new contracts being entered into – especially if you use standard template contracts. Think carefully about how you define a European territory – perhaps list the specific states, if appropriate. Consider inserting clauses to deal with Brexit-induced changes, which might trigger a right to terminate or renegotiate should certain repercussions of those changes adversely affect the efficacy of the contract.

 

Many businesses are currently feeling a bit helpless in relation to preparing from Brexit, but these are real, practical steps that can (and should) be taken right now.

 

To discuss this matter or to find out more information please contact Alison Marshall