How will Brexit impact your new or existing supply contracts?
With Brexit fast-approaching, we consider what issues it may present for our clients with their new or existing supply contracts.
If a contract party’s ability to perform the contract, or the cost of performing the contract, is likely to be affected by the effects of Brexit.
It depends. The existing contract may already have a good alternative to negotiating a variation dealing with the effects of Brexit – it may, for example, have a short notice period to terminate the contract giving the parties a relatively painless escape route. However, beware that if you do nothing, the contract parties will still be obliged to perform the contract, even if Brexit makes it commercially unattractive to do so.
Maybe, but it depends on the drafting and a court’s interpretation of your existing contract.
A contract party wishing to vary or end the contract may look to clauses such as force majeure or the termination provisions but it may turn on the circumstances in which the party is seeking to rely on the clause and the way in which the clause has been drafted. It is not certain.
A lot can still change between now and 29 March 2019. As such, it is difficult to anticipate what the ramifications of it will be for you.
There is no all-scenarios-type clause that can be put in your commercial contracts, but if there are certain, obvious consequences that are likely to arise for your business from Brexit, then you ought to look to make provision for those consequences.
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