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.