As the dust settles today on the EU referendum results, what does Brexit mean for your business contracts?
The majority of English law contracts are founded on the relative bargaining power of the parties and it may be that many B2B agreements will not be materially affected by the UK’s decision to leave the EU.
Nevertheless, the uncertainty of the situation means it would be sensible from a risk, compliance and governance perspective ask the question “do we know what is lurking in our contracts?".
We are encouraging businesses to conduct audits of their agreements; particularly those with a counterparty based in the EU, pan-European framework agreements, as well as their precedent template documents.
Key issues to identify in existing contracts and precedent documents include:
- References and exposure to EU legislation such as ARD employee protections and data protection (including GDPR, Privacy Shield and legacy Safe Harbor provisions for EU-US data transfers).
- Agency arrangements.
- Jurisdiction and compliance with law matters (including Rome I and Rome II matters).
- Currency fluctuation mechanisms.
- Territorial scope for services, use of products and software.
The two-year notice period required by the Treaty of Lisbon means that any Brexit date is very unlikely to be before Summer 2018 – some are even predicting a longer period of up to 10 years. It remains to be seen how the negotiations will play out and legislation will be unpicked over the coming months. Smart businesses will take the chance now to assess the risk and opportunities they face across their commercial contract portfolios.
Contact us if you would like to discuss how our contract auditing services could help your business