If and when a no deal Brexit takes effect it will not of itself cause
significant legal changes relating to commerce within the UK, and in
particular it will have limited impact on English law of contract and
commercial law generally. However, there is uncertainty about various
issues relating to trade with between UK and the EU 27 countries after
Brexit takes effect.
As to the possible effects of a “no deal” Brexit on commercial contracts
between UK business entities, the position remains as outlined in our blog
of February 2019 (available
here) for contracts which are subject to English law and the jurisdiction of
the English courts. A no deal Brexit might affect the parties’ obligations
as set out in a contract. For example, Brexit might give rise to greater
expense being incurred in order to perform a contract, or it might make it
more difficult or even impossible to perform a contract, or performing it
might be commercially unattractive or it might produce a different outcome
from that required or expected by one or both parties.
You should review existing contracts to check for any impact that a no deal
Brexit might have on them. Where you decide that a no deal Brexit might
have an adverse effect on any contract, you should consider whether to
terminate it if indeed in the circumstances the contract permits it, or
whether to seek to renegotiate it. Alternatively, you might see whether
there is a provision in the contract covering the situation, e.g. a
material changes clause which, on a proper interpretation, covers Brexit
and its effects. You might also see whether, on a proper interpretation, a
force majeure clause in the contract covers any effects arising from a no
deal Brexit - unlikely in the case of most force majeure clauses.
As to new contracts, whilst adding a Brexit clause to a proposed new
contract will not solve all Brexit-related problems, you could consider
building in a clause to safeguard your business against uncertainty, e.g.
one which allows for rapid termination of the contract or which provides
for some financial adjustment (such as a price change) or some other change
to be made upon Brexit occurring, or you might decide to add a force
majeure clause specifically dealing with Brexit.
The implications and commercial realities for you will be specific to your
business, your particular circumstances and the nature and terms of the
The Government has published guides to
prepare your business or organisation for Brexit
Brexit guidance for your business, which you should review as part of your overall “no deal” planning.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific