Commercial contracts impacts

Outlined below are the top 5 key areas of potential impact of Brexit on Commercial contracts

  1. Increased costs of goods and services: the outcome of Brexit negotiations and the impact on the free movement of goods and services between the EU and the UK may increase the costs associated with ongoing contracts. Whether or not the parties to the contract will have the ability to renegotiate or terminate the contract will depend on the terms of the relevant contract. However, without a specific provision or break clause, parties may find themselves trying to argue that the impact of Brexit falls within clauses such as force majeure or material adverse change.
  2. Force majeure/material adverse change: the potential to call on these clauses to terminate a contract, or use the prospect of termination as leverage to renegotiate, depends heavily on the drafting and interpretation of the clauses in question. Without specific reference to Brexit as a relevant event it is likely to be difficult to rely on these clauses, particularly where the relevant contract post-dates the prospect of Brexit – i.e. was Brexit reasonably foreseeable?
  3. Transfer of data: the legality of transfer of data from Ireland to the UK will come under scrutiny in the context of Brexit as it will no longer be possible to rely on the protection afforded by common EU rules. It may be necessary to put in place specific agreements for data transfer in order to ensure the adequacy of post-Brexit UK safeguards.
  4. Territorial restrictions: many contracts – ranging from acquisition agreements to distribution and franchise agreements to employment contracts – have restrictive provisions, the extent of which often include a territorial aspect. Where territorial restrictions reference the EU, the contract should be reviewed to determine how this will be interpreted post-Brexit.
  5. Future contracts: businesses should review existing key contracts to determine whether the term is likely to post-date Brexit and, if so, the impact Brexit may have on such contracts. For future contracts, businesses should consider addressing the potential implications of Brexit – whether through a specific provision concerning the potential impact of tariffs and customs procedures, or by providing for a right to terminate on Brexit.

Relevant Publications:

The impact of Brexit on your contracts: a timely reminder

Here you can find information on how services like banking, online shopping, food prices and energy supply may be affected according to the Department of the Taoiseach, in the case of a no deal Brexit last updated on the 13th of March. A List of the key areas covered in this are; Healthcare, Finances, Energy supply, Broadcasting, Food supply, Mobile phones & roaming, Consumer rights and Data protection. Click here to read this.

Find the UK temporary rate of customs duty on imports after EU exit announced today 13 March here.

No Deal Brexit – The implications for companies that transfer Personal Data to the UK

The Irish Governments - General Scheme of the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill 2019, first published on the 24th January 2019, is part of the overall no deal preparations. This single omnibus Bill is made up of 17 parts prepared by 9 Ministers. Each part will be commenced by the individual Minister at the appropriate time.

Related Practice Areas

Corporate and M&A