Brexit: Impact on your contractual obligations
Is Brexit really happening? The UK government says ‘Yes’ and it is scheduled to leave at 11 pm UK time on Friday, 29 March 2019. Well, whether it happens or not happens, keep that discussion aside for now. What you might be interested in knowing is, how Brexit impacts certain contractual obligations in your existing contracts?
The vote to exit the EU has already created turbulence in the cross-border trade activities between the two regions. In both the regions, 50% of their exports come from each other. The high impact is on commercial contracts whether they are existing or new ones. Hence it is highly recommended that audit all your existing commercial contracts to see the possible impact on the contractual rights and obligations. Certain key areas or clauses that you should review are listed below:
The territorial scope of a contract: The definition of Territory may change due to a new relationship with the UK. For example, the definition “EU Territory” may or may not include the UK.
Governing Law: If the applicable law and jurisdiction impact the post-Brexit relationship and would result in a change in the definition. For example, “EU Legislation/Jurisdiction” may include English Law.
Dispute Resolution: You may revisit the dispute resolution clause to ward off the post-Brexit enforceability issues in the EU, favoring out-of-court resolution or arbitration method.
Termination clause: Analyse whether Brexit would impact the early termination grounds by either party.
Force Majeure: Is your contract impossible to perform as a result of Brexit? You may assess all the events included in the force majeure clause. Parties may look for frustration or force majeure clause where any changes in economic conditions or material adverse change would result in non-performing the contract. Have you included such events in your contract?
Key Definitions: Any contractual terms or definitions which would impact as a result of Brexit, for example, EU Standards vs UK Standards, UK Compliance vs Non-UK Regulatory Compliance.
Brightleaf can help identify and extract your contract and industry-specific vulnerable clauses that can be affected by Brexit. Brightleaf provides an NLP/AI technology-powered service for extracting data elements from contracts and other documents.