Brexit and commercial contracts: assessing the impact
This article assesses the impact of the UK’s decision to leave the EU on businesses' contractual obligations. It covers commercial implications (e.g. the imposition of tariffs); questions over the meaning of contracts (e.g. whether references to "the EU" will continue to include the UK after Brexit); and the difficulties in enforcing a judgment by English courts in some member states if the UK ceases to be covered by the recast Brussels Regulation and replacement arrangements are not made.
Brexit could have a significant impact on businesses' substantive obligations under contracts. Businesses should review key existing contracts and future-proof new contracts to prepare for Brexit. This article, originally published in Practical Law on 27 October 2016, assesses the impact on commercial contracts and considers the following three key issues:
- The potential significant commercial implications, such as the imposition of tariffs, restrictions on the freedom of movement of people or further changes in exchange rates. This could result in financial hardship. However, in the absence of express contractual provisions, parties are unlikely to obtain relief.
- Questions over the meaning of contracts; in particular, whether references to "the EU" will continue to include the UK after Brexit. The answer will depend on how the reference is used and the relevant context.
- The potential issues to enforce a judgment by the English courts in some EU member states if the UK ceases to be covered by the recast Brussels Regulation (1215/2012/EU) and replacement arrangements are not made.
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