Hasta la vista, baby

Wilson Browne

1st January 2019

Great Expectations

Wilson Browne

HOPEFULLY, the average reader recognised the iconic one-liner from the blockbuster Terminator films, delivered in his deadpan way by Arnie, but who'd have thought that there could be a link between Cyberdine's Series 800 and Brexit?

Both can lead to termination... in the case of Brexit though, the context is contracts. Could Brexit really lead to mass termination of contracts? Can it legitimately provide reason or cause to terminate?

It is now only a few months until the UK will leave the EU, yet the outcome is still unclear. This begs the question whether the final trading or export rules post-Brexit can be a good reason why one or both parties would try to terminate or amend existing contractual commitments.

If there is no specific provision in the written contract then it may be possible to argue that force majeure provisions should apply or that a contract has been frustrated. 'Frustration' is the existence of an unforeseen event that makes performance impossible or radically different. Force majeure is a legal concept which allows a party to be excused from its contractual obligations as a result of a very disruptive event outside of that party's reasonable control. Normally, a force majeure clause will include a specific list of examples of what constitutes such disruptive events, and it may be arguable that a generic listed example e.g. the act or order of any governmental or regulatory body would apply.

In order to rely upon a force majeure provision, generally a party must show that there were no reasonable steps that could have been taken to avoid or mitigate the event or consequences, and in addition the performance of the contract normally has to have become physically or legally impossible for force majeure to apply.

In most cases the outcome of Brexit will not make performance of a contract impossible: perhaps just plain difficult, unprofitable or simply less profitable, and furthermore the problems it may cause are all (broadly) foreseeable.

It is unlikely that any contracts formed since the result of the referendum will become subject to a firm right of termination or amendment, unless Brexit makes contractual performance impossible, or the problematic outcome is provided for within the contract.

If you are operating a business where you believe the outcome of Brexit could make performance of a contract unprofitable, then it is worth obtaining specific legal advice on the contract or preferably at the time that the contract is negotiated to ensure that you are adequately covered.

We're a long way past 4 August, 1997, the day Skynet became self aware and took control, but it's not too late for you to take control. There's still time between now and 29 March 2019 to get advice. Call the expert team at Wilson Browne Solicitors for information on 0800 088 6004.

Wilson Browne