ON 23 June, Britain voted to leave the European Union. Just over 100 days later, there is still a lot of speculation about what the vote is going to mean for businesses and, in particular, what the legal implications will be for businesses.
The Prime Minister, Theresa May, has said that the European Communities Act 1974 will be repealed. She has also said that the body of existing European Union law will be converted into British law. This promise to convert existing European Union law into British law, will give businesses – and their employees – a degree of certainty. Essentially, the same rules and laws will apply to businesses after Brexit as they did before.
That said, from the date the European Communities Act 1974 is repealed, Parliament will have greater freedom to amend or repeal any law that it chooses. This is a freedom that Parliament is hardly likely to resist exercising. While there almost certainly will not be a “big bang’ change to company law, the law governing shares and shareholdings, or tax laws, it is, possible that there will be a creeping change to, for example, data protection and employment laws.
The question, therefore, is how businesses can best prepare for these possible changes to the law when entering into contracts, agreements or other arrangements between now and the date the European Communities Act 1974 is repealed.
It is impossible for businesses to future-proof all their contracts to deal with all the possible changes to the law that might arise. However, it would be sensible for businesses to consider the following points when entering into a new contract.
1. Add an express provision stating whether your business or the other parties to the contract will have the right to terminate the contract when Brexit occurs. This will help avoid any disagreement as to whether Brexit should or should not be considered an event of Force Majeure.
2. Consider whether the value in the contract is pegged to the right currency. If a business’s charges in a contract are pegged to Pounds Sterling, but its costs are pegged to different currencies, your business could be at the mercy of any currency fluctuations caused by Brexit might want to include a provision allowing them to re-price the charges or switch currency if the value of the Pound dips below a certain point.
3. If the “Applicable Law’ is defined in a contract as including European Union law this could mean that, in future, that contract is still subject to European Union laws that are repealed in Britain. For example, if Britain decides to put in place new, de-regulatory rules covering data protection, your business might still have to meet the (possibly higher) European Union standards on data protection for the purposes of fulfilling its obligations under that contract. Look again at the definition of “Applicable Law’ and its use throughout the agreement.
Wilson Browne Solicitors likes to help businesses prepare clear and unambiguous contracts that stand the test of time. Its well resourced and experienced Commercial Law team has experts covering most areas of the law, ranging from mergers and acquisitions, corporate and commercial, commercial property, litigation and dispute resolution, employment, insolvency and debt recovery.
If your business is looking for advice on commercial contracts give Andrew Kerr a call on 01604 876697. To talk to one of our solicitors about anything else relating to you or your business call us today on 0800 088 6004.
