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Your commercial contracts post-brexit – what to expect.

18th October 2016 by Your commercial contracts post-brexit – what to expect.

Categories: What's New?
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Like it or not, Brexit is now firmly on our horizons. Even if you forget the scaremongering headlines from the tabloids (The economy will crash! The world will no longer trade with the UK! We will all suffer unbearable humiliation when venturing abroad, if we are allowed to leave the confines of our own country!), changes are coming. Government now has the unenviable task of sorting its way through the thousands of pages of EU legislation that currently govern our country, and will have to decide how to address the numerous issues contained within these regulations and directives once we say goodbye to the EU.

Regardless of how Government arranges the split from our cousins across the Channel, the process will have important implications for the commercial contracts that businesses have in place. For example:

  • References to EU law will become obsolete post Brexit. The equivalent English legislation (if any) will need to be put in its place when it comes into force, otherwise the courts will be left to determine what rights and obligations may be enforceable (a costly, lengthy and unpredictable process). Any contract you have should be reviewed before Brexit takes place in order that these references can be updated. Any use of the term “applicable law” (or similar) will also need to be reviewed for this reason.
  • The removal of legislation, or the adoption of new laws, may affect whether or not the contract can be carried out. If a party is unable to comply with their obligations or exercise their rights as a result of the changes, this could give rise to all sorts of complications (for example a party might be able to legitimately terminate the contract as a result of the change). Review your contracts before Brexit takes place and ensure that any changes to legislation are adequately addressed in the agreement.
  • If your contracts include a clause that allows a party to terminate a contract if there is any material adverse change, consider whether Brexit will trigger this right to terminate. If in doubt (and you do not want the contract to be terminated), then get written confirmation with the other parties that Brexit will not entitle either party to rely on this particular provision.
  • If you are dealing with foreign entitles then consider what impact Brexit may have upon your ability to enforce any judgment in an EU state. It may become harder to enforce an English judgment in the EU.

It is obviously very difficult to predict how the future will look once we have extracted ourselves from Europe. England and Wales has a variety of options that are, in theory, available to it (subject to the EU’s consent). Some will result in relatively little changes to the way in which we operate from a legal perspective whilst others have the potential to completely rewrite the laws which currently govern our society, such as data protection, consumer and competition law. Only time will tell. Regardless of what is decided, be sure that you are up to date on any changes and act on them before they take affect.

If you have any questions about or require any advice on your commercial contracts please contact Sam Freeman at or on 01202 557256.

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