Brexit Clause - Is There Such a Thing?

Jul 26, 2016
Drafting contracts can be hard enough – you are constantly considering the unknown and uncertain events to help all eventualities or possibilities occurring. And then the Brexit vote had to happen. Regardless of how you voted, our country has been left in a difficult time – never before have we had to deal with such an unprecedented result, and in my view, will continue to cause  an economic rollercoaster for the foreseeable future. The best that can be done is for us solicitors to evolve. Increasingly, people are considering whether to include a Brexit clause in their contracts. 

Technically, a Brexit will occur in the future at some point. But when, how and if it will occur in the way that it literally should occur, by formally exiting, will not be known for a long time. Free trade deals are being negotiated, so the economic landscape could be quite similar to what we have now. Or, it could not. We just do not know. A Brexit clause such as giving a party the right to terminate, “when Brexit occurs” is far too vague. It is therefore important to consider the actual events that you may want to consider why you would want a termination provision, if Brexit occurs. For example, if tariffs on imports or exports change and dramatically change the effect of the contract, and whether it triggers a termination right, or even if it just involves a renegotiation of key terms or a reallocation of responsibility. 

The continuing monitoring of your business after Brexit is key to keeping on top of the challenges, and there are certainly some creative ways that are being developed in this unknown area. However, the important thing is if you have any concerns, you take action and seek advice. 

Nicola Lucas

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Nicola Lucas

Nicola is a member of our Business Law Team handling all the commercial requirements of her clients such as shareholder agreements and negotiating on commercial ...

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