A specialist solicitor is warning that contracts are key for businesses concerned about the impact Brexit could have on trade.
Jon Esner, Commercial and Intellectual Property partner at regional law firm Napthens, warns there are still a number of possible outcomes for Brexit, including the UK leaving the EU with no agreement.
In the event of a ‘no deal’ exit hundreds of treaties governing multiple areas (including trade, aviation and regulatory compliance) are likely to end overnight.
Jon reports that many businesses are concerned how to prepare for what might be a very different trading environment in just a few weeks’ time.
He explained companies likely to be most affected by an imminent ‘no deal’ are those trading with the EU or any of the countries subject to European Union trade agreements (including the EFTA countries, Canada, South Korea, Turkey, Israel, Mexico and South Africa).
Jon said: “In the event of a no deal Brexit, trade in goods for these countries will be subject to non-preferential WTO rules and tariffs.
“This is likely to lead to additional costs for both importers and exporters and impose an additional administrative burden. For example, businesses will need to make an import declaration for goods entering the United Kingdom and they may need a licence to import or export goods. How they complete and pay their VAT return will also change.”
Jon explained that contracts are key to preparing, and gave some top tips:
- All businesses should identify their most business-critical contracts and evaluate them for Brexit related risks. Depending on the outcome of this review, they may need to re-negotiate key terms or seek to terminate contracts that impose an unacceptable risk.
- In particular, businesses may wish to review force majeure provisions to make sure that (for example) if a supplier cannot deliver on time because of a Brexit related issue, they cannot rely on force majeure provisions to excuse non-performance.
- Alternatively, they may need to set out what will happen if tariff or licence fees which were not previously required now become payable.
Jon added: “Overwhelmingly, Brexit emphasises the need to have well-considered and suitable contracts in place.
“Business owners need to act now and take advice as required to make sure that they are ready for potentially the biggest change to the UK’s commercial life in decades.”