With the EU referendum now less than a month away, a vote to leave could have an impact on commercial contracts.
While many contracts are expressed as governed by English law (regarded by many as the best in the world), some will have references to European legislation or refer to EU legal concepts within them.
Also, even if a contract is governed by English law, on a Brexit, contracts would still need to be checked as many areas of English law emanate from the EU and could change.
There is the potential for a period of uncertainty in English law, which may result in some confusion and will mean companies will need to analyse clauses dealing with applicable law to understand how any exit may affect their commercial relationships.
Then there are the costs of regulatory change to consider. The core value underpinning a commercial contract may be ‘pegged’ to either the Euro or the Pound. As the currency market would be affected by Brexit, parties might want to include causes enabling them to re-price or even to switch currencies.
Banks and other parties could also pass on the costs of their part in dealing with Brexit and there could be implications for the cost of lending.
As a result, many businesses are delaying deals until after the June 23 vote, but if this is not possible, then seeking legal advice at the relevant time must be at the top of your priorities.
It is unlikely that the thought of a Britain that is no longer in the EU even entered the heads of many people when negotiating commercial contracts and many of the effects – should this happen, are still unknown.
At Carter Lemon Camerons LLP, our Commercial teams are experienced in all aspects of commercial transactions. We draft, negotiate and interpret a wide variety of commercial contracts, including agreements for the supply and purchase of goods and services, outsourcing arrangements, agency and distribution agreements, franchise agreements and tender responses.
We also advise on general commercial contracts as well as technology contracts (licensing and ICT development agreements), distribution arrangements, intellectual property rights, franchising and outsourcing.