Preparations for Brexit: commercial contracts and Brexit clauses
It is certain that the relationship between the EU and the UK will change. However, we do not know yet what the new relationship will look like, we can only guess. It may even be that they do not make trade agreements for the future at all. The UK will leave the EU and will become a so called ‘third country’, comparable with countries such as China and Australia. We advise you to prepare for this scenario to run less risk of being confronted with surprises.
Preparing for a no deal
Doing business with the UK is going to change after Brexit. For many businesses it is still unclear what exactly will happen, because the UK and the EU are still negotiating about countless trade agreements and other subjects. There are several things that you must arrange, or you must be prepared for, (at least) before 29th March 2019. A few of these are:
- If you import or export goods you should get a UK Economic Operator Registration and Identification number. If you do not move the goods yourself, be sure to contact the company that does this for you to see if they are prepared.
- Make sure you talk to customers, buyers and suppliers. Stay alert to new tariffs and how they may apply, implications for VAT on imports and exports, and what new customs checks will impact the supply chain. If an important part of your product comes from the UK, discuss with your supplier on how they will deliver after Brexit.
- When the UK leaves the EU, there may be changes to the requirements for placing certain products on the UK and EU markets.
- You should check to see who is responsible for the goods before, during and after transport. Cover these risks with a transport insurance policy.
The government of the UK has a tool that can give you relevant guidance on how to prepare your business for a Brexit: https://www.gov.uk/business-uk-leaving-eu
If you do business with the UK and are likely to be affected by Brexit, you may want to get professional advice on how to deal with this. Check your local government website for advice on Brexit or contact us for more information and advice on how Brexit might affect you and your business. For example in the Netherlands, you can apply to the Dutch government for a so-called Brexit-voucher to partly cover the costs of this advice: https://business.gov.nl/brexit/#article-brexit-vouchers.
Brexit clauses in contracts
To avoid business disputes, it is important to make good and clear arrangements regarding Brexit. This can be done by drafting clauses in existing and new contract agreements.
Force Majeure Clause
Foremost, we advise you to include a so-called: Force-Majeure clause, in your agreements and terms and conditions with your contract partners. Consider the entire commercial chain of your company, from supplier to buyer. Due to new tariffs and how they may apply, implications for VAT on imports and exports, and new customs checks, it is very likely that there will be a delay in shipping time to and from the UK. A general force majeure clause is not sufficient. It must be specifically focused on Brexit.
It is possible to include a renegotiation clause in your contracts for the period after 29th March 2019. In case of radical changes, the agreement can then be reviewed and adapted to the new situation.
We have European and UK lawyers that can assist you with all your questions about preparing for Brexit. Furthermore, we can help you with the preparation of your existing and new contract agreements with customers, buyers and suppliers.
If you have not prepared anything ahead of 29th March 2019, contact us immediately! With only a few weeks to go, you have very little time to prepare yourself for a possible Brexit.