Brexit Pt.1: Preparing for the Unknown
Brexit means Brexit, right? It’s not often that we can quote Oasis in our articles (sadly), but ‘definitely maybe’ seems particularly applicable right now. Who on Earth knows at this point quite frankly?!
Who else thought that over two years after the ballots had been counted, it would all be a bit clearer how this would affect you and your business? No doubt, you would at least expect there to have been the slightest semblance of clarity of how the UK business scene will look at the end of the process. You are probably not alone in that.
While we are all unaware at this moment in time as to where we are going to be come 29th March 2019, there are steps that you can be taking now in an attempt to mitigate the foreseeable risks that such uncertainty is causing.
Here are 4 steps that we recommend for any business when undertaking their Brexit preparation plans:
1. Collate and Review Your Existing Contracts
Your existing contracts are likely to have been drafted without specific consideration to the possibility of Brexit. Some may however include mechanisms that can be triggered in the event of a political upheaval such as Brexit. Some contracts may include a clause that allows for termination in the event of a ‘Force Majeure’ event (which may be defined as specifically including Brexit as such an event or something ambiguous such as ‘political upheaval’), or even include mechanisms that allow for renegotiation or termination in the event of a fixed formula for currency fluctuations. It is important therefore to identify what contractual relationships you have in place right now and how they might be directly affected.
It is possible that such provisions already exist in your contracts. If they do not however, then sensible negotiation of the terms of these contracts with your fellow contracting party may be possible for the insertion of Brexit specific terms for your mutual benefit of ongoing business efficacy.
We recommend that you conduct a full contract audit for any references to EU law and any provisions that could be affected by Brexit and seek to vary these by using a suitable Variation Agreement or Addendum.
2. Collate and Review Your Existing Templates
Do not fall into the trap that many others will fall into. You may have gone to the significant effort and expense of producing a suite of carefully drafted contracts that you use in specific circumstances over the years. If you have, then kudos to you for doing so. This is very sensible business practice. How galling would it be, for example, to have gone to this effort and continue to use these post-Brexit but discover down the line that they refer to the exclusive territory of the EU and they lose business sense and value?
As frustrating as it will be to revisit a process that you have already been through, getting the contracts right in the first place is far more preferable than arguing about them down the line. A key principle of Commercial Law, and business generally, is that preventing issues before they arise is far more favourable than curing them after they occur.
3. Assess Your Existing Negotiations
Do not be reckless and try and get these concluded quickly without giving due consideration to how the relationship may be impacted by Brexit. Seek the necessary advice about the current forecasts of the currency fluctuations that will inevitably occur in the coming months (and potentially years) and consider how these will play a role in the arrangement. Consider your obligations and how these may be impacted by Brexit also. Does the relationship require your regular movement into EU countries? Whilst this may have been a relatively simple task in pre-Brexit Britain, how feasible will this be considering the restrictions on free movement post-Brexit?
It is no doubt tempting to deal with the frustration of uncertainty by running headfirst into the situation and dealing with the consequences as and when they should arise. Whilst no one can be certain at this stage of the commercial climate in two, five or 10-years’ time, being business savvy at this time can mitigate the risks and enhance the prospects of being in a position to capitalise on the opportunities that uncertainty brings.
4. Prioritise Your Issues
It is far too easy to panic and make a blanket decision to conduct a full review of every business concern in the order that it comes to mind or the order that it hits your desk. Whilst this is certainly preferable to doing nothing, your initial time is actually far better served undertaking a suitable period of due diligence to work out where your time and efforts are best spent. Rather than finding yourself blindly devoting significant time to considering the impact on a contract that it turns out expires before Brexit could even occur, mapping out a strategy for dealing with those areas that require the most immediate attention will reduce the workload dramatically in the long-run.
Brexit planning is not just about contracts, but they are a good starting point for identifying the practical issues that could affect your relationships with customers, suppliers and staff.
Making preparations now that minimise the foreseeable risks to your business is essential for good corporate governance. Removing yourself briefly from the cut and thrust of the business and viewing your business objectively, assess whether the business is suitably prepared for a period of such uncertainty following a popular vote that has been referred to as both a “colossal misjudgement which will harm our personal and national wealth” and “a once in a lifetime opportunity for Britain”. If an event can provoke such passionate and diverging viewpoints, can a business of any size afford to ‘wing it’?
Whilst we all hope for clarity on the political landscape in the near future, by following the steps in this article you will hopefully be able to commence your program to avoid becoming ‘Brictims’ of the political and commercial uncertainty.
Don’t look back in anger at not taking the necessary steps ahead of time.
If you would like assistance with undertaking a Brexit Contract Audit or creating a tailored Brexit Variation Agreement, please get in touch by calling us on 01603 339044 or emailing firstname.lastname@example.org.
Please note: the content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in each individual circumstance.