Planning for Brexit: Do I still have to perform my contractual obligations if Brexit has disastrous consequences?
The uncertainty revolving around Brexit is naturally causing concern amongst businesses.
In many industries, it is difficult to predict whether supplies of labour, materials or finished goods will be available at all, at what cost or whether unexpected and potentially lengthy delays will result.
A common question is whether businesses will still be obliged to honour their contracts if these consequences of Brexit makes performance difficult or unprofitable.
The short answer is likely to be yes, unless there are specific, Brexit-focused provisions within your contracts or terms of business.
"Force majeure" clauses (common in commercial contracts) may not assist where Brexit prevents one party to a contract from performing, as they often only provide protection against unforeseencircumstances or ones beyond a party's control. As Brexit will have been foreseeable for any agreements signed in the last three years, any party seeking to rely on a force majeure clause may well have been obliged to prepare for and anticipate its difficulties.
With Brexit now likely to be delayed until June or October 2019, now is the perfect opportunity to review your terms of business, standard-form contracts and any critical business relationships, to ensure the legal position is clear if you or your suppliers or customers are affected by Brexit.
We are already receiving requests to review and amend contracts.