Companies should be analysing risk in their contracts while uncertainty remains over UK exit deal, says Carson McDowell
29 November 2018
Businesses should expect to see an increase in Brexit related clauses being inserted into new commercial contracts in coming months and should be actively assessing potential Brexit risks in their existing contractual arrangements.
That is the view of Northern Ireland’s largest independent law firm, Carson McDowell, who outlined the options to businesses at a breakfast event titled Do I need a Brexit clause? at the Merchant Hotel in Belfast on November 29.
While most businesses have now started to plan for different Brexit scenarios, the firm says many companies are not reflecting this planning in contracts currently being negotiated and have not yet investigated whether existing contract arrangements afford them any flexibility to renegotiate terms in the event of an adverse outcome.
Dawn McKnight, partner and head of Commercial at Carson McDowell said: “We want to convey to clients that as they are preparing their business for Brexit they need to look at their existing contractual arrangements with customers and suppliers and those in the process of being negotiated.
“We are often asked by clients whether they will be bound by contracts if Brexit causes, for example, prices to soar, or if they could be left in a position post-Brexit where customers want to pull out of contracts for the same reason.
“We don’t know exactly what the final deal – or no deal – on Brexit will mean for businesses and their contracts but a Brexit clause that acknowledges the potential for trading conditions to change for the worse is a sensible step. Businesses may also have options in existing supply agreements through clauses that relate to material adverse change or force majeure and we will outline these options for them.”
This event featured a discussion on commercial contracts and Brexit with panellists including Rob Heron, partner at EY, Claire Guinness, CEO of Warrenpoint Harbour Authority and Aidan Gough, Strategy and Policy Director at InterTradeIreland.
Speakers from Carson McDowell included Dawn McKnight and Rosanne Brennan, Associate, from the firm’s commercial team and Richard Gray, partner and joint head of its corporate team. Kerry Teahan, partner and head of procurement also gave an overview of free trade arrangements and what it could mean if the UK had to trade under World Trade Organisation rules.