Further to the first installment of “Contracts: What to look out for in Brexit Britain” on 27th June, here is the follow-up.

Sometimes, it is the seemingly insignificant terms of a contract that transpire to cause the biggest problems.  Where the scope of a territory is defined as ‘the EU’, will it include the UK after Brexit? This will be open to various degrees of interpretation. 

Many contracts specify that the courts of England and Wales have exclusive jurisdiction. It is likely to become less common that a company in an EU member state will agree to this. In any event, businesses in the UK need to be prepared for how Brexit might affect the enforceability of judgements made in the UK against persons and companies in the EU area. Enforcement will be subject to the national procedural law of the country in which the person resides against whom the judgement has been made. With that in mind, it would be prudent to consider what security might be appropriate against a possible breach of contract.

Lastly, whilst the exercise of reviewing key contracts is being carried out, consider other potential consequences of Brexit. These could include collapse of the EU, other member states leaving, Scottish independence and a possible reversal of the Brexit process. Whilst it is impossible to foresee and address every possible eventuality, any level of flexibility can be built into a contract and the level of flexibility required will depend on the circumstances and bargaining position of the parties.

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