Generally speaking, Brexit will have a limited impact on English contract law. However, the wider impact on obligations under contracts may be more significant along with parties’ bargaining positions, particularly in relation to tariffs, exchange rates and taxes.
Whilst not all contracts will be equally affected, we aim to set out some of the areas which businesses should consider in relation to their contracts. If you have any specific concerns about the impact of Brexit on your contracts, you should seek legal advice.
The commercial effect of Brexit beyond the transition period is still uncertain. That said, the potential impacts to contract pricing could include:
- Tariffs: Tariffs could be applied to goods and services provided to and from the EU. In addition, there could be changes to tariffs for trade with non-EU countries or changes to the VAT treatment of payments under contracts.
- Exchange Rates: There may well be further changes in exchange rates, as seen immediately after the 2016 referendum when the pound fell sharply against the dollar and euro. This could happen suddenly or over time.
- Customs Checks: Whilst various government departments are currently trying to make this less of an issue, it seems highly likely that additional customs checks on goods entering and leaving the EU will lead to additional costs and delays in connection with supply contracts.
Data protection arrangements, and in particular transfers of personal data from EEA states to the UK, are perceived as one of the more immediate issues that need to be addressed before the end of the transition period. During the transition period, and following its end, it looks unlikely that the current data protection laws will cease to apply to the UK.
However, organisation which transfer personal data between the UK and EEA stares will need to consider whether new or updated arrangements will be required at the end of the transition period.
- Transfers from the UK to the EEA. The UK government has suggested that such transfers will be able to continue after Brexit without the need for any new protections. This is because the UK will deem EEA states to have an adequate level of protection. The UK government has said it will keep this under review.
- Transfers from the EEA to the UK. In a no-deal Brexit, the UK will become a “third country” under the GDPR. This means that controllers or processors based in the EEA will only be able to transfer data to the UK if certain conditions in the GDPR are met. The ICO has suggested that standard contractual clauses (SCCs) might be a way of dealing with the conditions and has developed an online tool to help businesses.
For more information on this topic please read here.