Hauliers should consider inserting a “Brexit clause” into their contracts if they’re transporting goods across borders – or risk being tied into unaffordable agreements, according to a top business lawyer.
Karen Holden said businesses need to be making Brexit plans ahead of the UK’s departure from the European Union, despite the exact manner of the exit still being unknown.
The founder of A City Law Firm said haulage and logistics companies with contracts that have a cross UK-EU border element, or with contracts that are due to end after the country’s departure date of 31 January 2020, or even have customers which will be affected by Brexit, need to think about including a contractual Brexit addendum into their agreements or face “serious implications”.
She said: “A Brexit clause, or a Brexit addendum, is a contractual clause or document that triggers some change in the parties’ rights and obligations as a result of a defined event occurring, such as Brexit itself.
“This would state that for example Brexit would not act as a force majeure event and would not be able to end or frustrate a contract.
Read more
- ‘We still risk the chaos of a no-deal Brexit,’ FTA warns
- UK logistics is ready for no-deal Brexit promises transport secretary Grant Schapps
- With just over a month until next Brexit deadline, UK transport remains in the dark, warns RHA
“The effect of such a clause or agreement is very similar to any other ‘if/then’, or force majeure, clause that may attempt to govern what will happen should the legal and business environment change in the future.”
Holden cautioned that the clause is not a silver bullet that would solve all Brexit-related issues for companies, but that it would provide certainty that the other party will not hold it to onerous terms without the possibility of negotiation: “The risk to your business of not drafting to address Brexit is that a party could be obliged to continue to perform its obligations in full, even if, as a result of Brexit-related events, doing so has become commercially unattractive or worse and the cost could be unaffordable,” she said.
“An affected party may be unable to renegotiate its contract and so may find itself in breach of contract and facing termination for default and an action for damages or litigation could commence.”
Last week, the FTA warned that a no-deal exit from the EU could bring chaos to the UK supply chain and that most of the crucial topics related to trade and transport have yet to be negotiated with the EU.
Pauline Bastidon, FTA head of global and European policy said: “Minimising frictions, red tape and costs should be at the heart of the negotiations if UK PLC is to continue trading effectively.”
