Reword contracts before Brexit, urges law firm Taylors

Businesses have been urged to write clauses into contracts to protect themselves amid more Brexit uncertainty.

Claire Barnes

Blackburn law firm Taylors says companies should prepare contracts that would prevent them from having to pay additional costs if new regulations come into force.

Claire Barnes, commercial disputes associate, at Taylors, says the government faces a mammoth task during its ‘cut and paste’ job to convert EU law into UK domestic legislation through the Great Repeal Bill. Yet, there are moves businesses can make now to safeguard them in the future.

The landscape remains uncertain as the government continues to thrash out the arrangements for departure from the EU.

While potential scenarios are being discussed, companies are still in the dark as to whether they will be better or worse off.

Claire said one question that would prove important would be whether the UK would replace the EU agencies that have legal powers to regulate industry with its own bodies. If this happened, it would effectively double the amount of red tape businesses would have to navigate to trade in the UK and Europe.

As an example, currently drug makers in the European Economic Area, or single market, can tap into the entire market of more than 500 million patients with a single EU marketing approval. If the UK brought in its own regulators, those drug companies would need to seek approval twice.

Some manufacturers are already writing clauses into supplier contracts to set out who would be liable to pay the additional costs if the UK created its own regulators.

She said: “Relations between regulatory bodies post-Brexit is a matter for negotiations in the run-up to the great divorce scheduled to be finalised in March 2019.

“David Davis confirmed to Parliament that the government would build relationships with its European partners enabling it to maintain common standards, however, he has refused to be drawn on the details of how this would work.

“For that reason, it would make good sense for businesses to prepare for this eventuality by working it into any new contracts they draw up with suppliers to protect themselves from additional expense in the future.”

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