How Will Brexit Impact Your European Contracts?
The result of the UK’s referendum on staying within the European Union was announced on Friday, 24 June 2016 with a vote in favor of the UK leaving the EU.
Regardless of the future relationship between the UK and EU, the result of this referendum is that all businesses that trade with the UK, whether as a supplier, purchaser or for staffing purposes, will need to review their business situation. While the new government hasn’t given any indication as to when it will trigger Article 50 of the Lisbon Treaty, which sets out the formalities required for the UK to formally commence its withdrawal, the change is inevitable.
Politics aside, companies of all sizes and industries should consider and plan ahead in order to protect their interests. One of the most crucial aspects will be the need to evaluate your entire contracts database – all contracts that involve the supply or purchase of goods, services or labor to or from the UK will be affected by the results of the referendum and will need to be assessed, as will those whose pricing assumes tariff free access, EU funding or harmonized regulatory or licensing regimes.
While the future shape of the UK’s relationship with the EU will be unclear for some time, contingency planning involving contract review should start now with a view to managing risks arising from the initial stage of uncertainty.
Understanding the Impact of Brexit Through Contracts Analytics
The first step in preparing your business to operate in a post-Brexit economic climate is to analyze your existing contract database in order to gain more visibility and clarity into which clauses will be affected.
Key issues to consider when analyzing your contracts and agreements include:
- analysis of terms that could become invalid due following Brexit
- review of any pricing that may assume no tariffs, quotas or other barriers, or which are tailored around the EU free movement of goods and people
- the impact of market disruption and currency fluctuations
- an analysis of the ability to continue to sell a product/service if regulatory changes occur
The question is: how do you locate the thousands of contracts scattered across various content repositories, sort out which ones will be impacted by the Brexit results and triage those of highest importance and impact?
You can either do it manually by setting aside vast amount of human and monetary resources or deploy a software solution that will support your transition.
Infinote’s powerful discovery capabilities will enable you to display content within a particular context, thus ensuring you quick and accurate assessment of your existing contract database. Infinote’s contracts analysis will bring structure and actionable results, delivering 100% accuracy during the analysis and update of contracts.
In addition to its search and analysis capabilities, Infinote’s platform is designed to support the drafting of new contracts based on standard terms – something that will inevitably occur when drafting post-Brexit trading agreements and contracts. Traditionally, the drafting of new contracts is a time-consuming process, but with Infinote this process can be streamlined. Infinote automatically discovers and converts your existing contract repository into a reusable library of words and phrases, that you can use to auto-complete new documents based on standardized clauses and phrases.
The two years given by Article 50 may seem like a long time to prepare your business, but with thousands of documents to review, time can pass very quickly. If you’re an EU company facing changes to your UK centric contracts, or a UK company facing changes to your EU contractual situation then reach out to us for further information today.