Tonucci News
9.08.2016

Brexit – Foreseen effects: Commercial Contracts

If in the short-term, little is likely to change in the relations between Member States and the United Kingdom, the same can not be said with respect to the commercial relations of those  who have interests within the United Kingdom.

The first immediate result of the vote for Brexit was the devaluation of the British pound (whose exchange rate with the euro has fallen to 2012 levels in just a week), and a general market instability, likely to continue for the whole period of withdrawal, with possible fluctuations in one direction or another, based on the periodic disclosures concerning  the progress of negotiations.

These uncertainties will probably have an immediate impact on any short-term contracts in progress. Fluctuating exchange rate conditions and access to credit could affect the economic or legal equilibrium of contracts with consequent risks to their survival (consider for example, cases of excessive burden or possible distortive effects on clauses determining price, withdrawal or termination).

As for the medium and long-term contracts, we must instead consider a greater  number of risks and uncertainties, including the possible consequences of the actual exit of the United Kingdom from the European  Union.

In this context, although it is not yet possible to get a detailed picture of what the structure  and relations between the European  Union and the United Kingdom will be, we can certainly assume that there would be a weakening of the Union’s four fundamental freedoms: free movement of capital, free movement of goods,  free movement of services and free movement of persons.

The impact of possible changes on existing contracts and those currently under negotiation when Brexit will be effective may even be disruptive due to the possible introduction of duties, restrictions on the movement of certain goods  or services or the introduction of new financial charges. This could prejudice or render impossible the existence or successful conclusion of some agreements and negotiations.

However, this must not lead businesses and consumers in the United Kingdom and the European  Union to renounce mutual markets, instead businesses and professionals in any industry should conduct a careful analysis of the risks and opportunities  associated with Brexit, and allow themselves time to prepare  suitable precautions to protect  their own interests and those  of their customers.

You can consult and/or download the full version of the Brexit dossier here.

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