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Commercial contracts

Posted on 24 June 2021

Whilst many retailers will have reviewed or "future-proofed" their contractual arrangements before the end of the Brexit transition period to mitigate Brexit-related risks, there are a number of issues they should still continue to bear in mind when negotiating commercial contracts, alongside IP, Trade in Goods and Services, and Data Protection.

Contractual:

  • Retailers should continue to consider how risk is allocated in their contracts. Particularly, any risks relating to regulatory divergence, trade barriers, logistical and compliance costs, currency fluctuations and any other charges or levies that are now more likely to affect such agreements. These are likely to impact the cost and pricing structure, the duration of the contract and overall risk profile between the parties. Given the risks, we have already noticed that our retail clients are more carefully considering what contractual termination rights to include for both themselves and their counterparty as a direct result of the new conditions that they face.
  • UK and EU based retailers and their counterparts have also been wary of how Brexit may affect the enforcement of contracts in cross-border disputes. The framework for such disputes has changed and requires a careful assessment of questions relating to jurisdiction, service of proceedings, and enforcement.

Legal and regulatory changes:

  • There will be increased divergence over time between the UK and EU's legal and regulatory positions. For example, as mentioned above, there are a number of EU laws that are incoming in relation to consumer protection and digital trade, which the UK may or may not seek to replicate. Retailers selling to consumers in both the UK and the EU swill need to be alive to the impact of divergence on how they interact with their customers in both territories.
  • Parties should consider the possible impact of this on their existing and future agreements (particularly medium to long-term agreements where there is greater risk that divergence will impact the agreement), and ensure they are satisfied with the allocation of obligations and responsibilities. Additionally, suppliers of goods or services will need to review and change their standard terms and conditions if previously used for both the UK and EU.

Digital trade:

The UK is no longer participating in the EU's Digital Single Market regime (a series of laws seeking to harmonise areas such as copyright, portability of content, geo-blocking, e-commerce and audio-visual media services). As a result, retailers should be considering the following:

  • E-commerce: If a UK based retailer is trading online in the European Economic Area (EEA), they should consider and review their website information requirements as they will need to comply with the legal requirements relating to online activities in each relevant EEA country, particularly as those develop as EU Member States implement a series of consumer-related EU laws.
  • New EU rules relating to supply of digital content or digital services: EU Member States must implement the Digital Content and Digital Services Directive into their national laws by 1 July 2021, and apply the measures from 1 January 2022. UK traders supplying digital content or services to EU-based consumers will need to review the implementing laws in relevant Member States, to ensure compliance.
  • Geo-blocking: The EU Geo-Blocking Regulation (which regulates situations where access to a website is blocked based on the consumer's nationality) no longer applies in the UK. This means businesses may discriminate between EU and UK customers in the UK. However, UK businesses operating in the EU must still comply with the EU Geo-Blocking Regulation.

For further details, see our Brexit hub on Commercial Contracts and Digital Trade.

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