Deal with the EU is the equivalent of arthritis

Published, 9 months ago

The free trade deal with the EU is the equivalent of arthritis – you can still do most of what you did before, but it just takes a bit longer and is more painful!

Something that may help alleviate the pain is good contract management and awareness of the roles and responsibilities of those businesses in your supply chain.

photo 1486299267070 83823f5448dd

Getting ahead of risks and uncertainties can help to put your business in the best position to face the new terrain ahead. Identifying potential potholes and areas of friction now may prevent arguments and delays in the near future.

Terms and conditions of sale or purchase

Take the example of your terms and conditions of sale or purchase. Whilst there will be uncertainty as to the division of roles and responsibilities with unwritten contracts, written contracts can leave gaps that are only become obvious when circumstances change.

By way of example, below is a provision in respect of delivery of goods:

“Seller shall deliver goods to Buyer at Buyer’s address.”

What the above provision fails to state is:

  • at who’s cost;
  • which party insures the goods in transit;
  • when delivery takes place for the purpose of risk of damage or loss – when goods are loaded on to the third-party carrier’s lorry, when the goods are available for unloading at the buyer’s address, or when unloaded; and
  • who is responsible for clearing goods for export or import?

Also do your terms and conditions contain a “no oral modification” clause that provides that amendments are to be made in writing and signed by the parties in order to be effective? If not, could it be said that conduct to date has varied the terms and conditions in place? Does this leave you in a more or less favourable position?

In contrast to the above, perhaps the provision on delivery states:

“Seller shall deliver the goods ExW (as defined in Incoterms® 2020).”

Britain2

Where the buyer is situated in the EU, this would be a favourable outcome to the seller in terms of the burden of logistics and paperwork. However, in practice the seller may need to assist its customer with the process of clearing customs given that it is likely to be the seller that holds the key information, and the seller wants its goods to remain in a good state and for the customer to place orders again in the future. If the seller does assist in this way, it might be appropriate to record that such assistance is offered for a limited time only and does not vary the terms and conditions between the parties.

No oral modification

On a separate point, where there is a “no oral modification” clause in the terms and conditions, and the seller occasionally helped out the odd key customer by delivering to the customer in the EU, where does that leave the seller in terms of its role and obligations going into 2021?

ATA Carnets

Moving away from the concept of delivery, what about where your contract obliges your counterparty to attend trade shows? For example:

“You shall attend three (3) trade shows each Year.”?

Post pandemic, trade shows are again likely to be a popular forum at which businesses and their products can be displayed to potential buyers. Whilst guidance is to be updated, we anticipate that ATA Carnets will need to be used in order to passport samples from the UK to the EU. Who will be responsible for putting in place the paperwork to ensure that samples can be taken with the attendee where the contractual terms are silent in this respect?

UK distributors

Where you are acting as a distributor under a contract with a manufacturer based in Germany, you will become the importer that places the products on the UK market. As this is a new concept for distributors in 2021, it is unlikely that your role as importer and the additional obligations that will be placed on you are addressed by the distribution contract.

Such obligations include labelling and conformity processes. Putting to one side the additional burdens that will be placed on distributors in this position, it may be the case that the additional risk that accompanies such burdens would have resulted in a different price or a more favourable position in respect of purchase requirements being negotiated and accepted by you when the contract was put in place.

Britain3

VAT

What does your contract say about VAT?

Changes in VAT payments will need to be understood. Whether importing or exporting goods, VAT rules are likely to change. What are the implications of this in terms of record keeping, VAT returns, and cashflow? Do changes need to be made in terms of your supply chain structure? If you are the seller, what costs are you to put on your customers and how will this reflect on your brand?

Dialogue

Reflecting on the above issues, an open dialogue between businesses in the supply chain is critical at this stage and in the months to come. Businesses will be battling to keep on top of additional paperwork and logistical challenges, but it is important to:

• reflect on terms in place with counterparties in order to highlight potential risk areas; and

• where necessary, agree on the sharing of additional roles and responsibilities moving forwards.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Stephen Sidkin is a partner and Lucy Coffey is an associate at Fox Williams LLP (www.foxwilliams.com)

© 2020 Fox Williams LLP

Liked what you read? Share the article!

Share on facebook
Share on twitter
Share on pocket
Share on whatsapp
Share on linkedin

Get Noticed with Fashion Rider.

Get the recognition you deserve. Portfolio, Jobs, Social Media promotion and much more. All in one membership. 

You might also like

Looking for easy ways to cut down on plastic?

Plastic plays an essential role in many businesses, but it doesn’t have to be difficult to make your business more sustainable. Read this article for 3 easy ways to cut down on plastic usage in your business.

Read More

Exercise and creativity: Does exercise improve your creativity?

Exercise has known and proven benefits. When we think about exercise, we tend to think only about our physical health but not the benefits of exercise on our mental health. This article explores the correlation between exercise and creativity and how exercise improves your creativity

Read More

How to Stay Healthy When Working in Fashion

The fashion industry can be incredibly demanding, and sometimes this can impact how much fashion professionals feel fulfilled by the work that they are carrying out.

Read More

So What Do You Wear To Play Poker Nowadays?

So What Do You Wear To Play Poker Nowadays? It’s been a while since we’ve been able to get out and about into casinos and …

Read More

Sustainability: 8 easy steps to make your brand more sustainable

In an environment where people are becoming more aware of the real damages of climate change, it is important to keep your brand green and sustainable. Read on for some great tips on how you can improve your brand’s eco-sustainability.

Read More

5 interesting things that make Milan the Fashion Capital of the World

Although Milan is not the capital of Italy, It can be considered the Fashion Capital of the World, find out 5 interesting things that justify Milan’s title!

Read More

Tips and Tricks for Always Looking Presentable at Work

Looking presentable at work is one of the most important an employee should do. Being presentable enables you to have better opportunities. Take a look at this week’s article covering Tips and Tricks for Always Looking Presentable at Work!

Read More

How to Be More Confident at Work

Being confident is a vital skill. Confidence brings a unique charm that can help you grow career-wise. Take a look at these tips on How to be more confident at work.

Read More

6 Steps to Healthy and Beautiful Hands

The modern world is an exciting place with lots to experience and explore, but it can also take a toll on our skin. Most women …

Read More

We use cookies to offer you a better experience and analyze site traffic. By continuing, you consent to the use of the cookies following our privacy policy. You may choose to opt-out through our privacy policy page.