Territory definition post Brexit

I have no doubt that you already know that the UK left the EU on 31st January 2020, but have you considered whether you need to change your contracts as a consequence?

 

This blog looks at the definition of Territory in commercial contracts post Brexit. Does your contract make reference to a Territory that covers or includes the EU? If it does, was your intention that this definition was to include the UK? If so, the first thing to check is if the specific wording of the definition covers member states as at the date of the agreement, or member states from time to time, or whether it names each country it is looking to include. If the definition says member states as at the date of the agreement and the agreement is dated prior to 31st January 2020 then the UK will still be covered without amendment, however if it uses the phrase, from time to time, it will not include the UK post 31st January 2020. If the definition includes a full list of countries and the UK is named, then the UK will still be covered by the contract even after Brexit. Some definitions may simply make state the Territory as the EU without further clarification, in this case you need to review the other contract clauses to determine whether the UK is still included or excluded after 31st January 2020.

 

Now that 31st January 2020 has passed, we should also consider how to draft the definition of Territory going forward. The UK is the first and currently the only EU member state to have invoked Article 50 and the only member state to have left the EU but other member states may follow and so it is important to future proof your contracts at the point of drafting. We should also look at the definition of the UK which is made up of England, Scotland, Wales and Northern Ireland. Let’s not forget that during the Brexit referendum, 62% of the population of Scotland voted in favour of the UK remaining in the EU and the current First Minister for Scotland, Nicola Sturgeon says she still wants to hold a Scottish independence referendum in 2020. So, when the UK is mentioned as a territory, it would be sensible to determine whether you want to cover the UK as it stands now, or the UK as it may change from time to time.

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