What can contracts concluded by Polish-English businesses may look like in the post-Brexit era? Is it possible to protect against unfair provisions in trade contracts?

Both in Great Britain and in Poland recognizes high degree of freedom in entering into contracts. Most of the relations between businesses now depends unwritten set of rules governing relationships (likely to be in small contracts) or heavily regulated agreements where parties force their proposals upon the other.

In the later example – it may turn to be quite important to understand the effects of the changes onto the parties’ legal position. One of the changes that businesses are already introducing into contracts is the change regarding ‘force majure’.

We have already observed in Polish-English contracts very clear attempts to present solutions that would help the parties avoid the risk of ‘breach of contract’ – as a result of the political factors. Below some information on most common ones:

• Changes regarding the choice of jurisdiction of the courts and the law in the contracts – EU legislation – Rome I and II regulations still apply in contractual and non-contractual matters in the UK – however, many of our clients, experienced pushing for the law of one or the other state as prevailing – depending on the more dominant party wishes. We suggest using a precise definition of the applicable law and courts in contracts (Polish or English), as well as using clauses preventing issuing court proceedings – without mediation or giving the other party a formal notification to cure the breach;
• • Changes in application of ‘force majure’ clauses – taking into account political risks, and e.g. delays in deliveries caused by new circumstances (often occurring in transport). We suggest caution in arranging contractual penalties (‘liquidated damages’);
• Changes to ‘frustration’ and ‘variation’ in contracts – including changes to pricing policy. We suggest, to specify when a change may be accepted. It may be useful to reference the option to change the price to some economic indicator (ie. consumer price index in Poland or the UK) or in relation to some intervening factor (e.g. a documented change in the cost of production – which the other party may ask, to be proven);
• Intrusive changes in clauses allowing for the renegotiation of contractual terms – they appear much more often than before Brexit –they are also slightly more intrusive. Please be aware of overly vague renegotiation clauses – to avoid changing them every single time.

Please note that these changes may occur not only in the contracts concluded between the parties – but also in the ‘Standard Terms of Business’, which are very popular in the UK (and not so much in Poland).