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Brexit: Contractual Terms

Concerns have been raised by a number of firms in construction sector about the potential for delays caused by a no deal Brexit leading to the triggering of penalty clauses within construction contracts, and the impact that this could have on firms within the supply chain, in particular SMEs.   The position of the Construction Leadership Council is that invoking these clauses should be a last resort, and that clients and firms in the supply chain should adopt an open and collaborative approach to identifying and planning to mitigate these risks before they materialise.  We would encourage early discussions between clients and firms, and for all those involved in the supply chain to both demonstrate flexibility and seek to ensure that risks are managed by those organisations best placed to do this.

In the short term, firms should take steps to:

  • understand their obligations and liabilities in relation to delays included within the terms and conditions of contracts they are party to or considering signing;
  • identify the key risks – whether to their workforce, or ability to secure sufficient products or materials to complete the project or work package – and ensure that planning to mitigate these is underway;
  • identify whether there are contract terms and conditions linked to the performance of other firms in the supply chain or the delivery of products or materials by suppliers;
  • review insurance policies and the cover these provide, and if necessary, notify your insurer of anticipated delays or potential claims;
  • identify whether there specific Brexit-related project plans or terms and conditions in relation to the project that are not included in your contract; and
  • consider including clauses relating to Brexit and potential delays within contracts that are under negotiation.

This is a complex area, due to the wide range of contractual practices within both the public and private sectors.

More detailed guidance has been prepared by BuildUK for our community here.

Further guidance available in the FIS Brexit Checklist.

Data Protection in the event of a No-Deal Brexit

Firms need to act to understand where, how and to or with which organisations and countries they send, receive or exchange personal data. They also need to identify whether they have put in place either:

  • Standard Contractual Clauses – standard sets of contractual terms and conditions which the sender and the receiver of the personal data both sign up to. They include contractual obligations which help to protect personal data when it leaves the EEA and the protection of the GDPR; or
  • Binding Corporate Rules – an internal code of conduct operating within a multinational group, which applies to restricted transfers of personal data from the group’s EEA entities to non-EEA group entities. This can be a corporate group or a group of undertakings and enterprises engaged in a joint economic activity. These rules must be approved by an EEA supervisory authority in the country where one of the entities is based.

The Information Commissioner’s Office (ICO) has also provided additional useful information and guidance:

  • ICO advice – this provides an overview of the rules, guidance on what the key issues are and what action firms should consider taking. It also provides links to other sources of information and guidance, including to a list of Frequently Asked Questions.
  • ICO Leaving the EU Six Steps – This sets out the key actions required relating to data transfers to and from the UK, in relation to European operations, internal policies and documentation, and organisational awareness (identifying which key individuals who need to understand and apply the new rules.
  • ICO tool for working out if SCC will work for you – this guidance is focused on SMEs, and outlines how SCCs can work, and the circumstances in which these can be used, as well as identifying possible alternative approaches.

Product Regulation: Trading Timber Products

In the event of no deal, firms will need to follow different processes for trading timber and timber products. The UK will have its own law for trading timber, which will mirror existing EU rules. Full guidance published by the Department for the Environment, Food and Rural Affairs can be accessed here.

Importing from the EU/EEA

From 29 March, firms will need to show that imports from the EU and EEA have been legally harvested; which is already required when timber is imported from non-EU and EEA countries. This will require firms to:

  • gather information on the timber – its species, quantity, supplier, country of harvest and how it complies with relevant laws;
  • assess the risk of timber being illegal by applying the legal criteria; and
  • mitigate any identified risk through obtaining more information or taking action to confirm that the timber is legal.

If the timber has an import permit under the Convention on the International Trade in Endangered Species (CITES), then the UK will recognise this has been legally harvested.

Exporting to the EU/EEA

If you’re exporting timber to the EU or EEA, you may need to supply documentation about the source and legality of your timber. This is so EU and EEA-based customers can meet the EU Timber Regulation (EUTR) due diligence rules. Due diligence systems will vary business by business.

You will not need to take any additional action at the border because of Brexit.

Monitoring Organisations

The UK will still recognise monitoring organisations based in the UK. These are independent bodies which carry out due diligence on timber. They’ll still support UK timber standards. The UK will not automatically recognise EU or EEA monitoring organisations if there’s no deal. The EU has indicated it will no longer recognise monitoring organisations based in the UK if there’s no deal.

Looming deadline to transfer UK Conformity Assessment Certificates before Brexit

Looming deadline to transfer UK Conformity Assessment Certificates before Brexit

Deadline for Moving Certificates to an EU-27 Notified Body in a No Deal Brexit Scenario

On 29 March 2019, UK Notified Bodies will no longer be recognised by the remaining EU-27 Member States. As such, UK bodies will not be in a position to perform conformity assessment tasks under the CPR. If UK manufacturers wish to continue placing product on the EU-27 market they must either:

  • Apply for a new certificate issued by an EU-27 Notified Body, or
  • Arrange to have their UK conformity assessment certificates transferred to an EU-27 Notified Body which would then take over the responsibility for those certificates.

EITHER OPTION – THE MOVE MUST BE COMPLETED BEFORE 29 MARCH 2019.

IF THE MOVE IS NOT MADE BY THIS DATE THEN THE PRODUCT WILL NO LONGER BE ALLOWED ON THE MARKET PLACE OF THE EU-27 MEMBER STATES AND A NEW CONFORMITY ASSESSMENT WILL BE REQUIRED.

FIS members receive 10% discount off Construction Contractual Handbook

FIS members receive 10% discount off Construction Contractual Handbook

The must have Construction Contractual Handbook for everyone involved in Construction – 10% discount for FIS members.

For everyone involved in construction, navigating the contractual landscape can be time consuming and difficult. Essential information to help anyone involved in construction contract matters can now be found in the Construction Contractual Handbook. This Handbook is a must have whether you are an employer, developer, project manager, architect, engineer (structural, civil, M&E and others), surveyor (all types), facilities manager, main contractor, subcontractor (all types including specialists), barrister, solicitor, claims consultant, broker, insurer or anyone else involved in construction.  It guides parties to make sound judgements, avoid disputes, and run projects on a safer basis. It is also useful for those studying for construction related education qualifications.

Simon Bingham, Chairman of Caunton Engineering Ltd and chairman of British Constructional Steelwork Association’s (BCSA’s) Commercial and Contracts Committee said: ‘As a specialist subcontractor, Caunton Engineering Ltd needs to be aware of unilateral and difficult to spot changes to contracts, and make sure that we remain vigilant throughout the duration of the contract.  The Construction Contractual Handbook will be an extremely useful tool for our commercial team.’

The Construction Contractual Handbook is an essential tool which sets out the law and contracts in a compact, easy to follow and accessible way.

The Handbook:

  • Includes a reminder about the formation of a contract.
  • Contains a chapter explaining some of the most common onerous clauses or changes that subcontractors, main contractors, architects, surveyors and employers might come across.
  • Addresses the need to maintain vigilance throughout the duration of the contract, ensuring certificates are issued at the right time, variations and any disputes are properly managed and claims procedures are followed.
  • Advises on which contracts to use and includes guidance on the JCT, NEC, DOMs, CECA and the Infrastructure Conditions of Contract.
  • Includes chapters on Insurance, Insolvency, Bonds and Guarantees, Termination and Competition Law.
  • Includes chapters on Scottish and Irish law.
  • Contains useful checklists as a reminder.

The Construction Contractual Handbook is now available for purchase from the Construction Industry Publications (CIP) Bookshop and is priced at £90. https://www.cip-books.com/product/construction-contractual-handbook-5th-edition .  To claim your 10% FIS discount use the promotional code FIS when checking out.

CIP offer FIS members 10% discount off a range of their publications from Accident Books to specialised legal contracts using the discount code FIS.  Click here for details https://www.cip-books.com/category/fis-range