What have I signed up to....?

Despite Brexit being “done” almost 18 months ago, it is seemingly never terribly far away from the headlines.

The Northern Ireland Protocol

Most recently the discussion has centered around Northern Ireland and the Northern Ireland Protocol (“the Protocol”) which was agreed in October 2019 and has been in effect since early 2021.

By way of quick recap, Northern Ireland required special consideration in the Brexit negotiations because it is the only part of the United Kingdom that is connected by land to the EU (the island of Ireland).

The Protocol was borne out of this geographic concern and means that goods are checked when they enter Northern Ireland from the UK, and then no further checks are carried out when the good enter the EU – the Republic of Ireland – as they leave Northern Ireland. Effectively the checks required by the EU are carried out whilst the products remain within the UK.

The Current Situation

Opposition to the Northern Ireland Protocol is in the news currently because the result of the recent elections require a power-sharing government to be formed; the Democratic Unionists are opposed to the Protocol because they consider the Protocol places the border between the UK and Northern Ireland in the Irish Sea and therefore threatens Northern Ireland’s place as part of the UK. Until their concerns over the Protocol are resolved, the DUP are refusing to enter a power-sharing government.

Readers will no doubt be aware that there has also been criticism of the Protocol from the UK Government who have made accusations that there are too many checks and too much paperwork between them and Northern Ireland.

Central to the theme of this note,  there have been murmurings from Westminster that they did not expect the EU to fully enforce the terms of the Protocol. 

Contractual Terms

Putting politics aside, and no matter what your views about Brexit are, the current situation in relation to the Northern Ireland Protocol serves as a timely reminder to always read – and understand - the terms of a contract before you sign up to them.

• Variation

Most contracts will include provisions which allow a party to the contract to seek to vary the terms, however any variation will usually need to be agreed to by all parties and there is rarely a contractual obligation on a party to accept a proposed variation.  Unilateral variation is also unusual.

For any variation to be binding, the contract must usually be varied in accordance with the terms contained within the contract.

• Entire Agreement Clauses

Most contracts will contain an “entire agreement” clause, a provision which states that the contract is everything contained within the written agreement and prevents a party to the contract from relying upon, or indeed being liable for, any representations or statements which are not set out in the written agreement.

It is important to remember that where a contract contains an entire agreement clause, the terms of the contract must fully reflect the parties’ understanding of the terms that have been discussed and negotiated; should a dispute arise because of a representation that is not contained within the terms the aggrieved party will have limited chances of success in relying upon the representation over and above those contained in the signed agreement.

• Termination

Most contracts will contain termination provisions which will enable parties to end their contractual relationship should pre-agreed circumstances arise.  In the case of the Protocol, Article 16 sets out a safeguarding process to be implemented if either the UK or the EU deem that the application of the Protocol is leading to “serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade".

Summary

Whilst discovering that the terms of a contract are being applied to the letter in a more onerous way than you had initially anticipated is unlikely to result in such a newsworthy way as the current situation in Northern Ireland, it can nevertheless be costly and time consuming to resolve.

Thomas Barnard, Commercial Dispute Resolution Partner at Irwin Mitchell comments:

“Understanding the terms and conditions of a contract before you are bound by them is an essential element in seeking to prevent future disputes arising. It is prudent to engage professionals to assist with negotiating and finalising contractual terms and it is also sensible to engage with professionals promptly should a dispute surrounding the terms arise to limit a costly fall out and seek to settle any dispute swiftly and on mutually agreeable terms.

We would always advise that you take the time to read a contract carefully and never sign unless you comfortable with the terms and conditions you're agreeing to.”

Please contact Thomas should you require any further advice in relation to commercial disputes.