Family businesses and Brexit

Comments08 July 2016 By Adam Jones
Much is being said and written about the UK’s exit from the EU, and there will be much to do in respect of it. As our recent research has shown, however, there are family owned businesses out there who have survived not just two World Wars but also the Napoleonic Wars, all of which drained the country of personnel and funds, and been through multiple economic downturns, whether Black Tuesday, Black Wednesday – and perhaps the recent vote will go down as a Black Thursday. But what might it mean for you?

One immediate impact is currency volatility, so you will be affected where contractual terms relate to exchange rates. Where you have contracts that use territorial descriptions such as ‘European Union’ they may well need a view taken on their interpretation (in due course) as this may relate to permitted areas of operation of your business, restrictive covenants, and so on. Employment law also takes a lot of its rights from EU law and will remain part of English law for now, but if these have gone too far we may well see these curtailed in the future.

However, broadly speaking EU law does not significantly shape English contract law, which will therefore remain largely unaffected, save for specific protections on (for example) intellectual property rights that are derived from European Community trademarks or similar. You might also be wondering about clauses that could allow termination or suspension for a material adverse effect, or for ‘force majeure’, but one thing to remember is that we are not yet “out” and in fact it is unlikely that the exit from the EU (when it comes) would allow termination, suspension or withdrawal bearing in mind the heavy burden of proof that a particular event such as that has caused an inability to meet obligations. Having said that, we can expect any new contracts that you might enter into going forward to potentially include specific drafting relating to the UK’s exit from the EU, possibly providing a new and specific right to back out of a commercial deal. 

As for any specific implications for being family owned, most likely the divisions caused by the vote will continue around the dinner tables, as will the berating of those who now claim to regret their support for exit, and you can bet that this is going on within most families across the country. Your task is to continue to focus on your family’s shared vision of where your business is going, what it needs to do to continue to thrive, and whether or not it is the experience of the older generations or the drive of the current and future generations – or a potent mixture of both – that is needed to see you through the unclear and turbulent times ahead.

The content of this article is for general information only. For further information regarding family owned businesses and Brexit, please contact Adam Jones. Law covered as at July 2016.

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