Brexit and Prices

One expert was quoated as saying “

The price dispute between Tesco and Unilever is the first of many stand-offs that are inevitable as the implications of Brexit kick in and companies try to navigate a sustainable way forward. The problem is that some companies will use the exchange rate as a vehicle for negotiating price rises that are a) avoidable and b) could leave some of their customers un-competitive, if they agree to pay more when others refuse”.Â

Any supply agreements need to be carefully considered in that drafters will need to consider the impact Brexit will have on prices and if so:

  • Should Brexit mean an automatic price review?Â

  • What prices index will be the most appropriate? Do we need a prices index?

  • Can we terminate as a result of Brexit?

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One Clause I have seen refers to the followingÂ

[PRODUCTÂ PRICES]

The Product Prices at the date of this agreement are set out in the Schedule. No variations shall be made to the Product Prices during the Term UNLESS EXPRESSLY STATED.

YOU may adjust the Product Prices with effect from [ XXXX say 1 Jan and or 6 month intervals] to reflect increases or decreases in the cost of [legislation/raw materials OR [ITEM SUBJECT TO INDEXATION] indicated by the percentage increase or decrease in the Consumer Prices Index during the previous [year OR six months]. You shall give the Customer not less than one month’s prior notice in writing of proposed changes. If the Customer objects both parties agree to an expert who shall be independent.Â

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