Aside from the UK-EU trade deal reached for Brexit, by 2022 the Government hope to get 80% of the total UK external trade to be free trade agreements (FTAs) as part of the development of UK independent trade policy. Negotiations for FTAs are underway and those with both Australia and New Zealand have reached agreements in principle. FTAs will give parties preferential treatment in trade such as eliminating tariffs and other barriers on goods and a primary effect is likely to include greater imports of agricultural products to the UK. The UK also hopes to join the Comprehensive and Progressive agreement for Trans Pacific Partnership (CPTPP) and refine trade policy.
Trade and economic barriers between the UK and EU will remain high in 2022 due to restrictions on certain food products, labour shortages and the end of the UK grace period on food import checks. trade disputes in Northern Ireland Protocol and fishing arrangement will remain likely.
Retail and consumer businesses should be aware of the FTAs that are progressing and being concluded. Specifically, understanding the terms of such agreements and how they may affect business operations, supply chains and contracts is crucial to being able to make informed and strategic business.
The adverse impacts of Brexit will continue to hinder and complicate trade in 2022. Businesses should continue to mitigate such impacts through measures that encourage supply chain resilience and contract flexibility.
Brexit will continue to impact businesses' commercial contracts. The full impacts on trade will depend on the commercial and economic implications of Brexit as the trading arrangements and relationship between the EU and UK continue to change. Of particular concern is the impact on the cost of parties’ performance of commercial contracts. The impact could be direct (e.g. a new tax specifically applies to the subject matter of the contract) or indirect (e.g. currency fluctuations mean the UK-based supplier’s costs of purchasing source materials from Europe is increased, which affects margins as there is no contractual right to pass on such costs to a customer). This is of particular relevance to supply chains which has been demonstrated by freight disruptions, shipping delays and border control issues at Irish borders.
Businesses should continue to monitor the situation closely so that they can respond once clearer details emerge of the future trade arrangements between the EU and the UK. It is necessary to continue reviewing and assessing contracts and to possibly renegotiate or terminate some contract. Future-proofing contracts against the long term consequences of Brexit is critical and may be achieved through a degree of flexibility - although the benefits and drawbacks of this must be considered.
Some specific considerations may be the use of Brexit clauses; ensuring 'boilerplate' jurisdiction and service process clauses are reviewed and are locally compliant; and considering dispute settlement or arbitration clauses.
Emerging technologies such as distributed ledger technology and artificial intelligence are being adopted to create 'smart contract' programmes which run automatically, in part or in whole, without the need for human intervention whilst still being legally enforceable. Smart contracts are created by hard coded inputs that give rise to a set of defined outputs. Smart contracts can have specific uses such as on decentralised cryptocurrency exchanges or in the exchange of non-fungible tokens (NFTs).
They can also be 'smart legal contracts' – defined as legally binding contracts in which some or all of the obligations are defined in and/or performed automatically by a computer programme. The UK's current legal framework facilitates and supports the use of smart legal contracts without the need for statutory reform. However, the Law Commission found that there are some areas of legal uncertainty that could eventually lead to legislative changes which include:
In 2022 the Law Commission are continuing with projects on smart legal contracts and the extent to which English Law, and England and Wales as a jurisdiction, is able to facilitate and attract burgeoning markets in digital assets and crypto assets, e.g. "tokenised" assets such as NFTs.
Both the advantages and risks must should be fully appreciated before using smart legal contracts. Businesses choosing to experiment with smart legal contracts are taking steps to appreciate the implications of the identified legal uncertainties and to mitigate them through practices such as being completely clear about when contracts become binding, the buy/sell triggers and issues of precedence. Businesses may decide to follow the Law Commission's projects to anticipate any potential future reforms.
Case: Sky Ltd (formerly Sky Plc) v Skykick UK Ltd [2021] EWCA Civ 1121. The Court of Appeal allowed Sky's appeal and overturned the High Court ruling that Sky's trademarks were partially invalid due to bad faith. It dismissed Sky's appeal for passing off. SkyKick intends to appeal to the Supreme Court where the scope for trademark use will be determined.
If an appeal is dismissed and the Court of Appeal's judgement is upheld, firms will be able to use trade mark registrations that cover very broad specifications of goods or services, even where initially the applicant had no intention of using the mark relating to some of the registered specifications for goods or services. If, however, the appeal is successful, UK trade mark owners will need be aware of the drafting implications to avoid invalidity proceedings and third-party intentions to use a mark.
The Omnibus Directive (EU 2019/2161) is a piece of amending legislation which updates and amends four existing Directives which aim to protect consumer rights: (i) Unfair Contract Terms Directive (93/13/EEC); (ii) Price Indication Directive (98/6/EC); (iii) Unfair Commercial Practices Directive(2005/29/EC); and (iv) Consumer Rights Directive (2011/83/EU). This Omnibus Directive aims to enhance consumer rights and protection throughout the EU due to an increasing risk of EU-wide infringements and to modernise EU consumer protection to account for market developments. The Directive introduces new penalty schemes, enhances enforcement measures and requires increased transparency.
In particular, the Directive introduces regulation relating to the dual quality of consumer goods. Under the Directive, it will be a misleading commercial practice to market goods in one Member States as identical to those in other Member States where the goods have significantly different composition or characteristics unless justified by legitimate and objective factors.
By May 2024, the EC will report on the application of the Omnibus Directive, including whether more detailed provisions on information about the differentiation of goods are necessary.
Due to Brexit, the Directive does not directly apply in the UK unless domestic provisions are adopted. It is expected that there could be divergence on EU consumer regulation as domestic regulation develops post-Brexit. However, businesses that sell products on the EU market may still be subject to the requirements.
Businesses may consider reviewing their product portfolio and the current marketing and labelling of such products to determine if the requirements are met. . Non-compliant businesses will be exposed to consumer claims and potential enforcement action. Under the new penalties schemes imposed by the Directive, the possible fines could amount to up to 4% of turnover. Note that the UK Government's Green Paper on Modernising Consumer Markets proposes Ta cap of 10% of turnover.
The Directive (2019/633) established a minimum of unfair trading practices in business to business (buyer and supplier) relationships in agricultural and food supply chains to prevent unilateral dominance in contracts. In particular, it introduces specific requirements and restrictions on contractual payments terms.
Due to Brexit, the Directive does not directly apply in the UK unless domestic provisions are adopted. However, businesses that have agricultural and food supply chains in part Europe may be subject to the requirements.
Some practices including late payments, last minute order cancellations, unilateral changes are deemed abusive and prohibited in all circumstances. Other practices will only be allowed if agreed fairly between parties. Businesses must be aware which practices are completely prohibited to ensure compliance and ensure contracts are negotiated fairly to prevent claims of unilateral variation.
As part of the UK Government's 'Tackling Obesity Strategy' and Better Health campaign, legislation is being introduced to ban HFSS products being shown on TV and online before 9pm and to end the promotion of foods high in fat, sugar or salt (HFSS) by restricting volume promotions and placement in certain locations.
The rules only apply to selected categories of products and retail and consumer businesses should ascertain whether the restrictions apply to any of their products. Businesses will have to consider Considerations businesses should take into account include the scope of advertising campaigns; factual claims being made; the additional enforcement measures they could be subject to such as the imposition of civil fines and whether certain exemptions for online sales apply.
The Committee of Advertising Practice (CAP) and Broadcast Committee of Advertising Practice (BCAP) are introducing new targeting restrictions that prohibit cosmetic interventions advertising from being directed at under-18s. Restrictions target adverts for cosmetic interventions must not appear in non-broadcast media directed at under-18s, where under-18s make up over 25% of the audience and adverts during or adjacent programmes commissioned for under-18s.
Businesses that have advertising campaigns that fall under the scope of these restrictions will have to make alterations to comply.
The Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP) are conducting an open call for evidence to assist in their regulation of advertising which gives rise to potential harms relating to body image concerns. Future regulation could arise as a result of this consultation.
Businesses may want to participate in the consultation and should look out for responses produced in the future.
Web accessibility is a way of designing websites, tools and technologies so that they are user friendly for all users. It includes making adaptations for blindness and low vision; deafness and hearing loss; neurological limitations; cognitive limitations; speech disabilities and limited mobility. The WCAG is an international standard which is mandatory for the public sector but not yet a legal requirement for the private sector. However, there is increasing consensus to introduce compulsory web accessibility requirements for private sector businesses such as WCAG 2.0 and WCAG 2.1.
A responsible retail and consumer business may want to voluntarily introduce accessibility filters and alterations. It would be best practice to be ahead of regulation becoming a market leader and demonstrating a commitment to Environmental, Social and Governance (ESG) agendas.
