The Eurozone and Commodity Contracts 1

Introduction

The possibility of one or more countries exiting the European Monetary Union (the "Eurozone") has been well publicised. It is becoming increasingly important for businesses to understand the implications of different scenarios for the future of the euro.

This is the first of two alerts that consider the legal risks for commodity and energy traders, arising from either a Eurozone Exit (i.e. where one Eurozone Member exits the Eurozone) or a Eurozone Break-up (i.e. the disappearance of the euro altogether).

This alert focuses on the risk of redenomination of euro payment obligations into a new national currency. The next alert will look at whether a Eurozone Exit or Eurozone Break-up will cause the "frustration" of contracts or trigger "force majeure" or "material adverse change" provisions.