Whichever way Greeks vote in Sunday’s referendum, the impact of Greece’s financial position on trade with Greek companies will continue for some time.

Selling to Greece?

Sellers to Greece who have taken advantage of credit insurance probably have no need to read further.

But what of sellers relying on letters of credit or other secured forms of payment? In short a letter of credit is only as secure as its terms and its issuing Greek bank unless confirmed by a non-Greek bank. Other secured forms of payment may depend on the terms of the security.

Increasingly businesses are looking at the force majeure clauses contained in commercial agreements and finance documents.

Similar situations exist where guarantees have been taken from third parties.

Buying from Greece?

For buyers from Greek companies who are uncertain as to the long term viability of their Greek suppliers, the above issues should be considered in reverse.

But also consideration should be given as to whether the relevant agreements exclude a right of set off. If a right of set off is not excluded, a buyer could consider claiming that its agreement has been breached and then set off a claim for damages against monies otherwise payable to the Greek seller. As such a buyer may find that the grey cloud of Greek fall out has a golden fleece!


There has been speculation that following Sunday’s referendum Greece could find itself stuck formally within the Eurozone but without access to third party funding (the so-called Grimbo scenario).

It is also possible that businesses in other Eurozone members – particularly Portugal, Ireland and Spain – will come under pressure.

Action points!

To safeguard your position give thought to:

  • Ensuring that any new agreement is stated to be governed by English law and that the English courts will determine any disputes between the parties. Failure to do so is likely to leave you exposed.
  • What is to be the currency of payment. Also how are you to be paid?
  • Your agreement providing for payment in an exact currency, for example, Sterling. Inclusion of a provision where payment is to be made ‘in the currency of the Republic of Portugal’ is only likely to result in problems.
  • Your letters of credit. If relying on a letter of credit ensure that the letter of credit is confirmed by the nominated bank to avoid the problem where the bank issuing the letter of credit is in a country under pressure. Equally the letter of credit should be stated to be irrevocable – this will avoid the issuing bank revoking it.
  • Ensuring that you have a retention of title right and that this right is properly incorporated into your agreement.



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