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.
To safeguard your position give thought to:
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