Challenges That Arise In Drafting International Contracts

Challenges That Arise In Drafting International Contracts
international agreement

Your company will use contracts in one form or another. And no doubt you understand the importance of having accurate and comprehensive written agreements. But if your business deals with foreign companies or international matters, having well-drafted contracts is even more significant. Your goal with any contract is to clarify rights and obligations while limiting liability. If you need help drafting an international contract, trust an experienced Connecticut business attorney.

Getting the language correct is the first task in any contract drafting. While this may seem obvious, its importance cannot be understated. And it’s not just misunderstandings and translation errors that can trip up your contract. There have been cases of foreign courts that refused to enforce contracts not written in the prevailing national language. Make sure, before drafting, that the language chosen is the “right” one.

Similarly, make sure the language is clear, especially when dealing with terms of art. Take, for example, “consequential damages.” It’s a term of art that may not have the same meaning in another court, even an English-speaking one. Not all terms of art are understood the same everywhere, even if they are translated correctly into a foreign language.

Two related and fundamental issues that arise are choice of law and choice of forum. A Connecticut business lawyer can explain these two concepts. But basically, choice of law states which country’s laws will govern interpretation of the contract. On the other hand, choice of forum clarifies which country’s courts will hear disputes over the contract.

Not getting these two right can be disastrous. Your contract may be interpreted according to laws you didn’t anticipate. Or, you may have to travel to a country you weren’t expecting for court proceedings. Many international contracts choose the United States for choice of law and choice of forum. However, make sure this is clearly understood at the outset of drafting.

Giving notice can be challenging when dealing with contracts that cross borders and time zones. Notice clauses are necessary before certain actions are taken. But the exact amount of notice has to be clear. It should also be clarified which individuals within the respective companies are proper to send and receive notice. Also, make sure the method of conveying notice – e.g. email versus postal service – is stated. Some companies want written notice sent via traditional postal service. But remember, the mail has to travel further. This consideration will impact the amount of adequate notice given as well.

It is generally harder to protect intellectual property rights when dealing with clients overseas. It needs to be expressly stated what rights are protected and who is licensed to use them. Ask a Connecticut business lawyer about this. Failing to address intellectual property rights could jeopardize them.

Finally, make sure there is no misunderstanding about acceptable currency to be used in financial transactions. This might seem like a no-brainer, but contracts often use vague or misleading terms. For example, the word “dollars” means different things to countries that use them. An American dollar is not the same as a Canadian dollar, for instance. Leave no question as to which precise currency is agreed upon.

MEETING YOUR CONTRACT DRAFTING AND BUSINESS NEEDS

This is just an overview of some of the topics that could arise in drafting your international contract. There are others, and it’s imperative to speak with a knowledgeable attorney about them. At Aeton Law Partners, we understand contract drafting. Where necessary, we can call upon specialists and others with useful input. Our goal is to protect your interests when your company enters a new agreement, international or domestic. Let us help with the drafting, negotiating, and revising of your contracts. Call us today to get started.

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