CHAPTER 9
Parties to the Transaction, Part 3 IN THE CENTER OF YOUR DESK,
on top of all your lists of possible contract terms, your notes from negotiation, several memoranda, and lots of letters, there rests T H E C O N T R A C T . You have not signed it. You have not even read it all the way through from beginning to end. Maybe you have peeked inside at a few provisions, in particular the payment clauses. Does it state your intentions? Does it cover all of the basics? Does it cover all of the extras? And the most important question looms on the horizon: should you sign it? It is wise to read the contract several times, keeping in mind different concerns each time to be certain that your contract states your entire agreement. You should first read it to become familiar with the organization of the provisions. The next review should include a comparison to the terms that you have already negotiated and to which you have orally agreed. On the third review, you should consider whether the contract defines every aspect of the relationship that you intended in terms of the practices in your industry and in your own particular business. Finally, you should always be certain that you have covered the legal and business issues common to all international contracts, and in this regard you should consider whether the contract answers the points listed here.
Buyer Although the seller or the seller’s attorney often drafts the sales contract, as the buyer you had better review and understand every term before signing. Further, it is wise to have your own attorney’s advice on the terms. To protect your interests and to work with your attorney to your best advantage, keep in mind the following issues related to the contract terms. COMMITMENT TO RELATIONSHIP
Is the contract for a one-time transaction, or does it create an ongoing relationship? Contract terms tend to differ depending on whether the parties intend to establish a long-term relationship. The basic distinction is in the flexibility permitted to the contracting parties to negotiate details as their relationship continues. In a one-time transaction, the terms of the sale are established and in the absence of a major problem, the parties rarely renegotiate. If the parties intend to work together for a long time, they may still set up a contract for a single transaction, but generally the contract will allow the parties to alter terms as necessary to make the performance of the contract profitable for both. Alternatively, the parties may enter into an agreement that establishes the basic parameters of all transactions that will subsequently occur between them. Such an agreement will not deal with the particulars of any one sale, but will be in effect
96
