CHAPTER 5
Contract Basics are complicated by the movement of goods and services between foreign jurisdictions with different legal systems. The drafting of a contract, performance or modification of contractual obligations, resolution of disputes, and enforcement of judgments or orders are relatively straightforward in domestic transactions, but they can be tortuous when you face international transactions subject to foreign laws and legal systems with which you are unfamiliar. In addition, many foreign governments actively take part in or become actual third parties to otherwise private contractual relationships. Governments interfere with private contractual agreements for a variety of reasons. What may be consistent with or contrary to the public policy of a government may depend on current priorities for attracting technology or capital, balance of payments problems, or an unstable political regime. Foreign companies may even serve as convenient scapegoats to be expropriated or nationalized, despite previous contractual guarantees. Thus, in order to protect a company’s commercial interests, contracts in countries with this type of instability should be drafted and negotiated by experienced international business managers and lawyers familiar with the country. For a comprehensive view of international sales contracts for the nonattorney, refer to A Short Course in International Contracts by Karla C. Shippey, J.D., also by World Trade Press.
INTERNATIONAL BUSINESS TRANSACTIONS
Importance of Written Contracts At the very least you should have a written contract whenever you pay for goods, especially when you do not take possession of them at the time of payment. Make sure you have documentation for the sale, even if it is just a simple description of goods, quantity, and price. This is usually sufficient for general merchandise if you take physical delivery and ship the goods yourself, rather than having the seller handle packaging and shipping.
Know Your Jurisdiction Wherever you are doing business you must keep in mind that international contracts must be prepared and negotiated in an entirely different context than domestic ones. A contract in international business is not merely a document setting forth quantity, price, and delivery schedule of the products (although it must surely include such information); it must also take into consideration the local legal system and political and currency risks in the countries involved.
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