Issue Arise In Drafting International Contracts

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A man drafting an international contract.

Drafting contracts is difficult, and every new case brings its own challenges. International contracts add entirely new, and sometimes unusual, factors into an already complex situation. But the goal of drafting contracts is to clarify the respective rights and obligations of the parties while minimizing liability. Although it’s not always easy, it’s essential to write up the contract in a comprehensive and diligent way. That’s the level of service you can expect from Rosenbaum & Taylor.

Many international contracts are written in English, but getting the language right is the first step in drafting. Not using the “right” language can cause more problems than simply translation errors or misunderstandings. Some foreign courts have refused to enforce contracts not written in the prevailing language. Before drafting, make sure that English is the preferred and proper language.

The choice of law and choice of the forum are two related and fundamental issues to work out before drafting. The choice of law clarifies which country’s laws will govern the contract. Meanwhile, the choice of forum refers to which country will hear any disputes litigated over the contract. You don’t want to have an unfamiliar country’s laws control interpretation of your agreement. Nor do you want to have to travel to another country (or an unexpected one) for legal proceedings over it.

Next, be sure to use clear language in your contract. Unclear language can be particularly problematic with certain legal terms of art, such as “consequential damages.” Not all cultures or countries understand these terms in the same way. A term or phrase that seems mundane may actually be unique to American contract jurisprudence and culture. Be sure to have an attorney vet the terms and phrases that are used when handling international contracts.

A man drafting an international contract.

Many contracts have notice clauses for one purpose or another. They typically require one party to adequately give notice to the other before some action is to be taken. When dealing with domestic clients, notice is not usually a major issue. But international contracts can make notice more complicated.

For one, it needs to be clear exactly how much notice has to be given. It should also be stated who within the parties’ organizations is sufficient to receive communication of the notice. The proper format should be specified, such as email versus postal service. The postal service is obviously slower, so that should be taken into consideration when deciding the amount of notice. Finally, be sure to indicate in which language the notice should be given.

Intellectual property rights are often put at risk when dealing with overseas clients. It’s harder to keep an eye on how your proprietary rights are being used, and who has access to them. You may be dealing with more than one company or affiliates of that company which may jeopardize intellectual property rights. It should be clear, at a minimum, which rights are protected, as well as the terms of any licensing agreements.

Currency is one of those topics that are easy to overlook in contracts. Never assume a particular currency is understood or tacitly agreed upon. Make it clear which currency is acceptable, and beware of misleading or vague terms. For instance, “dollars” can refer to the currency of several different countries: the United States, Australia, Canada, etc. Be clear throughout the contract which precise currency may be used.

We’re Here To Meet Your Contract Drafting Needs

There are, of course, many other drafting hurdles that could arise in your international contract. Our goal at Rosenbaum & Taylor is to protect your interests when you enter into a new agreement. We don’t rush contracts, but instead, take time to understand the issues involved so we can meet our clients’ needs. If you have questions about your international contract, or you anticipate entering into one, let us help. We can review the agreement, answer your questions, and suggest possible revisions. Give us a call today to get started on your case.

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