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How to protect your business when drafting cross-border contract
Cross-border contracts are legally binding documents between individuals or businesses highlighting the terms of an agreement, or multiple agreements, made between them when trading across two or more countries. The contract may relate to employment contracts made between employers and employees, or when commercial companies enter into business with each other, or any other instances where a legal document is necessary.
Drafting a contract may be more challenging between individuals or companies located in different countries. We will explain the best way to draft a cross-border contract, the main issues that can arise, and how you can protect yourself from any future legal disputes that may arise.
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The best way to draft a legal contract.
Some common problems individuals and businesses may face.
Choosing the best jurisdiction.
How to make your contract air-tight.
More about how you can solve any possible legal issues that can arise.
How our expert team can assist you.
Frequently asked questions concerning cross-border contract disputes.
How to draft a cross-border contract
Contracts protect your business interests, and it is essential to ensure that your contract is as comprehensive as possible to protect your assets and interests. All parties involved in the contract should agree to the terms before the contract is signed off. It is essential to seek legal advice from lawyers who are qualified in the jurisdictions in which the parties to the contract are based. Also, you should ensure that the lawyers speak the languages of the countries concerned.
When dealing with cross-border contracts, use understandable language when listing services, products and the length of time for which the contract is valid. This should apply when laying out the consequences of breaching the contract for the avoidance of confusion. Dispute resolution terms should also be included, such as a clause obliging the parties to use alternative dispute resolution (ADR) initially in the event of a dispute. As your business dealings are cross-border, the jurisdiction which applies to the terms of your contract should be defined, so you are aware of where negotiations should take place if you enter into a cross-border dispute.
If you need assistance from an international lawyer, you can find out more information on our website.
What common issues can occur with cross-border contracts?
When navigating cross-border business dealings, the main issues often pivot on language and cultural barriers. Which is why clarity is important to avoid any issues appearing further down the line. It is essential to include jurisdiction and alternative dispute resolution clauses which ensure that the dispute will be dealt with in the jurisdiction of your choice. The other party will not be able to litigate without a degree of negotiation prior to the matter going to court.
If you are unaware of the terms of the contract, this can lead to problems further down the line, as the contract may be breached bringing legal problems for both parties.
Which jurisdiction is best?
Jurisdiction is a most important issue and should be considered before the contract is drafted. Without a jurisdiction clause, the court will decide where the applicable law and jurisdiction lies, which could leave you at a disadvantage. European Union Member States are governed by the Rome Convention (Rome I and Rome II). However, if you include a jurisdiction clause in your contract your jurisdiction of choice will prevail.
The jurisdiction of England & Wales is frequently invoked in contracts as it is perceived as unbiased.
If another jurisdiction is considered it is important to seek the help of an international lawyer who understands the law in the country where jurisdiction lies.
Removing risk from your contract
For a contract to be valid, it must include the following important elements: contractual offer, acceptance, consideration, contractual capacity, and legality.
The offer is made by one party to another, and it must be understood and agreed upon in the contract. There should be a statement of terms, which must be accepted by the other party. Acceptance should be declared in the form of a signature or any other tangible means. Consideration applies to an exchange of value; this could be in the form of a promise by one party to provide something for the other, such as tangible items or a service. There must also be an intention between both parties to enter into a legal binding contract.
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Anticipating legal issues that may arise
Even with a well-drafted contract there is no guarantee that you won't encounter any cross-border disputes. Unexpected factors may occur so you need to be prepared for any eventuality. By following the steps listed previously, such as implementing a jurisdiction and ADR clauses within the contract you can help prevent disputes before they occur.
Common disputes that can arise include parties disagreeing on terms or not understanding their contractual obligations, also breaching the contract. If you seek international legal expertise to assist in the drafting of your contract, you will ensure that your contract is sound and the only risk of dispute will arise due to breaches or an unanticipated factor.
How Giambrone & Partners can help
Our expert lawyers have years of experience in handling a varied range of cross-border litigation cases and have enabled our clients to achieve the results they require both in and out of court. We always aim to keep cases out of court, providing expert alternative dispute resolution to settle matters in an efficient manner.
To find out more, or to arrange a consultation to discuss dispute resolution, please get in touch with our team today.
Common queries
Can a contract be governed between two countries?
If you have created a contract with another party in a different country, it is advised that you include a jurisdiction clause so that, in the event of a dispute, it is clear where jurisdiction lies. If is not included you may find that a dispute is argued in a jurisdiction in a country that maybe biased towards the other party if that is their country.
Can I draft my own contract?
You can draft a contract yourself, but it is strongly advised that you seek the guidance of a lawyer experienced in drafting contracts applicable to cross-border matters to ensure the risk of legal issues occurring in the future is reduced.
Related content
- Types of commercial cross-border disputes and options for resolving them
- A guide to EU and UK trade agreements post-Brexit