Negotiating and drafting cross-border commercial contracts can be rather challenging. With differences in common law and civil law jurisdictions, decisions regarding commercial terms and dispute arbitrations can significantly affect the future of the contract. Here are a few tips from co-founder / co-director of the Institute for Dispute Resolution Karen DeSoto. Negotiating and drafting cross-border commercial contracts can be rather challenging. With differences in common law and civil law jurisdictions, decisions regarding commercial terms and dispute arbitrations can significantly affect the future of the contract. Here are a few tips from co-founder / co-director of the Institute for Dispute Resolution Karen DeSoto.
Have Clarity on What the Deal is about
A good commercial agreement is detailed and effectively recites the intent of all the parties in a simple, consistent and comprehensive manner. The agreement must provide a robust understanding of the regulatory — as well as the technical requirements of the relevant industry — allowing parties to satisfactorily negotiate a contract that protects everyone involved, and also allows them to reach the intended goals.
Anticipate the Demands of the Other Parties
Make sure you make well researched and educated guesses about what the other parties’ requirements will be and incorporate elements that seem viable to you into your draft agreement. Choosing to draft a one-sided agreement or refusing all the change requests may result in a complete breakdown of a possible contract. If your transaction is with a non-English-speaking country, remember that the lawyer may not have the best command of the language and may come with a disadvantage when drafting the contract. By showing that you are taking into account their requirement, will highlight your positive intent and result in a favourable deal.
Identify not only the terms if things go well, but also the remedies if things don’t go as intended.
Finally, when involving yourself with any international transaction, investigate the issues that may result in negative publicity for your company. Make sure you are free of any criminal liability, issues related to child labour, local privacy laws, tax frauds and antitrust issues.
Karen DeSoto 