International contracts are a lot like domestic contracts, but an international contract usually requires additional terms.
Extra Provisions to Include in International Contracts
Domestic contracts for the sale of goods or the provision of services are agreements made between two parties who both operate their businesses in the United States. International contracts are made between one party who has its business in one country, such as the United States, and one party who has its business in a different country, such as the United Kingdom. Both domestic and international contracts are formed by the process of offer, acceptance, and exchange of something of value to support the promises.
Most domestic and international contracts for the sale of goods or the provision of services will cover the following items:
- identification of the parties to the contract, including name, address, and kind of legal entity, such as a corporation or limited liability company
- a description of the goods or services to be sold
- the quantity and quality of goods
- the price of goods or services
- the duration of the contract
- a force majeure clause, which excuses non-performance of the obligations under the contract due to factors beyond the control of the parties
- the manner of dispute resolution, and
- the place where lawsuits should be filed.
In addition to the above terms, an international contract should also include provisions that cover the following items:
- the official language to be used by the parties in their dealings
- the currency that will govern the transaction
- the country's law that will apply to the contract, and
- the country's courts that will have jurisdiction.
Depending on your situation, there may be other things you need to cover in your contract.
Legal Rights of Parties
The rights of parties to a contract in the United States may be different from the rights of parties to a similar contract in a foreign country. For example, some foreign countries give a dealer or distributor of goods more protection from an American supplier's cancellation of a contract than United States courts would give under similar circumstances. Depending on what law governs the contract, an American supplier sued for cancelling a contract might be forced to pay a lot more than would typically be expected under United States law. This is the kind of unpleasant surprise that can be avoided by consulting with a lawyer before entering into the contract.
Good legal advice at the beginning of a business transaction can often save a lot of time and money if there are disagreements later over the contract. This is particularly true when you are dealing with international contracts where the laws of another country may be different from what you would expect.