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Considerations When Looking To Trade Internationally

09 March 2010

Whenever you trade outside your own country’s border you can face the same problems recovering outstanding sums as you do from companies within your own jurisdiction.  In addition you face the potential conflict of laws as to whose law governs the agreement and potentially you may struggle to recover the sums due to you.  This brief note is intended to give you an overview of points to consider.  It is no substitute for professional specific advice which we strongly recommend before you start entering into contracts with overseas businesses.  The aim of this fact sheet is to define and outline terminology and to give you some points to consider.

1.Prevention Is Better Than Cure

Like so many things it is better, easier and often much cheaper in the long run, if proper specific advice is sought before any action is taken.  Although we understand that the need to get the job done when you have secured a new contract is often the only consideration.  You need to establish who it is you are dealing with; be confident that it is a legitimate request and understand what status of company you are dealing with.  You may also need to understand the legal process of the country they are in and the potential political issues which may cause you problems.

2. Battle Of The Forms

You need to decide on whose terms of business you are contracting or whether in fact you need a bespoke contract prepared.  Normally you want to do business subject to your own standard terms of business, which ideally have been prepared for your own business by an expert who understands what you do.  If the contracting company has terms as well, the general principle is that the final one sent to the other before the contract is formed becomes the terms which govern the agreement.  We will assume for the purpose of this note that they have been properly incorporated in to the contract.

3. The Terms Of Your Terms

Let’s assume that your terms apply to the contract.  We now need to look at the terms contained in your terms to see how they can assist you in recovering your money.

Jurisdiction Clause

When involved in overseas transactions this is the daddy of the clauses.  It needs to be specified that the contract is governed by English law and that the English Courts have exclusive jurisdictions to hear and determine any dispute.
This in essence means that you get a “home game” if the matter becomes disputed and you are not having to find an advisor in another country or trying to understand the finer points of their commercial law system.

Other Clauses

Your terms may well specify that you can recover all of your legal costs and disbursements in the event that your invoices are not paid within your terms.
If you are doing a lot of international trading you may deal with Incoterms – which are set down by the International Chamber of Commerce.  These very clearly specify when risk and liability take place and pass from one party to another.  You should seek specialist advice before using Incoterms.

4. “Jaw Jaw Is Better Than War War”

You may wish to consider entering into arbitration.  Under the “New York” convention (or giving it the full title “The convention on the recognition and enforcement of foreign arbitral awards”).  This is particularly attractive where enforcing a judgment in the jurisdiction of your debtor maybe very difficult.

This article is intended to be a brief guide to some major considerations to have in mind before commencing international trading.  It is in no way to be construed as providing definitive advice and we strongly urge you to seek our expert assistance in order to provide you with practical commercial legal advice. 

Please contact Martin Kingman, Head of Debt Recovery and Insolvency on 01634 828277 or email :  debt@furleypage.co.uk 

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