{"id":874,"date":"2011-02-14T08:00:05","date_gmt":"2011-02-14T08:00:05","guid":{"rendered":"http:\/\/www.asociacion-eurojuris.es\/en\/?p=874"},"modified":"2020-04-11T07:20:39","modified_gmt":"2020-04-11T07:20:39","slug":"international-contracts","status":"publish","type":"post","link":"https:\/\/www.asociacion-eurojuris.es\/en\/international-contracts\/","title":{"rendered":"International Contracts"},"content":{"rendered":"

Lawyers working in international law<\/strong> oftentimes interpret, review, and advise their clients<\/strong> on contracts written by other international lawyers in foreign countries.\u00a0 Considering the great possibility for legal, linguistic, and cultural misinterpretations,<\/strong> it is important for international lawyers to become familiar with the types of contractual clauses that they see in such diverse contexts.\u00a0<\/p>\n

Culture and Contracts for International Lawyers<\/span>\u00a0<\/em><\/strong><\/p>\n

In understanding the commonly used clauses in contracts drafted by lawyers in other countries, international lawyers will be better prepared to explain to their clients the consequences and implications of contract language <\/strong>written according to the laws and customs of other countries.\u00a0 International lawyers may do work with clients and their legal representatives across the world.\u00a0 However, the purpose of this article is to help guide those lawyers practicing outside of the U.S. toward understanding the common clauses used in contracts written by U.S. lawyers.<\/p>\n

Common situation<\/span><\/em><\/strong><\/p>\n

The international-contract scenario<\/strong> is easy to identify.\u00a0 It begins with a party in Mexico, for example, who contracts with another party in Germany.\u00a0 Or it starts with a Spanish company wishing to employ a French agent to work in Spain.\u00a0 While the parties negotiate<\/strong> the contract terms, one party’s lawyer may, in the end, write most of the contract due to the difference in the bargaining positions of the parties.\u00a0 The party whose lawyer drafts most of the contract has the advantage of including certain clauses with legal concepts that may be unknown<\/strong> to lawyers not practicing in that country.\u00a0 To avoid this situation of allowing unfavorable contract terms into a business deal, international lawyers should become familiar with<\/strong> – to the extent time and circumstances permit – the country’s laws and customs<\/strong> where the other contracting party resides.<\/p>\n

An understanding of the typical contractual clauses used in the U.S. legal system is beneficial to those international lawyers whose clients contract with parties represented by U.S. lawyers.<\/strong>\u00a0 Because the U.S. legal system is based on the common law<\/strong> (judge-made law), typical contractual clauses encompass legal concepts of well-developed case law of which international lawyers may not be aware.\u00a0 The following paragraph and examples provide the basic background about the standard terms and conditions clauses<\/strong> normally included in many contracts drafted by U.S. lawyers.<\/p>\n

Standard terms and conditions<\/span><\/em><\/strong><\/p>\n

A contract contains the standard contractual clauses and performance deliverables<\/strong> to which both parties agree.\u00a0 While the performance deliverables section of a contract provides the parties with general ideas of expectations, the standard terms and conditions section of a contract is just as important.\u00a0 Signing the contract binds a party to the common contractual clauses as much as it does to the performance deliverables clauses. <\/strong>\u00a0In summary, the standard terms and conditions section may contain just as many or more calls to action as the performance expectations.\u00a0 Therefore, while a French agent contracted to do work in Spain may be more aware of his or her duties to carry out performance, the standard terms and conditions that also bind the agent are critical to the agent’s understanding of how <\/em>to perform.\u00a0 This is because standard terms and conditions clauses in U.S. contracts generally lay the legal framework for how to interpret the contract, which law applies, dispute resolution options, etc.<\/strong><\/p>\n

The clauses contained in the standard terms and conditions section consist primarily of those clauses the parties include to protect themselves<\/strong> in case of breach of contract or potential litigation over contract terms or circumstances.\u00a0 A breach of contract may result, for example, from a breakdown in the parties’ relationship or a misunderstanding about performance or enforceable promises.\u00a0 To assist international lawyers with identifying and understanding common contract clauses to prevent a breach of contract for their clients,<\/strong> listed below are some of the typical contract clauses<\/strong> normally contained in a standard terms and conditions section of contracts.\u00a0 This list is not exhaustive, but it does contain some of the more commonly included contract clauses in the U.S. legal system.<\/p>\n

Commonly called:\u00a0 Merger\/entire agreement\/complete agreement clause<\/span><\/em><\/p>\n

Effect:\u00a0 <\/strong>This clause indicates to the reader that the parties have no agreement other than the agreement containing the merger clause.\u00a0 A merger clause pronounces an agreement’s completeness and restricts other prior agreements from consideration when determining the contract’s terms.\u00a0 The function of the merger clause is to keep out any “side conversations” when determining the parties’ intent captured in the contract at issue.\u00a0 The effect of this clause is that one agreement only governs the parties’ relationship.<\/p>\n

Example:\u00a0 “<\/strong>This agreement represents the parties’ entire agreement<\/em>.”<\/p>\n

Commonly called:\u00a0 Modification clause<\/em><\/span><\/p>\n

Effect:\u00a0 <\/strong>This clause generally requests that two contracting parties memorialize their modification in a writing that both sign.\u00a0 Important to the modification clause and its effect is the general rule that contract modifications typically require new consideration.\u00a0 Consideration is a common-law concept that refers to a bargained-for exchange.\u00a0 However, some types of contracts may not require new consideration for modification, so it is important to check (1) the type of contract and (2) the laws in the jurisdiction governing the contract.\u00a0 While the consideration issue may be more complex, a modification clause simply requests that amendments to the contract be in a signed writing.\u00a0 This writing requirement of the clause encourages the parties to negotiate any modifications before reducing their changes to writing and obtain a similar and clear understanding of what will be modified before any change occurs.\u00a0 However, oral modifications – despite what a contract says – may be effective depending on the U.S. jurisdiction.<\/p>\n

Example:\u00a0 “<\/strong>The parties may modify the contract only by an agreement in writing signed by both parties<\/em>.”<\/p>\n

Commonly called:\u00a0 Employee or independent contractor clause<\/span><\/em><\/p>\n

Effect:<\/strong>\u00a0 In a contract for services, this clause identifies whether one of the parties will be considered an employee or independent contractor.\u00a0 The greatest difference is that employers are responsible for certain financial and liability matters for employees, where those who hire independent contractors are not responsible for the same matters.\u00a0 In summary, an employee means more employer control but also more employer liability.<\/p>\n

Example:<\/strong>\u00a0 “Mr. X will act only as an independent contractor for the ABC corporation.\u00a0 Mr. X is NOT considered an employee of the ABC corporation for the purpose of this contract for services<\/em>.”<\/p>\n

Commonly called:\u00a0 Confidentiality clause<\/span><\/em><\/p>\n

Effect:<\/strong> \u00a0A confidentiality clause or agreement defines what confidential information is, who must keep it private, and what the consequences of disclosure are.\u00a0 Confidentiality clauses may have exceptions relating to publicly known information or where the other contracting party consents to the disclosure of otherwise confidential information.<\/p>\n

Example:<\/strong>\u00a0 “Mr. X, independent contractor, will not disclose confidential information obtained through Mr. X’s scope of services for ABC corporation<\/em>.”<\/p>\n

Commonly called:\u00a0 Conflict of interest clause<\/span><\/em><\/p>\n

Effect:<\/strong>\u00a0 A conflict of interest clause restricts a contracting party from engaging in relationships, transactions, or circumstances external to the contract at issue.\u00a0 The purpose of the clause is to prevent a conflict of interest from arising between the contracting parties.\u00a0 A conflict of interest issue may arise due to a party’s personal situation or position.<\/p>\n

Example:<\/strong>\u00a0 “Contractor has disclosed any interest that presents or may present a conflict of interest.\u00a0 Contractor will disclose any actual, apparent, or potential conflict of interest that arises throughout the term of the parties’ contractual relationship<\/em>.”<\/p>\n

Commonly called:\u00a0 Choice of law clause<\/span><\/em><\/p>\n

Effect:<\/strong> \u00a0A choice of law clause identifies where the contracting parties prefer to litigate issues arising from the contract.\u00a0 Usually, the party who drafts the contract chooses the applicable law.\u00a0 Other jurisdictional issues may become relevant in the future if litigation arises.<\/p>\n

Example:\u00a0 “<\/strong>The laws of the State of Delaware will govern this contract<\/em>.”<\/p>\n

Commonly called:\u00a0 Dispute resolution clause<\/span> (commonly involving arbitration and waiver of jury trial)<\/em><\/p>\n

Effect:<\/strong>\u00a0 These clauses tell the reader whether either party has waived some type of dispute resolution option.\u00a0 A contracting party may want the other party to opt out of certain dispute resolution options in light of likely costs and inconveniences.<\/p>\n

Example:\u00a0 <\/strong>“ABC corporation agrees to resolve all matters arising from this contract through arbitration<\/em>.”<\/p>\n

Commonly called:\u00a0 Severance clause<\/span><\/em><\/p>\n

Effect:<\/strong>\u00a0 This clause refers to the situation where a court determines that part of the contract is illegal or unenforceable.\u00a0 The clause states that in this case, the validity of the remaining portions of the contract is unaffected.<\/p>\n

Example:<\/strong>\u00a0 “If any of the provisions of this agreement contravene or are invalid under state or federal laws, this finding will not invalidate the whole agreement.”\u00a0<\/em><\/p>\n

Commonly called:\u00a0 Indemnification clause<\/span><\/em><\/p>\n

Effect:\u00a0 <\/strong>This clause states that one contracting party will indemnify (reimburse) the other for failure to meet a contractual obligation or other illegal or damage-causing action.<\/p>\n

Example:<\/strong>\u00a0 “ABC corporation shall indemnify, defend, and hold DEF corporation harmless from any and all liabilities, damages, penalties, claims and expenses (including defense and settlement costs) resulting from any breach of this agreement<\/em>.”<\/p>\n

Conclusion<\/span><\/strong><\/em><\/p>\n

This article clarifies some of the most common clauses found in the standard terms and conditions section of a contract drafted by a U.S. lawyer.<\/strong>\u00a0 While the explanations and examples of the clauses are generally consistent across a wide variety of U.S. contracts, these clauses vary depending on the U.S. jurisdiction<\/strong> in which the drafting lawyer is licensed or the interests of the party drafting the clause.<\/strong>\u00a0 As a result, international lawyers should carefully read and assess<\/strong> the standard terms and conditions of the contracts that guide their clients’ contractual obligations.\u00a0 Even if U.S. law does not govern the contract at issue, understanding and recognizing common U.S. contract clauses will allow international lawyers to better help clients to perform on contracts in a way that does not offend U.S. cultural notions of compliance and fairness.\u00a0 <\/strong><\/p>\n

In understanding contractual clauses common to any particular legal system, both international lawyers and clients will be more prepared to fulfill contractual obligations<\/strong> and maintain healthy international business interests and relations.<\/strong><\/p>\n

Melanie Glover & Marina Bugallal<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Lawyers working in international law oftentimes interpret, review, and advise their clients on contracts written by other international lawyers in foreign countries.\u00a0 Considering the great possibility for legal, linguistic, and cultural misinterpretations, it is important for international lawyers to become familiar with the types of contractual clauses that they see in such diverse contexts.\u00a0<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1064],"tags":[390,387,389,388,391,393,244,344,392,386],"class_list":["post-874","post","type-post","status-publish","format-standard","hentry","category-pubications","tag-choice-of-law-clause","tag-conditions-clauses-international-contracts","tag-confidentiality-clause-contracts","tag-contractual-clauses-international-contracts","tag-dispute-resolution-clause","tag-indemnification-clause","tag-international-contracts","tag-mariscal-abogados-lawyers-spain","tag-severance-clause","tag-standard-terms-international-contracts"],"yoast_head":"\nIntenational contracts<\/title>\n<meta name=\"description\" content=\"This article clarifies some of the most common clauses found in the standard terms and conditions section of a contract drafted by a U.S. lawyer.\" \/>\n<meta name=\"robots\" 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