7 Advices for international commercial contract writing

01.15.2018 [0]

Ivars Mēkons,
SUCCESS Specialized Advisory Services

Application of law shall help businesses realize their goals. A good contract puts business relationships at the center.

Advice 1. Write so that a businessperson understands the essence and that a lawyer`s assistance is involved for details

  • address only the necessary – the other contracting party is a partner of your client! If there are grounds for becoming too cautious from the other party, a bold advise of avoiding entering such relationships shall be advanced – it is doubtful that the other party has good intentions;
  • a legal services agreement serves as an example: despite the clients entrust matters worth millions or billions, even acclaimed international law firms would present their services contract on a few pages only.

Advice 2. Address issues from the positive side instead of dealing with every imaginable negative circumstance

For example, provide that a buyer may withhold payment for defected goods instead of creating bureaucratic procedures on inspection and verification of the compliance with specified characteristics. The parties are capable to resolve any dispute in negotiations or by other dispute resolution methods.

Advice 3. Write a contract in one language only

Meaning flows from the intention of the parties instead of the wording itself (Article 5:101 of the Principles of European Contract Law; Articles 4.1.-4.2 of the UNIDROIT Principles of International Commercial Contracts 2010); the intention of the parties will be sought first and it may turn out that the authentic language wording is wrong.

In case you need a local version, simply make a working translation instead of creating an illusion of automatic correctness of one version.

Advice 4. Avoid providing lengthy regulatory clearances as conditions precedent

Competition authorities act in the boundaries set by law. Knowledge of these boundaries is just part of the whole bunch of provisions of law that each business organization is deemed to know. Risk is an integral and pleasurable part of achieving a goal in business; risk of a competition authority interpreting the law differently is just one of the risks.

While some laws prohibit the implementation of a deal before a clearance is issued, the outcome as to validity of the deal is still the same: it is at the risk of parties that the final decision approves the deal: for instance, Article 7(4) EU Merger Regulation No.139/2004 of 20 January 2004 .

Advice 5. Address specific industry issues

To serve the client`s business interests, you should know what are current issues and future trends in the client`s industry. Seek industry expert advice in case you lack such specific knowledge. The business needs coverage of market matters instead of legal technicalities.

Advice 6. When operating in countries with often changing regimes, involve a peer country as a partner

The host State will be more reluctant to do harm when direct economic interests of another State, especially, a friendly one, is at stake.

Advice 7. Substitute costly insurance policies with a credible guarantee

Insurance costs a lot and is a tremendously burdensome procedure. When you get a guarantee from a credible neutral person, such as a reputable bank or other company, it is their reputation and word that is at play.

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