Drafting an International Trade Contracts
International trade is an area that not everyone understands. Your overseas suppliers are not functioning. Your overseas customers are not satisfied. In this article we will review some surprising principles at the legal level regarding international trade.
International trade is a large field that includes many situations that almost everyone encounters.
For example, when there is a doubt in a foreign country from which you purchase parts or goods to manufacture your product in Israel or in another foreign country.
When you are interested in hiring a foreigner as an agent or distributor of your products.
International trade can be trade in physical products such as import / export of electronic components, electrical products or cosmetics.
International trade can be the purchase / sale of physical services such as jewelry design services, capital market investment services, or services such as marketing and sales.
International trade can be the provision or consumption of services via the Internet, such as financial investment services, content writing service, sale of products via the Internet and mail delivery, and in fact any product or service that can be ordered via the Internet (such as Fiverr).
However, no international trade will take place without an international trade contract. An international trade contract regulates the entire relationship between you and the person who is in the foreign country. Without an orderly contract, there may be an oral contract, but an oral contract is usually a very simple contract that does not cover solutions to most of the complex situations that can arise when it comes to international trade.
Suppose you paid money for some goods and it arrived defective - who is responsible?
For example, you paid a contractor in a foreign country to build real estate, but he did not complete the construction.
In fact as the lawyers of a company we have to take into account the practice, but when it comes to a company engaged in international trade, we have to put a special emphasis on the practice and not on the legal world.
Payment by milestones
If you are the paying or ordering party, in the case of a complex service, your payment will never be made in advance but you only have to pay an advance that expresses your seriousness. Payment will be made after completion of steps by the person you are paying.
Add a judgment clause
The international trade agreement must include a clause stipulating that any dispute will be heard in Israeli courts. This clause may be the most important clause in an international trade agreement, as it means that if the parties get into a dispute, instead of going to court in Ukraine, you will file a lawsuit in Israel and the case will be heard in Israeli courts. Do you know the law of contracts in Ukraine? Do you know whether the courts in Ukraine are honest or corrupt? Do you know whether the courts will prefer the good of their citizen over the good of your "foreign" society? The place of judgment is a decisive factor in such situations.
Check the incorporation documents
If you enter into an agreement with a foreign company, how do you know that the company really exists? Maybe the same person invented the name of a company, invented a number and a fictitious address, "appointed himself a director" in the imaginary company? If the same person caused damage to you or your business, how can you exhaust the law with the "foreign company"?
On the other hand, it may be a real company but the same person pretends to be a representative on its behalf, or authorized to sign for the purpose of concluding the agreement. How will you know that he is indeed authorized on her behalf?
An inexperienced legal advisor may think that the answer to this is to contact the Registrar of Companies in that foreign country and request identifying documents about that company. However, there are countries where the Registrar of Companies does not disclose identifying information about the company's owners or managers. Not only that, but some states impose fines of up to $ 20,000 on a person who discovers such information. In such countries the only way is to ask the company to provide identifying documents itself.
International standards
Some contracts have certain standards. For example, agency and distribution contracts have acceptable fees and acceptable working conditions. Development agreements or outsourcing have a certain consideration that is acceptable, on specific terms and dates. If we, as lawyers or as parties to international trade, raise too great demands on the other side or put too draconian clauses in the contract, we may frighten the other side. Remember - when the other side is in a foreign country it is not easy to make reconciliation meetings. Sometimes the person in the foreign country is the only person who is willing to work with you or who understands your language and is generally able to work with you.
These points are in fact enlightening to the different nature of an international trade contract. If you would like to receive experienced legal assistance in international trade matters, you can contact us at any time.