It Can Pay To Play A “Home” Fixture

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by Martin Kingman 
| 19 October 2020

If you are thinking of trading internationally, it is worth remembering you face the same problems with debtors that you do on home turf; with the added headache of defining whose laws govern the agreement. Before you enter into any contracts overseas you must establish who it is you are dealing with, be confident it is a legitimate request and be aware of the company status. It also helps to understand the legal process of the country and potential political issues which may arise to cause you further problems and complications.

Generally, you want to do business on your standard terms, which have been prepared for you by an expert who has a thorough knowledge of what it is you do and mirrors your exact processes. If the other company has its terms, then the rule of thumb is that the final one sent to the other before the contract is formed becomes the terms of the agreement. Of course, the terms have to be incorporated into the contract (but we will take it as read that they have been). Let’s assume that your terms apply to the contract, we can now examine how they can assist you in recovering your money:

Jurisdiction Clause

This is the daddy of all clauses if you are trading overseas. It needs to be specified that the contract is governed by the English law and that the English courts have the exclusive jurisdiction to hear and determine any claims or disputes. In essence, this means that you get a home game if the matter is disputed and you will not have the inconvenience of trying to find an advisor in another country or trying to understand the finer points of their commercial legal system to bring a claim. This also avoids any additional complication with translations.

Other Clauses

Your terms should include:

  • Full recovery of your legal costs and expenses in the events that your invoices are not paid within the terms;
  • Provisions that interest and compensation are added on to the outstanding balance; and
  • if you are providing goods, a retention of title clause over any goods until paid in full means you can collect any of your items if they have not been paid for.

If you are doing a lot of international trading you may want to use incoterms – laid down by the International Chamber of Commerce to define where the risk and liability take place and passes from one party to the other. We always recommend you seek specialist advice on this.

You also can consider arbitration under the New York Convention or to give it its proper title The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 163 countries are currently signatories. This is an attractive option where enforcing a judgment in the jurisdiction of your debtor may be difficult and it may be cheaper to arbitrate than to issue legal proceedings.

A quality set of drafted terms do offer a whole scope of protection and we urge you to contact us should you wish to have your terms of business either overhauled or completely rewritten.

Dated: 19 October 2020

*Nothing in this article constitutes legal advice or gives rise to an advisor/client relationship. Specialist legal advice should be taken in relation to your specific circumstances. This article is provided for general information purposes only. Whilst we endeavor to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and we do not accept any liability for error or omission as it is based upon our interpretation of the law. Please be aware that the legal circumstances may have changed since this article was first published in October 2020 and you should contact us for specific up to date advice on your circumstances.

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