International Contracts

Culture and Contracts for International Lawyers

Lawyers working in international law oftentimes interpret, review, and advise their clients on contracts written by other international lawyers in foreign countries. 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.

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 written according to the laws and customs of other countries. International lawyers may do work with clients and their legal representatives across the world. 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.

Common situation

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

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. Because the U.S. legal system is based on the common law (judge-made law), typical contractual clauses encompass legal concepts of well-developed case law of which international lawyers may not be aware. The following paragraph and examples provide the basic background about the standard terms and conditions clauses normally included in many contracts drafted by U.S. lawyers.

Standard terms and conditions

A contract contains the standard contractual clauses and performance deliverables to which both parties agree. 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. Signing the contract binds a party to the common contractual clauses as much as it does to the performance deliverables clauses. In summary, the standard terms and conditions section may contain just as many or more calls to action as the performance expectations. 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 to perform. 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.

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

Commonly called: Merger/entire agreement/complete agreement clause

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

Example: “This agreement represents the parties’ entire agreement.”

Commonly called: Modification clause

Effect: This clause generally requests that two contracting parties memorialize their modification in a writing that both sign. Important to the modification clause and its effect is the general rule that contract modifications typically require new consideration. Consideration is a common-law concept that refers to a bargained-for exchange. 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. While the consideration issue may be more complex, a modification clause simply requests that amendments to the contract be in a signed writing. 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. However, oral modifications – despite what a contract says – may be effective depending on the U.S. jurisdiction.

Example: “The parties may modify the contract only by an agreement in writing signed by both parties.”

Commonly called: Employee or independent contractor clause

Effect: In a contract for services, this clause identifies whether one of the parties will be considered an employee or independent contractor. 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. In summary, an employee means more employer control but also more employer liability.

Example: “Mr. X will act only as an independent contractor for the ABC corporation. Mr. X is NOT considered an employee of the ABC corporation for the purpose of this contract for services.”

Commonly called:Confidentiality clause

Effect: A confidentiality clause or agreement defines what confidential information is, who must keep it private, and what the consequences of disclosure are. Confidentiality clauses may have exceptions relating to publicly known information or where the other contracting party consents to the disclosure of otherwise confidential information.

Example: “Mr. X, independent contractor, will not disclose confidential information obtained through Mr. X’s scope of services for ABC corporation.”

Commonly called: Conflict of interest clause

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

Example: “Contractor has disclosed any interest that presents or may present a conflict of interest. Contractor will disclose any actual, apparent, or potential conflict of interest that arises throughout the term of the parties’ contractual relationship.”

Commonly called: Choice of law clause

Effect: A choice of law clause identifies where the contracting parties prefer to litigate issues arising from the contract. Usually, the party who drafts the contract chooses the applicable law. Other jurisdictional issues may become relevant in the future if litigation arises.

Example: “The laws of the State of Delaware will govern this contract.”

Commonly called: Dispute resolution clause (commonly involving arbitration and waiver of jury trial)

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

Example: “ABC corporation agrees to resolve all matters arising from this contract through arbitration.”

Commonly called: Severance clause

Effect: This clause refers to the situation where a court determines that part of the contract is illegal or unenforceable. The clause states that in this case, the validity of the remaining portions of the contract is unaffected.

Example: “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.”

Commonly called: Indemnification clause

Effect: 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.

Example: “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.”

Conclusion

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. 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 in which the drafting lawyer is licensed or the interests of the party drafting the clause. As a result, international lawyers should carefully read and assess the standard terms and conditions of the contracts that guide their clients’ contractual obligations. 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.

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

Melanie Glover & Marina Bugallal

Write Your Own Business Letters and Contracts – Save a Fortune on Lawyers’ Fees

Small business owners can save a fortune in legal fees by searching online for boilerplate legal documents which cover anything from employment law to business letters, debt recovery to landlord and tenancy agreements for your property investments.

There are many free business letters and templates out there but do remember to read the document fully yourself before using it. You may need to adapt or remove some of the lines which don’t apply to your business or situation.

It can be intimidating to write a letter of complaint or send a reminder for a late-paying customer, but using a template can help you overcome the block of how to start your letter. A good letter template will be well structured and flexible enough that you can modify or remove portions to fit your circumstances.

For example in a sub-contracting agreement, it is important to be as specific as possible about the tasks or deliverables which the sub-contractor must deliver. In a supplier agreement be sure to check the penalties for late delivery are suitable for you or check how refunds for defective materials are handled. Especially useful template documents can be confidentiality agreements which you can produce easily prior to discussing a new project with a potential client or partner.

In complex scenarios you should consult qualified legal advice as the potential loss you can suffer from using an inappropriate template is more than the cost of the advice. Even in these cases, looking at template documents will help to familiarise you with the issues and parameters that you will be discussing with your lawyer, again helping you to target your lawyer’s high hourly rate more effectively.

Do remember also that verbal contracts are enforceable but it is always best to follow up a verbal agreement with a written document that clarifies what was discussed and what was agreed. Although this may seem cumbersome in the long run it keeps things clear and avoids potential misunderstandings later down the road.

Five Factors That Limit Deliverance Ministry Effectiveness

Over the span of more than fourteen years in deliverance ministry, I have witnessed a broad spectrum of results in my sessions with clients and seminar attendees. There have been many wonderful testimonies, partial victories and (sadly) sometimes there is little good fruit that results.

The list below comprises five major factors that I have determined are limits on the effectiveness of deliverance ministry for the recipient:

  1. People do not stir up their faith. We see clearly from scriptures in the gospels that the faith level of people mattered when they came to Jesus to get their needs met. Jesus did not heal all the lame, blind and demonized people he passed but he did minister to all who came to him. They had enough faith to approach Jesus and that is still required today. I tell my clients that it is not a question of how much faith someone has but rather that they exercise it, step out and choose to expect a work of the Holy Spirit.
  2. People are not properly prepared. While some have a different approach, we believe it is important that people be prepared for deliverance ministry by doing some homework. Those who do not prepare, and therefore put the entire burden on us (the ministers) for results, are often disappointed.
  3. There is little compelling reason for a change. We like to see a level of desperation in our clients and seminar attendees. Unless there is a strong motivation to shake the status quo in their lives, it can be too comfortable to stay where they are spiritually, mentally and emotionally. This is particularly evident if a third-party (a spouse or parent typically) is taking the lead in initiating the contact and setting up appointments.
  4. Some are not prepared to “walk out” deliverance and develop new habits. Deliverance ministry involves a power encounter with the demonic realm. When the spirits are gone, there is still spiritual warfare, including battles in the mind that need to be fought. New habits need to be formed and this takes time (typically up to six weeks) and effort and some are unwilling to make the commitment. People can be delivered from spirits however they may be unable to maintain the victory.
  5. Questionable training, experience and anointing of the deliverance minister. This is clearly an important issue and due diligence is important when people are choosing to receive deliverance ministry. We are quick to research potential doctors, lawyers and restaurants so we should not be quick to receive ministry from unknown or unproven sources, especially at the altar of a church.

While controversial and imperfect, I believe that the biblical ministry of deliverance is valid and necessary today in the Body of Christ. Counselors and pastors are not miracle workers and the motivation of the client is highly important for securing positive outcomes. We cannot take ownership of the results but it is comforting to know that we do have the faithfulness and power of the Lord himself working in us and through us to help others!