Foreign economic activity is based on signing agreements with clients. The process must be officially registered, which requires drawing up a contract with a foreign customer. The correctness of the document's execution directly affects whether the deal is recognized as legal, and whether receiving the money is lawful from a legal standpoint.
When concluding agreements between business entities from different jurisdictions, it is important to know how to properly draw up a contract with a foreign customer, and professional consultations from the international law firm Maira Consult can help with that.
International foreign economic contracts are a documented agreement between two parties that are residents of different countries, reflecting the following information:
Subject of the contract: an exact description of the service, product, or goods to be transferred from the contractor to the customer;
Cooperation details: all terms of acceptance and handover, deadlines with start and end dates, schedules, the moment of transfer of rights, etc.;
Dispute resolution: an algorithm of actions in case one party's expectations diverge from reality, and compensation for losses;
Payment procedure: specification of amounts, currency, payment dates, payment schedule, advance payments, commission payments, and penalties.
A foreign economic contract with a customer can be drawn up using a standard template. The clauses of the contract may differ significantly depending on the field of activity, the counterparties' requirements, and the corporate rules of the parties.
Features of filling out the main sections of a foreign economic activity contract
To draw up a contract with a foreign customer that will simplify the process and speed up the decision in the event of litigation, it is important to follow the rules for filling out the mandatory fields. A sample list of contract clauses with a description of their content is given below.
Section of the foreign economic activity contract | Filling-in features |
Subject | This section must indicate a description of the product (service) that the contractor undertakes to send to the customer. An objective assessment should include the technical component, an informational description, measurements, format, volume, and other criteria that precisely define the scope of the work performed. |
Pricing, remuneration | In addition to the amount of remuneration and the sum, it is important to define points related to:
As a rule, foreign economic contracts contain a clause that determines the fact of payment: the moment of payment by the customer or the moment funds are credited to the settlement account. |
Acceptance of completed work (service, goods) | This section specifies the dates for handing over the subject of the contract, the method of acceptance by the customer's side, verification periods, options for sending the work back for revision, and the procedure for registering, reviewing, and resolving comments. |
Payment procedure | The money transfer stage must specify the exact deadlines, the method of crediting funds, advance payments, as well as the possible consequences if the customer fails to pay on time. |
Transfer of intellectual property rights | Foreign economic contracts whose subject is digital products must provide for the transfer of ownership and the finished work belonging to the customer. The use of the order completed under the contract may:
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Confidentiality | The agreement should specify the parties' obligation to maintain confidentiality regarding the information provided. An important nuance is defining exactly what information is considered confidential. |
Liability and termination procedure | In the event of a breach of the contract's clauses, it is important to provide for various types of liability and ways to terminate the contract. A contract with a foreign customer should be drawn up taking into account:
This section must also provide for the possibility of force majeure, including the conditions for confirming it, the duration of unforeseen circumstances, the term for suspending the contract, and the right to terminate it. The termination procedure should include the specifics of notifying the other party of the decision, the timeframe, remuneration for work already performed, or the return of the advance payment. |
To competently draw up a foreign economic contract with a customer, Maira Consult's lawyers point to the need for qualified legal advice. An expert assessment of the document helps avoid financial losses, ambiguous interpretations, and legal risks.
Nuances of drawing up contracts with a foreign customer
To correctly draw up a foreign economic contract with a customer from a legal standpoint, it is important to pay attention to the following criteria.
Language of the contract
In standard practice, foreign economic contracts are drawn up in a bilingual format. The document has a parallel column, or less often, the translation into the counterparty's language is placed on the facing page. A bilingual version helps speed up customs control, ease the currency control process, and avoid tax claims.
If the contract is drafted only in a foreign language (in practice, English is usually chosen as the business language), regulatory authorities most often require a notarized translation of the document.
In international practice, it is customary to use a language clause. It is important not only to draw up a contract with a foreign customer in two languages, but also to specify which version takes priority. Giving priority to one version of the contract makes it possible to rule out discrepancies in translation later on and arrive at a single legal meaning.
Details of the parties
When services are provided under a contract to a foreign customer, it is necessary to fully specify the information needed to identify both parties to the contract:
the full and abbreviated name of the legal entity (for a company) or the full name (for an individual entrepreneur);
the country of registration of the legal entities;
the registration codes of the legal entities in the Register of Companies;
address details;
banking and tax details.
When the contract is signed by an authorized person, it is important to request confirmation that the company's representative has the right to sign foreign economic activity contracts.
Application of the law of a given country when resolving disputes
So that a dispute between foreign counterparties can be easily resolved in the future, the contract with a foreign customer should specify the applicable law of a particular country. It would also be worthwhile to include clauses in the contract stating the name of the arbitration body or courts the parties trust to hear the dispute, as well as the language of the proceedings.
Signing a foreign economic contract with a foreign customer
Drawing up a foreign economic contract with a customer from another country requires not only heightened responsibility but also attentiveness and legal literacy at the contract-signing stage. At this stage, it is important to:
compare the text with its translation;
make sure there are no errors that could cause problems at customs, at the bank, or with the tax authority;
check the counterparty, its registration documents, status, and authorized persons;
make sure the party to the contract is not involved in litigation or included in any sanctions lists.
Properly drafted and executed foreign economic contracts are the key to fruitful international business and the rapid development of an enterprise. The key criterion is solving the task of how to correctly draw up a contract with a foreign customer in which Maira Consult specialists successfully help.
