Global Contracts

January 16, 2021
7 minutes
Product Marketing

Global contracts are critical for any business operating throughout the world to adhere to laws and prevent disputes between parties. From sales to information technology, there is a global contract for every intent and purpose. However, it is vital that you utilize contract translation services to safeguard compliance and prevent conflicts in the future.

What Are Global Contracts?

Global contracts are legally-binding agreements between two(2) or more parties located in separate countries. They should be written in a formal manner and include a legal translation proper for language and legal system. Companies hire lawyers to draft contracts so that the terms are clear and that the document is enforceable in court if a problem arises.

While global contracts cover all aspects of international commerce, the most types include:

  •  Sales contracts
  •  Commercial loans
  •  Commercial leases
  •  Employment agreements
  •  Intellectual property (IP)
  •  Information technology agreements
  • And more      

When creating a global contract, anticipate familiar language. It is common for global contracts to be written in English regard less of whether both parties live in English-speaking countries. Ensure that you have a legal professional review your contract for enforceability and translation services.

Types of Global Contracts

Depending upon your needs, global contracts can address numerous areas of your business so that you are compliant in places where you conduct transactions. Popular international contracts that US businesses draft with clients in other countries include:

Terms of Service:

A Terms of Service (TOS) is an agreement between a service provider and service buyer. The buyer must agree to the TOS. Otherwise, the client cannot purchase or use your products or services.

Privacy Policies:

When you need to explain customer data use, a privacy policy is a document you need. It will outline to customers how you plan to collect and use their data in accordance with the law.

Sales Contracts:

Sales contracts describe the conditions of a transaction occurring between a seller and a buyer. They also include payment terms, dispute resolution options, and contract limitations.

Employment Agreements:

Employment agreements set forth the terms of an employer-employee relationship, including compensation, expectations, and more. Businesses can use global employment agreements when hiring workers in other countries.

Loan Agreements:

Loan agreements are akin to a promissory note that secures a transaction between a lender and a borrower. They also assign payment schedules and the interest rate being charged as well as what will happen in the event of a default.

Data Processing Agreements:

Data processing agreements, or DPAs, regulate the particulars of data processing, including purpose and scope and a description of how a processor and controller will handle their relationship.

End-User License Agreements:

Protect your licensing rights by drafting an end-user license agreement. The document will prescribe how customers may use their licenses and prohibits them from sharing or redistributing them. It is essential that you hire a a legal professional when translating end-user license agreements.

Software Agreements:

Software agreements detail the relationship between a software developer and its users. Typically, they include information regarding copyright infringement and installation terms. You will also want to address how your users can interact with the relevant software.

Master Services Agreements:

A master services agreement (MSA) is a contract that comprehensively describes a business relationship between two companies while still allowing for flexibility when completing a project. It sets the relationship bounds while accounting for disputes that may arise.

Vendor Contracts:

Vendor contracts ascribe the terms and provisions that govern a relationship between your business and a contractor or vendor. When translated and executed correctly, these documents will protect you against potential liabilities.

There is a contract for every type of need and transaction. If you are uncertain about the agreement you need, seek legal advice from a licensed in-country attorney. He or she can use her knowledge and experience to establish which document is the best fit for your situation and requirements without making any legal mistakes.

Negotiation of Global Contracts

Global contracts look similar throughout the world. However, the differences are found in applicable laws and approaches, not to mention languages. Hiring contract translation services will help you avoid making mistakes in this arena. Other companies also hire in-country law firms if the contracts are considered “high-risk” or complex.

While it is best to get legal advice from a lawyer, here area few tips for the negotiation of a global contract:

  • Translate your contract into the same language rather than a mix that is error-free.
  •  Write the contract in plain language that satisfies its purpose.
  • Understand the differences between common law v. civil law in the country of jurisdiction.
  • Discuss which laws will govern your contract with your client beforehand.
  • Always expect the unexpected when negotiating a contract and have a contingency plan ready.
  • Address contract signing formalities to guarantee that your contract is enforceable.
  • Use local, in-country counsel to avoid making legal mistakes that can cause problems in the future.

During the negotiation of global contracts, never presume that a contract or transaction will go as planned. It is also vital not to rush the process since poor planning can also make the relationship challenging overtime. Speak with an attorney the first time around for legal advice.

When Are Global Contracts Used by US Businesses?

In general, global contracts are used by US businesses when engaging in commerce with another company, affiliate, or subsidiary in a different country. They often take the form of service agreements for a variety of purposes. Ultimately, you should have a global contract in place when you have any international business relationship that affects your company.

Examples of when to use a global contract include:

  •  Expanding into new international markets
  •  Hiring employees
  • Serving clients
  •  Partnering with vendors
  • Purchasing a building
  • Other transactions    

The rights of each contract party may differ from the rights of contract parties in the United States. Obtaining sound legal advice at the start can save money and time if contract disputes arise in the future. This assertion is especially true when dealing with global contracts governed by foreign laws.

What Laws Govern Global Contracts?

There are different bodies of law and organizations that govern global contracts. The decision primarily relies upon the agreement that the contract parties reach in this regard. However, companies can use two (2)types of governances when executing contracts internationally.

Laws default to the United Nations Convention on Contractions for the International Sales of Goods. It can be used when private rules apply and engaging in commerce.

However, the principles of the International Institute for the Unification of Private Law (UNIDROIT)also establish laws that apply to global contracts. It is possible that they can be used when the relevant parties do not choose specific rules that govern them. In other matters, UNIDROIT principles can also be utilized for contract translation.

Translating Global Contracts

Translating global contracts is a specific and specialized area of translation. Since global contracts extend across international boundaries, it is vital that the language and interpretation are correct for your clients. Not only do they need to make sense linguistically, but they must also conform to international contract laws.

If you need contract translation services, get a free quote for ContractsGlobal today at no up front cost to you.

Featured Blogs

"We were very happy with the service, quick turnaround, and communication updates you provided​."

Risk, Compliance, Tech Services & IP Sr. Manager at Electrical Manufacturing Company

ContractsGlobal is the leading provider of legal translation services to legal teams around the world. We deliver legal translations you can trust without spending a fortune on outisde counsel.