You are engaged in discussions with a potential foreign partner regarding the terms of a possible economic partnership. During the negotiation process, you discover that the partnership is supposed to be governed by a straightforward agreement or purchase order and the standard General Terms and Conditions used by your business partner.
General Terms and Conditions is a document that defines the general rules of cooperation in the field of contracts concluded by an entrepreneur. It can be named differently, but very often the definition ,,General Terms and Conditions’’ (GTC) is used. Acceptance of the terms of cooperation between parties under the GTC is often accompanied by the conclusion of a short agreement regarding a specific business venture that the parties want to implement together. This agreement usually contains a reference to the General Terms and Conditions.
1. Ask for the GTC that will apply to the concluded contract
The General Terms and Conditions will become an element of the agreement concluded with the foreign contractor. An entrepreneur who has obtained information that cooperation will be based on this type of document should not only be aware that such a document exists, but also obtain it before concluding the contract and accepting its conditions.
2. Read the given GTC from the beginning till the end
Once you have the General Terms and Conditions, you should read this document from cover to cover. In a particular case, it may be that the conditions set out in this document are unacceptable for an entrepreneur who is considering a specific business cooperation. Without getting to know the content of the GTC, however, we will not know it.
Why should you read the document cover to cover? In the final part of the GTC there are often provisions regulating the jurisdiction of the court, applicable law and indemnification provisions. Their importance for the concluded contract is enormous.
3. Submit any comments to the given GTC and start negotiating provisions
Whether the provisions of the General Terms and Conditions will be negotiable depends on the specifics of a particular case and the negotiating power of the parties.
When starting cooperation with a foreign business partner, it is always worth proposing negotiations regarding the transferred GTCs and arranging cooperation on terms that are suitable for both parties to the transaction.
4. Sign the agreement to which the GTC will apply only after accepting their provisions and being aware of the results of this action
Conclusion of an agreement with a foreign contractor to which the General Terms and Conditions apply should take place only after reading their content and accepting the consequences resulting from the provisions.
What is not worth doing is starting cooperation on terms that are not known to the entrepreneur.
Establishing a formal agreement with a foreign business partner using a General Terms and Conditions document is a common practice. However, it’s crucial to acknowledge that this document is an integral part of the final agreement and deserves adequate attention to review its content and initiate potential negotiations regarding the terms and conditions for the collaboration of both parties.
Joanna Lubecka
attorney
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Below you will find some useful information on how to negotiate contracts concluded with a foreign business partner.
The purpose of the NDA is to secure the confidential nature of information that is provided to the other party in connection with the commencement of negotiations, determining the terms of possible cooperation between the parties, the concluded contract, cooperation or employment.
The standard practice is to start reading each document from the beginning. In the case of B2B contracts concluded with a foreign contractor, it is worth reversing this order.