How to conclude an agreement with a foreign contractor? Possible ways of concluding contracts in the international trade

A B2B agreement in the international trade might be concluded in several ways. Unless the law specifically says that an agreement must be made in a specific form  (like getting it signed by a notary or putting it in writing), most often the involved parties can decide about the way of formalizing their agreement.

Although in common understanding, an agreement is concluded only when two parties sign the content of a specific document, it should be remembered that in addition to the traditional written form, agreements can also be concluded:

• Orally;
• Through the exchange of e-mail messages;
• Through the acceptance of an offer submitted by one of the parties to another;
• Through the acceptance of an order placed by a particular party;
• As a result of negotiations between the parties covering the essential terms of the agreement;
• Other – in accordance with the commercial custom accepted between the parties.

It is important that the parties reach an understanding concerning all fundamental elements of the agreement such as: who will provide what, to whom, within what period, on what terms and conditions.

It should be noted that concluding an agreement orally does not mean that the deal does not exist. Numerous agreements are concluded this way. What may be problematic in this case is proving what the parties agreed upon. Such a situation may arise when a dispute occurs between the parties.

It’s important to remember that certain actions require a specific form of agreement in order to be valid. For instance, in Poland, transferring copyright requires a written form. If this form isn’t obeyed, the transfer of copyright won’t be legal. It is considered completely invalid in this case.

To put it simply, concluding an agreement assuming the transfer of copyright to a specific subject ] through the exchange of e-mail messages will not result in the transfer of these rights..

Therefore, when choosing a specific form of concluding an agreement, first of all, it is worth determining its subject and whether it is necessary to formalize it in a specific form or not. Failing to meet the requirements of relevant law can lead to significant repercussions.

First of all, we should consider why we are talking about the way and form of concluding agreements at all. In an ideal world, verbal agreements would be efficient to conclude a particular transaction. One person verbally undertakes to perform a certain type of service for an agreed price, which the other party undertakes to pay.

However, in practice, disputes often arise between the parties regarding issues such as:

• what was supposed to be the subject of the agreement;
• whether it was executed properly;
• whether the subject of the agreement was completed on time;
• whether the quality of the subject’s performance of the agreement is appropriate;
• whether the agreed remuneration has been paid on the terms specified in the agreement;
• what is the scope of any warranty services and on what terms they are provided;
• for what period the agreement was concluded;
• how the agreement can be terminated and what are the consequences of such termination;
• which law will be applicable in case of a dispute between the parties;
• where any potential dispute between the parties will be resolved.

The above are only examples of potential issues that may arise between the parties. As we can see, there are many of them.

To avoid uncertainty in the above mentioned issues it is worth concluding the precise agreement that will cover what’s necessary for the cooperation to work properly. If we have a written agreement with a foreign business partner that clearly and unambiguously defines what the parties have agreed to and under what conditions, the risk of dispute in the above mentioned cases is appropriately minimized. On the other hand, even if a dispute arises and one of the parties breaches its obligations, the agreement will enable a more efficient enforcement.

The best agreement is therefore that one that firstly, complies with the provisions of applicable law, and, secondly, allows to demonstrate (prove) what the parties have agreed to and under what conditions, as well as what are the consequences of failing to perform the specified obligations. Of course, a written form is very safe in this regard, but often contracts concluded through acceptance of an offer, order, and exchange of email messages between the parties also provide a proof of the essential parties settlements regarding the content of the concluded contract.

There are many ways and forms of concluding contracts with foreign contractors, often depending on the adopted commercial practice of the parties. However, not all of them will properly protect the interests of the entrepreneur from an unfair business partner. When concluding a B2B agreement, it is worth analyzing in detail the risk associated with the lack of documentation of certain activities. What should be also analyzed is  whether resigning the conclusion of the agreement in a written form, aimed at making the process of concluding the agreement faster, will not have negative consequences during its implementation. When making or confirming any arrangements with a foreign business partner, it is advisable to use available means of electronic communication. The above will certainly be useful in documenting certain agreements in case of a dispute over the contract’s performance.

Joanna Lubecka
attorney