Lubecka.Law Blog

How to formalize cooperation with a foreign contractor?

Economic cooperation with a foreign contractor can be formalized in several ways.

Do you know them? Are any of them better than the others?

Let’s see.

1. A written agreement

An agreement concluded in writing is one of the best ways to formalize economic cooperation between the parties, including in international relations. The advantages of this solution is that a properly drafted contract allows you to easily secure all the arrangements of the parties regarding the conditions under which this type of cooperation would take place. Thus, the agreements lead to the removal of uncertainty as to the legal relations of the parties, and in practice they often lead to significant time and financial savings.

Working over the details of a written contract, however, often requires time and attention from entrepreneurs. Negotiations regarding the future agreement between the parties can last for months, and international relations often prolong these talks. This should not discourage the formalization of relations between entrepreneurs in the international trade, but it is certainly worth considering that the time necessary to formalize the contract in this way may be extended.

2. General Terms and Conditions

General Terms and Conditions is nothing more than a document that universally regulates the rules of cooperation of one of the parties with its contractors. In the practice of the international trade, a document in the form of a GTC is the standard and the basis for concluding B2B contracts. General Terms and Conditions can be very extensive, and they are often accompanied by a short agreement referring to the details specified in this document.

The provisions of the General Terms and Conditions are sometimes negotiable, but the degree of changes in their content for the needs of a specific transaction will depend on the negotiating power of the business partner that presents this type of document and how much the parties want to formalize their cooperation.

Important!

When you learn that the cooperation is to be based on the principles set out in the GTC, it is worth asking for their access so that the cooperation takes place on terms known to both parties.

3. Email exchange, order and trade custom

In the international trade, B2B contracts are very often concluded in a form corresponding to the commercial custom adopted by the parties. The terms of the transaction are often agreed by the parties by exchanging e-mails. Sometimes, while doing business, partners use a standard order form or they agree to use a simpler document that they’re already familiar with. This helps make the process easier and more efficient.

It is worth remembering that the lack of a comprehensive, written agreement does not mean that the parties have not concluded it and accepted binding obligations that will have legal effects. An agreement may be concluded in a number of ways, and the exchange of e-mails containing the arrangements of the parties relevant to the future contract may lead to the conclusion of an agreement that will be binding for the parties.

The advantage of this solution is undoubtedly its efficiency. The basic defect, however, is connected with possible understatements and the lack of clear arrangements between the parties in all matters that may seem important for future economic cooperation.

What is the best way to formalize a B2B cooperation with a foreign contractor?

The way which:

  • helps in understanding and reconstructing the parties’ arrangements in the future;
  • takes into account the economic risk associated with the conclusion of the contract;
  • leads to the conclusion of a contract between the parties as efficiently as possible;
  • meets the legal requirements regarding the form of the contract.

Joanna Lubecka
attorney

02

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