YES, I’d love to sell to Nigeria! What could possibly go wrong?
Let’s imagine you’ve sold some goods to a customer, based, say, in Nigeria, and you are having trouble getting paid. What can you do?
The first thing any lawyer will want to do is to find out what law and jurisdiction governs the contract. If the contract is silent on choice of law and jurisdiction, it is implied into the contract that the contract is governed by the law of and the courts of the place where the contract is performed. If you agreed to include delivery to Nigeria, then the contract’s final place of performance is probably Nigeria, so you’ll have to sue there under Nigerian law. Not a good result.
Let’s imagine the contract does at least state it’s governed by English law. Great… but not if the contract doesn’t also go on to state that the agreed jurisdiction is the English court. You could, if you don’t choose the English courts, end up with an absurd result of suing in Nigeria, but the Nigerian courts trying to give a ruling based on English law.
Finally, let’s assume that the contract, in an attempt to be clever, states that it incorporates the “relevant points of Incoterms’. All that has been created here is confusion ripe for lawyers to argue over. Incoterms are a set of possible terms to include on international sales of goods and which give some certainty on things like, who carries the risk of the goods while in transit, who is responsible for loading and unloading at the port and so on. It is necessary to have an actually copy of the latest Incoterms, and choose which set to apply – Free on Board (FOB) or Delivered Duty Paid (DDP) etc.
Also, while it may seem sensible always to incorporate English law and the English courts into the contract, it might not always be the best idea. If you get into a dispute with, say, a distributor for your products based overseas, the threat of legal action in the UK may not be enough to focus their minds on resolving the issue. We often get contracts vetted by lawyers based in the foreign country, so that we can, with safety and confidence, allow the contract to be governed by the law and jurisdiction of the foreign country. Then if things go wrong, the foreign-based party is more likely to respond favourably to a threat of legal action from their own courts in their own country.
International sales contracts are just a bit more tricky than selling/buying within the UK. You need to remember to choose what law governs the contracts, which country’s courts would rule on a dispute, and what terms will apply to basics like responsibilities for delivery. Get these things right and you will be properly protected. Get them wrong, and you will get an answer you were not expecting!
Gerald Couldrake heads up the Commercial Law team at Howes Percival. Contact him on 01604 230400 or