Overseas Legal

Before you start exporting it’s important  that you understand who you are dealing with and the mechanics of the transaction.

As a starting point you need to get a feel for the legal environment  you will be trading in.  Are there any specific issues you need to be aware of such as standard payment procedures and credit terms that may be common to that territory?  With this awareness you can tailor the way you conduct your business in that territory and manage your risk.  Credit reports are essential on the correct party and, if a major contract for you, make sure that you visit the relevant parties be they customers, retailers, distributors or agents.

Once you are happy that you have a general overview of the environment you will be trading in, the key issues to consider from a legal perspective include:

  • Product Liability
  • Intellectual Property
  • Trade Restrictions
  • Contracts
  • Agents / Distributors

It is the last two issues that will be the most relevant when it comes to collections and Trade Credit Insurance.

One of the first issues to consider will be how you are going to export.

Are you going to sell direct to purchasers overseas?

Are you going to use an agent or a distributor?

There are pros and cons for each. Most importantly you need to know which option you are selecting so you are certain who is liable i.e. who is going to pay you and who do you need to insure?  It is also important that you protect yourself so you need to make sure that the authority of any distributor or ( in particular) an agent is agreed and clearly set out as you might be liable for the actions of an agent.

With particular reference to agents is the issue of bribes.  The UK Bribery Act 2010 extended liability for paying or failing to prevent payment of bribes overseas and the penalties for directors personally became tougher.  It is important that your procedures are in place to prevent bribery.

Once you have decided which model you are going to use you must get your paperwork in order, especially the contract(s) in place so everyone knows who is doing what.  Good contracts will help signpost all parties to their obligations and responsibilities in the export process as well as clearly setting out how each party will be rewarded for their efforts.

As always it is important to agree the goods/services to be provided as well as the price, but when exporting it is especially important to identify and agree specific issues such as responsibility for delivery, insurance and export / import documentation.  You can use internationally agreed “Incoterms” which set out the responsibility to each party, but you must remember that Incoterms are far from a complete set of terms & conditions as they only cover certain aspects of a transaction.

Looking further down the line it is important that you agree which laws will apply (ideally make sure it is England & Wales) and if possible agree some form of dispute resolution procedure rather than leaving it to the court system.

Overall, the opportunity to export as a growth mechanism is an exciting step in the development of business and it is simply a matter of planning, de‐risking and managing it correctly to ensure that it works successfully for you.

We appreciate that whilst you have hopefully found this information useful it’s likely you will have questions that require answers tailored to your exact situation. Please get in touch if this is the case.

Our advice, expertise and experience are offered at no charge. 

You can email us at helpme@theexporthub.com or call us on +44 (0)1279 437 662 or fill out the contact form.

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