Considering the following general terms and conditions when dealing with contracts is important.
Channels for Resolving Problems
If there are any problems with the quality or delivery, what are the expectations and protocols for corrective actions to ensure a quick solution and prevent future occurrences? What culturally and contextually appropriate conflict resolution technique will be used in case of disagreements in viewpoints or ideas that lead to task conflicts?
Example: After conducting fact-finding and allowing both parties to discuss any areas of disagreement, conflicts will be resolved through alternate dispute resolution. This will involve a third-party judge, who will be chosen by mutual agreement before the contract is signed.
Security Requirements
What measures need to be taken to prevent unauthorized access to proprietary data? Should specific data be classified? Are there particular requirements for sharing data? Should security concerns for goods in transit be addressed to comply with customs regulations in specific countries? This aspect of the contract includes steps to reduce security risks for both parties.
Example: Both parties are prohibited from sharing any confidential information they have received from the other party with any third party without obtaining prior written consent from the disclosing party. Additionally, freight forwarders and transportation providers are required to have C-TPAT certification.
Language of the Contract
Is an English-written contract suitable for all parties involved? Are there any language disparities that require translation? It is crucial to ensure accurate translation. Clarifying any ambiguous phrasing (words with multiple meanings) and acronyms is also advantageous. If there are many of these terms, creating a separate section for them may be necessary.
Example: The first agreement will be in English, and afterward, the organization’s translator will translate it and share it with the supplier for review. The translator will answer any translation queries from the supplier. It is essential to understand that the phrase “business day” refers to any day of the week, except for Saturday or Sunday, when banks are open for business in New York and Luxembourg City.
Contract Termination
It is important to define the process and terms for terminating a contract, including when and how the termination will occur and any advance notice requirements.
Example: The purchaser may terminate this agreement for any reason with six months prior notice to the supplier.
Legal Authority
When an organization engages in global sourcing, its relationship with its supplier can be affected by various laws, regulations, directives, and international treaties. It is essential to clearly outline the specific requirements of each country involved.
Example: This agreement and any changes to it will be ruled by the laws of the Czech Republic, without using the United Nations Convention on International Sale of Goods in case of any conflicts of principles.