Cautions for International Contracts

Key sticking points to address in supplier agreements abroad

Jonathan T Howe

More Pointers
• For the most part, the insurance policies you already have will not apply to offshore events. As soon as you start booking out of the United States, start looking into the appropriate coverage.

• Get to know your destination's culture and negotiating process. Be prepared to handle cultural issues, and be very tolerant of them for a successful outcome.

Hiring a good local destination management company (DMC) or professional conference organizer (PCO) will save you time, money and anxiety.

When planning an event outside the United States, it's important to beware of how laws differ when doing business overseas. Specifics vary from country to country, so preparation is key.

Who's Law?
When it comes to disputes, litigation waged outside the United States, just like at home, can be expensive and risky, and the process definitely won't be quick. As a result, arbitration might well be the best avenue to follow in hopes of finding an amicable solution, and this choice should be outlined specifically in the contract.

Still, all clauses have to be enforceable in the land you'll be visiting, because a local or federal statute, if not followed, might block part of the contract, even if spelled out and agreed to. For example, let's say the laws of one jurisdiction are set forth in the contract. While most courts outside that jurisdiction will honor those terms, some will look at it from a public-policy view and determine that their own statutes have been unfairly discounted and are applicable to the situation. There is no guarantee that this clause of selection of law will be upheld.

Your best bet is to consult with knowledgeable counsel to make sure all your bases are covered. Equally important is to read the contract forms very carefully. Be aware that in some countries, the failure to translate the agreement into the native language could make it impossible to enforce the agreements. The contract also should indicate which language will prevail in arbitration or court proceedings.

Where Will problems be solved?
Just as in a domestic contract, where the city or state is chosen for any arbitration or litigation that will arise, these details need to be designated in agreements for overseas events. For example, you might want the contract to be constructed in accordance with the laws of the United States, and choose a U.S. venue for legal action. But any incident that takes place on-site, such as a fall at the hotel, would be handled in accordance with the local laws where the property is located. Over the years I have found this approach works well.

Deposit Or No?
The issue of deposits comes up often with international events. Some suppliers require up to 100 percent of the value of the contract in advance. Instead, provide a standby letter of credit. This protects you if the supplier does not perform, yet provides security to the vendor that they will get paid if all goes well.

Standards Might Not Be
Even dealing with chain properties outside the United States might not be anything like your experience closer to home, and the standard contract might be different. While you want to trust -- be sure to verify.

Jonathan T. Howe, Esq., is a senior partner of the Chicago, St. Louis and Washington, D.C., law firm of Howe & Hutton Ltd., specializing in meetings and hospitality law. Email questions to him at