The key legal issues to consider when exporting to new markets

Many UK businesses in the manufacturing sector rely on exporting their goods to overseas markets.

While this can create significant opportunities for businesses, unfortunately there are also risks.

One of the key things to consider is that robust commercial contracts and terms and conditions are in place with the companies being traded with.

Below are a number of the most important provisions that need to be considered by UK businesses.

Jurisdiction and governing law

In a contract, a jurisdiction clause is a provision that identifies which courts have jurisdiction to hear a dispute. Therefore, if for whatever reason a dispute arose out of the contract, you could identify which country’s courts would have authority to hear it.

This is vital if you are dealing with overseas markets, otherwise you run the risk of a foreign court having jurisdiction (which could be very costly).

A governing law clause enables the parties to specify the system of law that will apply to the interpretation of an agreement. It is therefore important that this is clearly drafted to ensure that the laws of England and Wales apply to the contract.

Intellectual property

Protecting your intellectual property (including trademarks, patents, copyright, etc) is important when trading in foreign markets.

Intellectual property rights are often territorial; therefore it may be necessary to seek advice from local solicitors to determine how that country’s intellectual property laws operate and the best ways to protect your IP (for example by registration of a foreign trade mark). 

It would also be wise to ensure that IP is dealt with in any contracts to determine to what extent the business you are contracting with is able to use your IP (or vice versa).

Payment terms

If you are receiving money pursuant to a contract, it is important to ensure that you are paid on time. Any payment terms should therefore be clearly identified within the agreement. This is likely to make it easier to enforce the contract if you are not paid. It may also be worth inserting a clause specifying the currency in which payments should be made.

Incoterms

The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law.

On 16 September 2010, the ICC launched the new Incoterms 2010 rules. The Incoterms rules are a series of internationally recognised standardised terms governing the costs, risks and practical arrangements of the sale of goods, therefore the rules are relevant for anyone involved in the buying and selling of goods and services, especially international traders.

Although the Incoterms are incorporated into many contracts, in some respects they are not complete. For example, they do not describe the goods, warranties, liabilities, price and payment, title of goods, intellectual property, governing law and jurisdiction.

It is therefore important that your contracts adequately deal with such issues.