Private contracts for the exchange of goods and services are increasingly made across national borders. Firms continue to look for the best suppliers for their inputs or the best markets for their outputs, and as the costs of transport come down, global market access goes up. Yet the most fundamental tool of international business—the contract—may be much less global than the business itself. The understanding that a firm has of how a contract is formed and enforced in their home jurisdiction may conflict with that of their partners or customers in foreign jurisdictions, leading to unnecessary litigation. This Article will examine the common law contract requirement of consideration, an element that can make or break a contract. It will compare the requirements for forming a contract in civil and common law jurisdictions and explain how consideration can be overlooked or underemphasized, and what effect this has on the enforcement of commercial contracts. Finally, it will offer practical suggestions for parties to avoid a consideration challenge following execution of their agreement.
Details
Title
Cross-Border Commercial Contracts and Consideration
Published in
Berkeley Journal of International Law
Volume
34
Issue
2
Pages
1
Note
Private contracts for the exchange of goods and services are increasingly
made across national borders. Firms continue to look for the best suppliers for
their inputs or the best markets for their outputs, and as the costs of transport
come down, global market access goes up. Yet the most fundamental tool of
international business—the contract—may be much less global than the
business itself. The understanding that a firm has of how a contract is formed
and enforced in their home jurisdiction may conflict with that of their partners or
customers in foreign jurisdictions, leading to unnecessary litigation. This Article
will examine the common law contract requirement of consideration, an element
that can make or break a contract. It will compare the requirements for forming
a contract in civil and common law jurisdictions and explain how consideration
can be overlooked or underemphasized, and what effect this has on the
enforcement of commercial contracts. Finally, it will offer practical suggestions
for parties to avoid a consideration challenge following execution of their
agreement.