Exploring international business contracts can be a bit like navigating a maze, especially when you’re taking your business beyond local borders. While local business contracts are relatively straightforward, the transition to foreign markets introduces a layer of complexity due to differing legal landscapes.
For Canadian businesses venturing abroad, meticulous research and adherence to international laws are imperative.
Specializing in international business contracts is Ashlee Froese, the visionary founder and CEO of Froese Law. Beyond a mere focus on legal technicalities, Ashlee emphasizes understanding the spirit of the law and comprehending the strategic nuances involved in a company’s international expansion.
Ashlee Froese’s CEO Journey
Ashlee began her journey on Bay Street, becoming a partner in a short six years. However, her desire for change led her to redefine her professional landscape. Why forsake a comfortable position?
Ashlee’s motivation was rooted in her mission to create a law firm that stood out—modern, client-focused, and providing an inclusive work environment for professionals, especially women.
Ashlee wanted an answer to a problem she saw in professional settings — she noticed that women sometimes unknowingly hold themselves back. This lightbulb moment sparked her mission to break down the walls of the old-school law scene, creating a safe space that’s welcoming and supportive for everyone.
Fundamental Requirements for International Business
There’s a lot to consider when going international — and Ashlee is nothing if not thorough — as she puts it: “You need to have your house in order.” Let’s break it down with some key questions:
- Do you have a shareholders’ agreement in place?
- Is your intellectual property adequately protected?
- Have you considered safeguarding confidential information through robust trade policies?
- Are you sourcing materials or intellectual property from other parties for the deal?
- Have you secured financing for your international endeavors?
- Do you possess the necessary insurance coverage?
- What are the tax implications when dealing with different countries?
And this is just the tip of the iceberg. Navigating the international terrain involves understanding foundational aspects.
Ashlee’s proactive legal approach aims to tackle potential challenges head-on, offering effective solutions for the real-world situations you might encounter in the space of international business.
Nuances in Domestic Vs. International Contracts
When it comes to contracts, the game changes from domestic to international. While domestic agreements, especially within the same jurisdiction like Ontario, are relatively straightforward, international contracts demand a more nuanced approach.
As highlighted by Ashlee, dealing with international contracts involves considering specific laws of the country, territory, or province involved, adding layers of complexity.
Determining which law applies can be tricky, and enforcing rights in a different country poses its own set of challenges. However, regardless of the geographical scope, any business contract should cover essential elements while adhering to relevant laws:
Ashlee and Froese Law’s approach to international contracts means educating the client — they’ll create a balanced representation of risk and reward so that their client can make an informed and educated decision. Strategy plays a crucial role in this process, tailoring the approach based on the unique product or service offered by the client.
The Cultural Component
Consideration of the foreign location’s culture is crucial. According to Ashlee, “Canadians might be a little bit more informal and relaxed in how they do business. That may not play so much in other countries in Asia, where it’s a little bit more formal. The type of negotiations might be different.”
The culture component can significantly impact business dynamics, and Ashlee emphasizes the importance of responsibly learning about foreign cultures. It’s crucial to understand the variations in people as well.
Ashlee notes,“I think as much as it’s saying that there’s cultural differences. I think it’s also you have to be careful not to paint people with the same brush, right, because some stereotyping comes in.”
Protecting Client Interests
The core purpose of any contract is to protect the interests of all involved parties, addressing potential risks. This principle holds true for both international and domestic contracts.
However, recognizing the unique needs of each business agreement is paramount. Ashlee avoids generic templates, preferring to customize each contract to meet the specific requirements of her clients. This ensures that the contract serves its purpose effectively.
International Considerations for B Corps
Culture and client interests also come into play when it comes to looking into Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) metrics internationally.
The unfortunate reality is that not all countries prioritize human rights. While having a human rights or anti-slavery clause in an international contract may face challenges, making the effort and advocating for an ethical and sustainable world remains valuable.
The differences in laws and culture between countries can make maintaining B Corp certification a little bit more challenging when doing international business.
Part of B Corp certification involves ensuring that even business partners are held to a higher standard of ethics and uphold specific values. Incorporating those standards into a contract involves stipulating them as part of the obligations that a business partner has to abide by.
“In the end, the contract is the essence of what the business relationship will be,” Ashlee emphasizes. Crafting an ethical contract is integral to establishing a sustainable business relationship.
The Strategy In Contract Writing
Crafting a mutually beneficial business relationship with ethical standards is only one facet of contract writing; determining applicable laws is another challenge.
Choosing the Governing Law?
According to Ashlee, international contracts are customizable: “As long as it’s legal in principle, you can customize the contract, the business terms to whatever, as long as there’s a meeting of two minds.”
The jurisdiction’s laws applicable to a business contract are a strategic choice extensively discussed by Froese Law with its clients.
Doing Your Due Diligence in International Contracts
Conducting due diligence and market research before entering the international market is crucial. As Ashlee metaphorically puts it, “Don’t you date someone for a while and do research on them before you marry them?”
She recommends starting with short-term contracts, around three months, before considering long-term commitments or exclusivity.
Negotiating from Step One
“The contract is the endgame. That’s the final stage. So first things first: understand what you want and what you need for your business. Check your ego at the door.”
Ashlee’s negotiation approach is comprehensive, starting almost from the ground up:
- Start with an NDA to protect critical aspects during negotiation.
- Follow with an LOI that covers the fundamentals of the agreement. Only proceed if the fundamentals align.
- Gradually incorporate contract nuances like currency, renewal terms, and Intellectual Property (IP).
Ashlee recommends paying close attention to how the other party handles negotiations, because it can indicate what an actual business relationship with them will be like.
And critical to note: customize the agreement. Your business and its needs are unique. Even if there are similarities to other companies, it will have specialized needs.
Learn More About Ashlee Froese
Ashlee Froese is the founder and CEO of Froese Law, a corporate and commercial law firm based in Toronto, Canada. To Ashlee, law isn’t just about winning cases — although that’s important too. She passionately advocates for making legal services more accessible to people and educating her clients about what goes on.
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