US Contracts
German-owned businesses increasingly contract with US businesses, utilizing English language agreements which are drafted according to US law: asset purchase agreements, stock purchase agreements, shareholder agreements and other important contracts, such as patent licensing agreements. German businesses should understand that all contract clauses are negotiable. This is quite different from German contracts.
In a common law contract every clause can be worded in several different ways and will result in very different legal consequences for the parties in terms of their rights and duties. Without knowledge of US law a German party can easily commit to a contract with disadvantageous terms. This not a matter of merely translating contract provisons, but a matter of knowing the options and choices and to negotiate the best possible terms.
The issue of jurisdiction is important. I always recommend alternative dispute resolution (ADR) clauses for international contracts. ADR clauses replace jurisdictional provisions and allow for conflict solutions through mediation or arbitration as most cost-effective solutions.
US business partners most likely will not agree to German jurisdiction, if the agreement is drafted according to US law. There are other reasons why German jurisdiction is not the preferred approach. The execution of German judgments in the US is complicated and requires additional expenditures for court and attorney fees. The various US states have differing requirements for the execution of judgments. There is no international treaty for the execution of judgments between Germany and the US.
US Jurisdiction is not recommended. US litigation is expensive and can take years. Extensive discovery results in a burdensome exchange of documents, company secrets and electronic communication. At the end of the litigation every, even a long-time, business relationship will be destroyed.
I am happy to help you determine the right step for you and will provide an estimate of time and costs.
