Well-drafted contracts can help to ensure that parties who have diverse cultural backgrounds reach a mutual understanding with regard to their rights and obligations. All contracting parties come to the table with individual expectations, which in turn tint their understanding of the terms. What is reasonable to one may not be to the other, in which case mutual understanding-an essential element in the creation of an enforceable contract-is lacking.
The key is in the drafting of the agreement. You should write the provisions to reflect the culture of the foreign party, while at the same time keeping in mind your own requirements. Such drafting requires that you have an understanding of the other party's culture and the extent to which it differs from your own. Your contract provisions may need to be simplified so that they can be clearly understood, particularly if the contract will have to be translated into the other party's own language. You should review the provisions for shorthand phrases, legalese, and slang familiar to you but not to the other party-these provisions should be written in plain terms to ensure mutual understanding.
Further, you will need to determine the extent to which the other party is familiar with international business. If the other party has been trading internationally for some time, he or she is more likely to have gained an understanding of cross-cultural transactions. During your negotiations, you should explore the business history of the other party so that you can draft your contract to the appropriate level of sophistication.
A contract that reflects the cultural expectations of each party is more likely to be performed to the satisfaction of both. Mutual understanding means not only that each party knows its rights and obligations before signing the contract, but that the parties are in complete agreement as to each other's rights and obligations. Disputes typically arise when one party interprets a right or obligation differently than the other party. A contract drafted to ensure mutual understanding of culturally diverse parties will help to avoid, or at least to settle, subsequent disagreements over performance.
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