When dealing with a distant party in another country, you may be uncertain of the extent to which that party is making a commitment to perform the contract. While you are no doubt serious about the bargain, you have no evidence as to whether the other party has equal resolve. Does timely delivery of your order have the same importance to the other party as it does to you? Is the other party committed to producing quality products that meet or even exceed your expectations? Trust is built on the personal commitment that each party demonstrates to the transaction, and therefore this aspect of any transaction whether domestic or international is especially significant.
Gaining evidence of commitment in cross-border transactions, in which parties usually operate by different business practices, can be more difficult than in domestic transactions, in which parties typically share the same business practices. A party who orally agrees to become obligated has made a commitment to the other party, but the terms of that commitment depend exclusively on the word of one party against the other. In many cultures, bargains are struck only when the parties meet personally; a handshake seals the promise. Other cultures insist on the signing of written informal or formal contracts before a final commitment is made.
In transacting business with a person of another culture, you should keep in mind the way in which they are likely to show their commitment. You will need to decide in advance of negotiating the bargain whether to accept the other party's evidence of commitment, insist on your own, or reach a compromise. If you meet the other party personally, shake hands, and gain that parties respect and trust, you may decide that an oral agreement is sufficient to express commitment to the transaction.
If you do not feel comfortable with an oral arrangement, consider the other party's culture before you act. The other party may be from a culture where contracts are usually in writing, and thus without much fuss, you may simply mention that you will put the contract in writing and send it for signing. On the other hand, the other party's common practice may be to operate on a handshake, and that party may be insulted if you insist on a written contract. In that event, you may have to find an indirect approach. For example, you might tactfully explain the custom of your country, and ask the custom of your host's country. Then, if your host seems open to the idea, you might suggest an informal letter or memorandum as a compromise. If not, you may take or leave the handshake bargain, depending on whether you want the business and whether you can afford the risk.
If you have previously done business with the other party, you might well be willing to accept a handshake to seal the bargain, but such practice should be the exception not the rule. When dealing internationally, it is always best to insist on written evidence of personal commitment, even if you simply exchange a memorandum. In relative terms, there is more cost-in time and money-involved in cross-border transactions than in domestic ones. When you agree to sell or buy goods internationally, you are also responsible for complying with import, export, customs, consumer product, marking, transport, and other trade-regulating laws of two or more countries. It is wise to ensure that the other party shares the same commitment. |
