A domestic contract may cover the commercial basics while leaving important international questions unanswered. Cross-border agreements should address matters such as governing law, dispute resolution, payment currency, taxes, delivery obligations, intellectual property, confidentiality, indemnification, liability, termination, and force majeure.

Dispute resolution deserves particular attention. Choosing California law does not necessarily answer where a dispute will be heard or whether a judgment will be easily enforced abroad. Arbitration may be appropriate in some transactions, while court litigation may make more sense in others.

A business contract lawyer in Los Angeles can help businesses assess these provisions in light of the transaction and the jurisdictions involved.

Give the Contract a Cross-Border Checkup

Governing Law and Dispute Resolution: Decide which legal system applies and where disputes will be handled before the relationship becomes contentious.

Currency and Payment: Address exchange-rate exposure, payment mechanisms, taxes, banking requirements, and responsibility for transaction costs.

Intellectual Property: Clearly establish ownership and permitted uses of trademarks, software, content, inventions, and other proprietary assets.

Termination and Exit Rights: Consider how the relationship can end and what happens to customer information, inventory, licenses, employees, and intellectual property afterward.

The U.S. Department of Commerce notes that import requirements, documentation, testing, labeling, and licensing can vary substantially by country.

Check Export Controls and Sanctions Before Entering the Market

International sales can create additional issues when a business handles software, technology, technical information, specialized equipment, or products with potential military as well as civilian applications.

The U.S. Export Administration Regulations can apply to certain products, software, and technology. The Department of Commerce also provides a Consolidated Screening List for identifying parties subject to certain U.S. government restrictions.

For technology businesses, the fact that a product is delivered electronically does not automatically remove export-control concerns. The Bureau of Industry and Security's rules cover commodities, software, and technology, and certain provisions can also apply to reexports and transfers outside the United States.

Ask the Compliance Questions Before the Sales Questions

· What exactly is being exported or transferred?

· Who will receive it?

· Where will it ultimately be used?

· Does an export license apply?

· Is the recipient subject to restrictions?

· Could the product or technology be transferred to another country?

These questions are particularly important when a business is entering markets through distributors, resellers, agents, or other intermediaries.

Protect Your Data and Intellectual Property Across Borders

International growth can put valuable information into more hands and more jurisdictions. Customer information may be transferred between countries. Employees may access systems from overseas. Foreign contractors may work with proprietary technology. Cloud providers may process information in locations the business has not considered carefully.

Companies should know what information is being collected, where it travels, who can access it, and why it is being processed.

The same principle applies to intellectual property. A U.S. trademark registration or other domestic protection does not necessarily provide the same protection in every foreign market. Businesses should consider whether important brands, inventions, software, and trade secrets require additional protection before entering a new jurisdiction.

Protect the Asset Before Exposing It

Data Transfers: Identify what information will cross borders and determine whether applicable privacy requirements impose additional restrictions or safeguards.

Trademarks: Consider protecting important brands in target markets before significant marketing, sales, or licensing activity begins.

Trade Secrets: Limit access to proprietary information and use appropriate confidentiality protections with employees, contractors, distributors, and partners.

Ownership: Make sure agreements clearly establish ownership of work product, inventions, software, content, and other intellectual property created during the relationship.

Prepare for Employees, Contractors, and Local Vendors

International expansion often becomes more complicated when a company begins putting people on the ground.

Employment laws can differ significantly between jurisdictions, including rules concerning employee classification, compensation, benefits, working conditions, termination, and required agreements. A U.S. company should not assume that calling someone an independent contractor will produce the same legal result overseas.

The same caution applies to foreign vendors and service providers. Agreements should address confidentiality, intellectual property, data access, security, liability, compliance responsibilities, and termination.

Build the Local Compliance Checklist Early

Employees: Determine which employment requirements apply before making local hires.

Contractors: Review classification rules instead of relying solely on the label used in the agreement.

Vendors: Establish clear obligations concerning security, confidentiality, intellectual property, and regulatory compliance.

Local Representatives: Define the authority of distributors, agents, and other representatives so they do not make commitments beyond what the company intended.

Address Tax, Regulatory, and Ongoing Compliance Issues

International expansion is not a legal task that ends when the first contract is signed. New obligations can continue throughout the life of the operation.

Businesses should consider corporate taxes, withholding, VAT or GST, transfer pricing, foreign reporting, local registrations, industry-specific licensing, and other regulatory requirements. The IRS notes that transfer-pricing rules can affect transactions involving commonly controlled companies, including transfers of goods, services, and intangible property.

Tax treaties can also affect the treatment of certain cross-border income, but their benefits depend on the specific treaty and circumstances.

A corporate compliance lawyer in Los Angeles can help businesses identify legal requirements and establish processes for addressing them as the foreign operation develops.

Expand With a Plan, Not a Legal Cleanup