If you are planning to contract with a customer in the US, generally there is nothing wrong with using your normal UK customer contract template. Global companies have the reach and resource to have different versions of their customer agreements for all the territories they trade in, but that is not generally feasible for SMEs. Although you can’t override the laws of the customer’s territory if they apply to the type of contract involved, just in the same way you can’t contract your way out of applicable UK laws here), using your usual templates should give you a perfectly adequate starting point to help you in expanding your customer base across the pond.

However, US contracts often look very different to UK ones and you obviously don’t want to put your customers off by providing them with an unfamiliar looking document. The solution? Make some minor changes that don’t alter the core of your template but which will make them more familiar to – and therefore more likely to be accepted by - your US customers. Here’s how.

Tomayto / Tomahto

With US contracts, the easy language always wins – use “best efforts” not “best endeavours”; don’t “undertake” anything, just “agree” to do it; and definitely don’t be “procuring” over “directing” and “ensuring”. Even the font you use can make a difference – typical US contracts will use Times New Roman over fonts more common in the UK like Calibri or Arial.

Remember the Z’s – you want your customer to recognize the language as much as possible!

References to legislation should also change to their US equivalents – or you may be able to delete the reference entirely if the obligation is still sufficiently clear. Similarly, if you have a clause requiring insurance policies being in place then those policies should be described in language that will be familiar in the US. You should also check that those policies cover US claims.

Also, embrace the use of capital letters – US contracts traditionally use all-caps to make important contract language conspicuous and to put greater emphasis on important terms (e.g., warranties or limitations of liability). It may look a bit ‘SHOUTY’ to us this side of the Pond, BUT YOUR US CUSTOMERS WILL BE USED TO IT!

US Contract Traits to Avoid

Aside from the language, there are also some US contract traits to avoid when Americanizing your UK templates.

A fairly standard term you might see in US agreements is a termination for convenience – this essentially gives one or both parties the right to terminate the contract for any reason at any time – usually on requiring very short notice like 30 or 60 days. This obviously undermines the value of a contract tremendously. You might be delighted to sign up a customer to a lucrative five year contract, but you will be less delighted if the customer decides to walk away as soon as the ink is dry on the deal. So avoid these and stick to the standard termination rights – i.e. where the other party is in unremedied material breach or is insolvent.

US contractors also tend to grant overly wide indemnities. Indemnities are generally a ‘nice to have’ item but are by no means essential. A bigger point to watch out for are liability caps – you should ensure these are in place to limit your loss.

Dispute Resolution & Jurisdiction

The jurisdiction clause is a natural sticking point between cross border parties – i.e. whether your contract is going to be governed by the law of the State your new customer is based in, or by English or Scots law. In general, the governing law of an agreement doesn’t usually affect the meaning of clauses, so it is something that can be compromised on.

A bigger point perhaps surrounds dispute resolution – it is notoriously difficult to enforce foreign court judgements in the US as there is no uniform American federal law governing recognition. And going to court should always be a last resort in any event. A good way to address this is by including a multi-tiered dispute resolution clause which requires parties to try and resolve a dispute through different levels of discussions (involving increasingly personnel) and if that fails using mediation. This will help reduce the chance that you reach the stage of litigation.

Conclusion

Getting your customer templates in shape to help engage with US customers can be simpler and more costs effective than you might think. Our contract specialists at ipdcgroup@mbmcommercial.co.uk can help if you have any queries.