One Size Doesn’t Fit All: The Importance of 'Right-Sizing' Contracts with International Suppliers

Abstract

Supply chain and vendor relationships are a crucial component to the success of companies with a global footprint. Those relationships hinge on the contract terms that uphold the pillars of transparency, predictability, and stability. Lawyers may be drawn to the idea of drafting a global template supplier agreement, but a global “one-size-fits-all” template agreement is not practical, particularly when dealing with suppliers of different levels of sophistication and size. This can lead to delays in negotiation, resulting in wasted time and effort. At the core of any international negotiation, lawyers need to understand the market in which they are negotiating, and the cultural and business norms that may affect the agreement’s terms. A failure to do so and insisting on using a global template agreement can have catastrophic effects on the negotiation’s success. As scholars have recognized, “there are many differences in attitude and practice that distinguish international dealings from the domestic dealings.. . . . Many of those differences are purely mechanical or procedural differences. Nevertheless, a failure to be aware of them and to act on them can, and often has, resulted in disaster.”