Business in a Global Context: Minimizing Legal Risks in Contracts

This report examines the complexities of conducting business in a global context, focusing on the legal and contractual risks associated with partnerships with foreign firms. It outlines strategies for minimizing legal risks when signing contracts, emphasizing the importance of contract management, risk assessment, and contract review committees. The report further details effective methods for managing contractual risks in international agreements, including best practices, risk scorecards, and checklists. Finally, it explores various contractual dispute resolution options, such as negotiation, mediation, arbitration, and litigation, providing insights into their respective advantages and disadvantages. This analysis offers valuable guidance for businesses seeking to navigate the challenges of global partnerships and mitigate potential legal and financial repercussions.

Running head: BUSINESS IN A GLOBAL CONTEXT
Business in a Global Context
Name of the Student
Name of the University
Author Note

1BUSINESS IN A GLOBAL CONTEXT
For a business to enter into a partnership with a foreign firm can be risky, challenging
and lucrative all at the same given time. This assignment analyzes the way by which legal risks
can be minimized when signing a contract for partnership with a foreign firm, outlines the
number ways by which such risks can be well managed and also mentions the contractual dispute
resolution processes that ought to be put to use if and when disputes do arise.
1. Ways to Minimize Legal Risks when Signing Contracts with Foreign
Firms
One of the main ways by which risk can be minimized when signing contracts with
foreign firms is to engage in a process that is known as contract management. The contract
management tool stores executed contracts and contract templates in central repositories where
members of the legal department of the company can locate them by conducting a simple search.
The contract management tool also allows for contracts to be effectively managed such as
tracking price increases and renewal dates for example (Ameyaw & Chan. 2015).
Scoring potential contracts on the basis of the risk tolerance of the company is another
way by which legal risk can be mitigated when entering into a contract with a foreign firm.
Scoring contracts for the purpose of risk will help company owners to understand if the contract
is capable of meeting the parameters of the company for signature or whether it fails (Ibid).
Setting up a contract review committee is the third effective way by which legal risks can
be minimized when signing a contract with a foreign firm. The committee reviews the types of
risks that are presented by the contract with multiple heads coming together whether or not the
contract is one that can be accepted or whether it should be revised to include new terms and
conditions or be disbanded altogether (Ibid).

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2. Ways by Which Contractual Risks can be managed
Some of the ways by which risks in international contracts can be managed in an
effective manner are –
 To engage in consistent use of best practices with regard to contract management
 To make ongoing use of what may be termed as risk status scorecards
 To apply risk management processes of other international commercial contracts
 To make considerable use of good checklists for modifying, reviewing and creating
business agreements (Happio & Siedel, 2017).
3. Important Contractual Dispute Resolution Options
Three important contractual dispute resolution options that can be put to use when a
contract signed by a company with a foreign firm gives rise to a dispute are negotiation,
mediation and arbitration, and litigation. Negotiation includes sending letters to parties prior
to taking any legal action, or offering what may be termed as a cease and desist letter in
which the case of the company is set out clearly. It demonstrates to the opposing party that
the matter is being taken in all seriousness. Negotiation is a process that can prove to be quite
effective for satisfactory dispute resolution (Van Staveren, 2018).
Alternative dispute resolution options such as arbitration and mediation stand to be
particularly useful when the legal wrongs and rights of a particular situation are not as
important as commercial considerations such as speed, cost or the preservation of a
relationship between two or more parties. Mediation or arbitration is similar to court
processes where a third party gets to decide on the wrong or right of a situation with the
decision in this respect being binding in nature, on the parties involved (Mullner, 2016).

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Litigation is a dispute resolution process that is lengthy as well as costly. Yet in some
situations, it can be considered the best possible approach to international dispute resolution
and it is a court process in every sense of the term (Ibid).

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References
Ameyaw, E. E., & Chan, A. P. (2015). Risk ranking and analysis in PPP water supply
infrastructure projects: an international survey of industry experts. Facilities, 33(7/8),
428-453.
Haapio, H., & Siedel, G. J. (2017). A short guide to contract risk. Routledge.
Müllner, J. (2016). From uncertainty to risk—a risk management framework for market
entry. Journal of World Business, 51(5), 800-814.
Van Staveren, M. (2018). Uncertainty and ground conditions: a risk management approach.
CRC Press.