Blogging on International Contracting?

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Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

After I made a brief comment on international contracting, the doctor suggested that “maybe I could write an expert piece about international contract construction?“.Well, that piece would be way too long for a blog format. I take about an hour on this topic in face-to-face seminars and that’s after a session on cultural differences.

What I can do in this format is give my philosophy and a tactic or two.

Why do people write purchasing contracts? (And not everyone does.) I see two reasons. First is to get a written document that describes what each party is going to do. Second is to enable bringing in a powerful third party (a court) to get a company to do what they might not do otherwise, such as pay liquidated damages.

When you cross borders, cultures and language barriers, the first reason becomes more important than it is domestically. The second reason becomes less practical. Adjudication and enforcement can be awfully difficult and expensive.

That means first of all, it’s much more important to get a good supplier than to get a good contract. Second, it means that the contract should be written to help with communication between the parties, not hinder it. It should be clear and easy to read (no size eight gray type please.)

Here’s the tactic for the day.

Run a grammar check on your contract using Microsoft Word with “check readability statistics” turned on. Look for a “reading ease” score of 40 or higher and a grade level requirement of 11th grade or less. Remember, the document probably won’t be in the supplier’s language. Once you achieve that, then print the document in an attractive format. Pay attention to typography and white space. Make it easy to read.

If your lawyer struggles with this, get him or her a copy of the SEC’s “A Plain English Handbook“. (Download link.) It has lots of guidelines and tips. Another good source is “Plain English for Lawyers,” which you can find on Amazon.

As a final note, I just happen to be doing my one and only public Global Supply Management seminar for 2009 in the Chicago area on August 11-12. Check this link for details.

Dick Locke, Global Procurement Group.