All You Need to Know About International Contracts

All You Need to Know About International Contracts

By Joseph Conlin

Legal expert Jonathan Howe says be prepared to understand and work with different customs, terms, and legalities.

Up from a meeting in the Carolinas, a weekend home, an interview in his Chicago office first thing Monday morning, a telephone conference with a client, and then off to O'Hare International for a flight to New York City. That's five days in the life of Jonathan Howe, president and a senior and founding Partner of Howe & Hutton, Ltd. in Chicago. He has written hundreds of articles and papers, and with a thespian's delivery, Howe has shared legal insight with the meetings industry for decades, earning a reputation as an industry expert with a steel-trap mind. A board director for Duke Law School, his alma mater, Howe broke ground in the highly specialized field of international meetings law in 1969.

MeetingsNet: Let's start with the basics. What is the distinction between offshore and international meetings?

Jonathan Howe: The distinction is defined by the nature of the attendee. In my dictionary or lexicon, if you will, offshore means that an organization says, "We as a group will leave our home country and run a meeting in another one." In other words, an offshore meeting is composed of a homogeneous group gathering outside the boundaries of its home country. A meeting is international when its attendees are international in scope—not one homogeneous group of Americans, Canadians, Mexicans, or Brits, but a diverse group with attendees from many nations.

MeetingsNet: What is the distinction in terms of negotiations and contracts?

Howe: A planner of an offshore meeting must be acclimated to different procedures used in negotiations and contracts because each country has different laws and customs affecting both. With an international meeting, a planner may face similar issues. At the same time, procedures for an international meeting may be entirely familiar. For example, to organize an international meeting in New York, a planner would deal with local suppliers pretty much the same way he or she does in the rest of the country.

MeetingsNet: What caveats can you give planners of offshore meetings, whether they're attended by Americans, or people from a variety of countries?

Howe: The communication between planner and attendees becomes complex. For example, the planner of an offshore meeting should ask, "What am I doing to get my people into the country? Will there be visa problems? Will there be liabilities regarding getting people to and from [the meeting site] and even at the meeting site?"

MeetingsNet: Do planners expose themselves or their organizations to different liabilities when orchestrating international meetings?

Howe: There is liability any time a planner does not exercise due care. Due care takes on an added dimension with international meetings, especially as to the consequences of meeting in a particular venue. Primarily, there have been allegations made in regard to security issues. People have alleged that organizers failed to provide adequate warning about situations around various venues or activities.

For instance, there was a case a couple of years ago regarding a travel agent's failure to provide a warning. It seems that a group of American students were traveling by train through Mexico. The students were going from car to car. A student was seriously injured. According to the suit, there was a history of similar accidents, and because of such, the travel agent should have been aware and should have warned the students. That's the kind of situation a planner must address.

MeetingsNet: How can a meeting planner uncover this type of information?

Howe: The U.S. State Department issues warnings about potential problems in different locations. The alert list is updated frequently and is easy to obtain on the Internet or from a State Department office. Should a planner discover there are problems at the venue, he or she must ask, "What would the prudent planner do in that type of situation?" If the meeting is to proceed, a planner must then let people know what they might anticipate at the meeting venue. Planners might want to alter their contracts based on the State Department's list. The contract could state that because a venue is on the State Department's list, the meeting can be canceled at any time without any fee or obligation.

MeetingsNet: What is the most common mistake planners make with international meetings?

Howe: Assuming that the way we do business is the way they do business. Planners shouldn't rely on lingo used in the American marketplace. A first-class hotel in the United States is different than those in Europe or third-world countries. Another example is negotiations. Planners must do their homework. There are cultural hot buttons. The way we negotiate in the U.S. will not be effective in China, Japan, or Singapore.

MeetingsNet: What are some other relevant cultural differences that might impact negotiations?

Howe: Time can be cultural problem. For example, in all negotiations and contracts, there are elements that deal with time. The problem arises in that each culture defines time differently. There's an expression in the international market: "Is it Swiss time?" You can set your watch by Swiss time. Another culture's definition of time allows you only to set your calendar. You cannot fight the differences. Express interest and concern about how the deal is done, then develop a relationship and exchange valuable information.

MeetingsNet: How can planners guard against potential pitfalls?

Howe: Planners should check with their peers. Meeting Professionals International, the Professional Convention Management Association, and the American Society of Association Executives provide opportunities for sharing information and for networking. Also, find out which destination management companies or professional congress organizers have a good track record in overseas programs. Then call an attorney.

MeetingsNet: Why is an attorney necessary?

Howe: An attorney experienced in international law can help with contracts, currency issues, and making sure basic things like State Department Alert lists are checked out. A good attorney will note the differences in the methodology of contracts. Planners should not be fooled. There are those who will tell them not to worry, but sometimes there's a worry that even a vendor might not be aware of. For example, some countries automatically impose certain standards and conditions even if they are not in the contract. They may be conditions that the planner does not want to accept. It becomes a case of knowing what you are doing.

7 Tips for Conducting Business Internationally

1. Avoid assumptions about business or cultural protocol. If in doubt, observe and imitate.

2. Solicit advice from personal acquaintances, government contacts, or industry sources who have recently visited the country where your meeting will be held.

3. Avoid gestures, speak in low and even tones, and avoid attempts at humor.

4. Learn how to say thank you in the local language.

5. Allow more time to accomplish business transactions than you would in the U.S. Time is a cultural concept, so know the local attitudes towards punctuality.

6. Typical business blunders cluster around scheduling appointments, dressing for appointments, introductions, gift-giving customs, and negotiation procedures and pace.

7. If you cause offense, the best thing to do is just apologize. Most offenses are forgivable.

7 Things to Watch For in International Hotel Contracts

1. In most countries outside the U.S., business relationships are much more formal. Allow the other culture to take the lead.

2. With the exception of new convention hotels, most properties outside the U.S. have limited meeting space, and typically meeting room rentals are likely to cost you more than in the U.S. Further, meeting space in older hotels tends to be designed for food and beverage functions, not meetings with serious audiovisual needs.

3. Just as in the States, being flexible about timing can make a significant difference to your bottom line. For example, unlike in the U.S., the best hotel rates in Japan are available during the week, not the weekend.

4. Hotel contracts in other countries are often one-page letters of agreement, and the tricky part is to expand that document into something more substantial without offending your negotiating partner by implying mistrust.

5. Expect to pay a substantial pre-payment deposit at hotels outside the U.S. Some properties will accept a letter of credit.

6. U.S. sales representatives of international hotel chains can help with negotiating, logistics, and red tape—everything from banking information and airport transfer arrangements, to getting materials through customs.

7. Be aware that some countries automatically impose certain standards and conditions, which may not appear in your hotel or convention center contract.