Understanding Contract Remedies for SMEs
Contract remedies might not be the most essential things on your mind as a small or medium-sized enterprise (SME) looking to scale up and enter into the international markets. However, understanding available comprehensive contract remedies is one of the keys to volleying back civil negligence or intentional breach of contract, protecting your business, and enabling growth. SMEs that are preparing to scale beyond the local horizon need to be prepared for legal entanglements that arise when contracts go awry.
Micro and macro factors both pose risks to the viability of small and medium-sized enterprises (SMEs) looking to expand into global markets. Beyond the potential for fraud and misrepresentation, SMEs that enter into complex international deals for goods and services face the potential of default on the contract. Contract law is vast and complex. For SMEs that operate primarily in local markets, ignorance of the laws and the ramifications of contract breaches might not have serious consequences. Scaling up can place SMEs well outside their home turf. When that happens, it is wise to be prepared with a general understanding of the contract remedies available.
A contract remedy may take the form of either a legal remedy or an equitable remedy. Damages, specific performance, rescission, restitution, contribution, indemnification, and exoneration are examples of legal remedies. Drafting better contracts is one way that SMEs can avoid costly legal battles over contract breaches and invalid contracts.
When it comes to contract remedies, small and medium-sized enterprises need to think strategically about legal options at their disposal. Scaling up makes them more vulnerable to disruptions and changes in their financial health. By understanding the basics of contract law, SMEs can avoid costly pitfalls during contract negotiation and enforcement.
One of the biggest impacts of breached contracts for small and medium sized businesses looking to internationalize is that it results in decreased investor confidence. That could affect a number of things in a SME’s day to day operations. The ability to procure necessary equipment, export goods to international customers, and fulfill orders all rely upon sound contract negotiations. SMEs that go global with poor or invalid contracts could lose foreign business partners. Protecting intellectual property can become problematic and SMEs may find it more difficult to fulfill future contracts.
The exact remedies for contract breach will vary depending on the jurisdiction and the specifics of the agreement that was negotiated. SMEs should be proactive about safeguarding their businesses by taking the time to understand available remedies under the laws of the countries that are in question before entering into precarious international contracts.
By understanding contract remedies for internationalization, SMEs can protect their investments while expanding into the global market. The right legal tools can create an atmosphere of confidence that makes it easier for SMEs to build connections and partnerships overseas.