Crucial legal clauses for SMEs wanting to go global
By Rishi Saraf 22-Nov-2015
Rooshad Patel is Founder & MD, Hi Tech Resistors Pvt Ltd. He shares useful learnings:
On commercial terms he suggested that for quotations, one must choose a stable currency, and put a currency fluctuation clause, e.g. my price is X in currency fluctuation range of __ to __ , or hedge the currency.
If possible one must avoid sole distributors, but if necessary, one must put a performance target as the essence of the agreement. One must try to operate without distributor agreement.
As per international laws an Agent becomes your representative, and hence it is very dangerous to appoint an Agent.
He said it is better to get your international agreements vetted at Mumbai.
When the clause of applicable law/ arbitration law comes, it is better to ask for laws of the United Kingdom as they are similar to India’s laws and our lawyers will be able to handle it.
Do not go for arbitration outside India, ask for New Delhi, as legal expenses in other countries are very expensive.
Never sign consequential damages clause, do not agree to it, insist for Liability is limited clause.
Do not give credit to buyer, it is not the only reason for which he is buying from you.
Cover yourself with ECGC.
Do not bend (by overlooking your interests), remember both parties are interested.
Blog about your product, it drives traffic to your website.
Keep the customer delight, reply back promptly to queries/ mails.
Pay you taxes and keep your Balance Sheet stronger, then only foreign companies will come to you.
He was speaking at Global Nagpur Summit.