Cross-Border Commercial Contracts and the Ongoing Need for Consideration

Private contracts for the exchange of goods and services are increasingly made across national borders. Firms continue to look for the best suppliers for their inputs or the best markets for their outputs, and as the costs of transport come down, global market access goes up. Yet the most fundamental tool of international business — the contract — may be much less “global” than the business itself. The understanding that a firm has of how a contract is formed and enforced in their home jurisdiction may conflict with that of their partners or customers in foreign jurisdictions. In this article, I will examine the common law contract requirement of consideration, an element that can make or break a contract. I will compare the requirements for forming a contract in civil and common law jurisdictions and explain how consideration can be overlooked or underemphasized and what effect this has on the enforcement of commercial contracts. Finally, I will offer practical suggestions for the parties to avoid a consideration challenge following execution of their agreement.