Although in many respects the UK and the US share a legal background and contract terms are often similar on both sides of the Atlantic, there are crucial differences in contract law which may catch UK companies off-guard when negotiating with US entities.
Key differences to be aware of include:
- indemnification and insurance coverage
- intellectual property protection
- data privacy
- dispute resolution
- local law compliance
Commercial Contracts with US parties
Although in many respects the UK and the US share a legal background, there are crucial differences in contract law which may catch UK companies off-guard when negotiating with US entities, such as:
Different concepts are called different things in each country and can impact the interpretation of your contract. This is apparent with requirements for insurance coverage (e.g. workers’ compensation in the US broadly to UK employers’ liability insurance). Our US team is ‘bilingual’ and understands these differences when assisting you with your commercial contracts.
In the US, there is an implied duty of good faith for all contracting parties, while there is (for the most part) no such concept in the UK.
Liabilities and Indemnities
When parties try to limit their exposure, the types of loss differs between countries (and sometimes, even between states). In the UK, excluding indirect losses does not include profits or revenues. Broad indemnities are more common in US contracts than in the UK.
The latest data privacy regime in the UK means that UK businesses are now among the elite when it comes to respecting consumer data. The US looks like it is finally waking up to the idea that individuals are more protective of their personal information, especially with the introduction of the California Consumer Privacy Act. US privacy regulations can impact on a business even if it has no physical presence in the US. Understanding the differences between the two countries when it comes to privacy is critical for businesses, especially those in the tech sector. Our US qualified team has the ability to provide advice on how the CCPA and other data protection laws could impact on you as a business.
Protection of Intellectual Property in the US
Protecting your business’s intellectual property as it enters the US market is a key element of a US strategy. This includes protecting trademarks from infringement in the US and ensuring that you are not infringing the trademark of another business, which could expose your business to a claim. IP rights have important differences in the US, particularly when it comes to territory-based rights like trademarks and patents.
As there is no international regime for intellectual property registration, it is smart to register your IP with the appropriate regulatory office, as this gives you greater protection when expanding. One of the best things a business can do to protect its IP is use non-disclosure agreements with new contacts when discussing developing opportunities abroad. Our team has the scope to provide guidance on how to protect your IP when going abroad.