A country’s legal system, laws and rules of interpretation provide the framework for negotiations and ultimatelydefine the content and form of the contract document. However, language and contracting culture also play an important role in shaping the eventual contractual document.
Having worked both worked for a UK owned company operating in Norway, Rhian and I have experienced first-hand the challenges of explaining UK contracting culture and English law contracting to our Nordic colleagues. They are the same challenges faced by many smaller Nordic companies exporting into the UK or contracting under English law for the first-time. Receiving a long and complicated contract of more than 4 pages in length often awakens suspicision and confusion. “I thought negotiations were going well but they’ve sent me this…” “They sent me a 16 page document, they don’t trust me”, or even – “Are they trying to cheat me?”
One of the main reasons why an English law contract will be is longer and more complex is due to the very different legal systems of each country. Norway has a civil law based legal system where the main body of law is enshrined in statutory provisions. It is easier to refer to general principles set out in codified background law than having to identify the correct case law to help interpret the exact wording of the contractual clause.
Secondly. The rules of contractual interpretation in Norway means that, it is possible to rely on other documents such as previous contracts, draft agreements, communications and meeting notes to help interpret contract clauses.
Language and business culture also shape Norway’s more succinct and clearer contracting style. Norway has a population of 5.4 million people, a much less verbose language and a famously non-hierarchical business culture. Given then relatively small population and the concentration of industries in geographical and industry clusters, most contracting relationships are based on trust and co-operation. In most cases the parties know each other well or have existing relationships.
Not surprisingly then it is common to hear stories of multi-million-pound contracts for vessels written on the back of napkins at the height of the offshore boom. The essential terms being, the type of vessel, the price, payment terms and the delivery date. The rest of the contract and the practical details were left to the parties to work out based on previous contracts and background law provisions. This approach is also reflected in today’s contracting culture, where a contract of any longer than 4 pages is often deemed ‘excessive’.
Contrast this with the UK contracting culture. English law is based on the common law system, relaying on case law to establish how clauses and provisions are interpreted. The focus is then upon the exact wording of clauses instead upon their general meaning. The rules of interpretation include a presumption that the contractual document contains the entire agreement between the parties and, only in very limited circumstances, can other documents be used clarify the contract terms. This means everything must be written and agreed in the contract document itself.
As anyone who speaks English as a second language will agree, the English language is much more hyperbolic and verbose – “why use one word when you can use ten”. You can hear an example of this in any canteen where UK colleagues are present, e.g “Would you be so kind as to pass the salt” translates into Norwegian as “pass the salt”. Norwegian is a language which is clear, direct and to the point. The UK’s larger population of almost 68 million people and geographical disbursed industries means that it is far less likley that two UK parties will have such an established relationship or history.
All of this means that any contract under English law is likely to be more comprehensive than one governed by Norwegian law. It is quite normal for a simple English law contracts to be 12 or more pages. The game of “hunt the comma” is a familiar one. In short, English law contracts can be a nightmare for parties who do not have English as a first language.
So, if your UK couterpart sends you a long and complicated English law contract, don’t gie up hop or become disheartened or suspicious. They do want to do business with you and, (in most cases at least), there are no ulterior motives. It just is UK contracting culture. Whilst it is dificult to make an English law contract more “Norwegian”, some more creative contracting solutions can be employed…