7 Mistakes You're Making with International Contracts in 2025 (and How to Fix Them)

International contracts can make or break your global expansion plans. As we navigate the complex trade landscape of 2025, many businesses: from ambitious startups to established manufacturers: are still making costly mistakes that could derail their international success. Whether you're shipping food products across borders, managing manufacturing partnerships, or coordinating transportation logistics, these seven contract pitfalls could be costing you more than you realize.

The good news? Every mistake has a fix. Let's dive into the most common international contract errors we see at TEIL Firms and show you exactly how to protect your business interests while building stronger global partnerships.

Mistake #1: Writing Vague Product Descriptions and Contract Specifications

Here's a scenario that plays out far too often: Your contract states you're purchasing "high-quality manufactured goods" from an overseas supplier. When the shipment arrives, what you consider "high-quality" differs dramatically from your supplier's interpretation. Now you're stuck with products that don't meet your standards, and your contract offers little recourse.

The Problem: Generic descriptions like "standard specifications" or "industry-standard quality" create fertile ground for disputes. Without specific details, you're essentially crossing your fingers and hoping both parties share the same understanding.

The Fix: Transform your contracts into detailed blueprints. Include specific model numbers, technical parameters, quality standards, and acceptable deviation ranges. For food manufacturers, specify ingredients, nutritional requirements, and packaging standards. For transportation companies, detail vehicle specifications, capacity requirements, and performance metrics. Create appendices with technical specifications and reference recognized quality certificates. When possible, include visual documentation and explicitly define warranty obligations, return conditions, and quality assurance measures.

Mistake #2: Misunderstanding Incoterms and Risk Transfer

One of the most expensive mistakes in international trade involves incorrectly assigning responsibilities under Incoterms. Each term defines who handles transportation, loading, unloading, and customs duties: but many businesses choose terms without fully grasping the financial implications.

The Problem: Using EXW (Ex Works) when your buyer lacks logistics capability places maximum burden on the buyer, who must collect goods from your premises and handle all subsequent transportation and duties. Conversely, misunderstanding when risk transfers from seller to buyer under FOB (Free on Board) can lead to disputes when goods are damaged during shipping.

The Fix: Before selecting any Incoterm, thoroughly understand what responsibilities you're accepting. If your buyer lacks logistics support, consider FCA (Free Carrier), where you deliver goods to a specified carrier, simplifying the buyer's process. For food exporters, DDP (Delivered Duty Paid) might make sense for small, high-value shipments to established customers, while manufacturers might prefer CPT (Carriage Paid To) for better cost control. Always align your Incoterm choice with both parties' logistical capabilities and risk tolerance.

Mistake #3: Inadequate Dispute Resolution Mechanisms

When international business relationships sour, having a solid dispute resolution framework can mean the difference between a quick resolution and years of expensive litigation across multiple jurisdictions.

The Problem: Contracts lacking clear dispute resolution procedures often result in legal battles where nobody wins except the lawyers. Without specifying applicable law, jurisdiction, and resolution methods, you might find yourself fighting legal battles in foreign courts under unfamiliar legal systems.

The Fix: Every international contract needs a comprehensive choice of law, venue, and dispute resolution clause. For many businesses, specifying local law and courts or international arbitration in accessible venues saves time and money. Include mandatory pre-trial settlement mechanisms, such as required mediation before litigation. Consider international arbitration under ICC or ICDR rules, which enjoy better global enforceability than many court judgments. For transportation and logistics companies working across multiple jurisdictions, arbitration often provides more predictable outcomes than navigating different court systems.

Mistake #4: Ignoring Foreign Enforcement Realities

Winning a judgment in your home country feels great until you realize it's worthless overseas. Many businesses celebrate court victories only to discover their judgment isn't recognized in the foreign party's jurisdiction, or worse, their contract wasn't compliant with that country's laws.

The Problem: Contract terms that seem perfectly reasonable under U.S. law might be unenforceable abroad. Different countries have varying requirements for contract validity, dispute resolution, and judgment enforcement.

The Fix: Before signing any international agreement, conduct a local enforceability check in your counterpart's jurisdiction. This is particularly crucial for food companies dealing with countries that have strict import regulations or manufacturers working with nations that have different intellectual property protections. Engage experienced international lawyers who understand both jurisdictions involved. At TEIL Firms, we regularly help clients navigate these complexities by ensuring contracts meet enforceability requirements across relevant jurisdictions while protecting our clients' core interests.

Mistake #5: Unclear Termination and Force Majeure Provisions

The global disruptions of recent years have highlighted the critical importance of well-drafted termination and force majeure clauses. Yet many contracts still treat these provisions as afterthoughts.

The Problem: Vague termination mechanisms create difficulties when business relationships need to end. Similarly, inadequate force majeure clauses: those that fail to specify covered circumstances, impose difficult-to-meet requirements during emergencies, or leave consequences uncertain: can trap businesses in unworkable situations.

The Fix: Draft explicit termination provisions that include specific grounds for termination, clear notification procedures, defined timeframes, protocols for returning funds or property, and procedures for stopping new supplies. For force majeure clauses, provide specific lists of covered circumstances (including modern considerations like cyberattacks or supply chain disruptions), reasonable notification requirements, and clear consequences. Transportation companies should particularly focus on clauses covering route disruptions, while food manufacturers need provisions addressing regulatory changes that might affect product approvals.

Mistake #6: Neglecting Financial Terms and Penalties

Financial confusion between deposits, advance payments, and guarantees creates unnecessary risks and potential disputes. Many businesses also fail to include adequate penalties for contract violations, reducing accountability and increasing the likelihood of performance issues.

The Problem: A deposit is typically non-refundable if the buyer breaches the contract, while an advance payment must be returned if the buyer legitimately withdraws. Mixing up these concepts can lead to significant financial consequences. Additionally, contracts without clear penalties for violations provide little incentive for timely, proper performance.

The Fix: Clearly define whether payments are deposits, advances, or guarantee payments, ensuring your payment documentation matches your contract language. Include specific penalties for deadline violations, non-payment or late payment, and improper fulfillment of obligations. Address cross-border payment and currency risks explicitly: specify which party bears exchange rate risk, acceptable payment methods, and timelines for currency conversion. For manufacturing contracts, consider including penalties for quality deviations, while transportation agreements should address late delivery penalties and cargo protection requirements.

Mistake #7: Improper Contract Execution

Even perfectly drafted contracts become problematic when improperly executed. This seemingly simple step trips up many businesses, creating enforceability issues down the line.

The Problem: Common execution mistakes include having contracts signed by persons without proper authority, lacking required seals, failing to initial all pages of multi-page agreements, and exchanging documents through insecure or unauthorized channels.

The Fix: Always verify signing authority through powers of attorney and corporate documents before execution. Include required seals when mandated by applicable law. For multi-page contracts, ensure all pages are initialed to prevent unauthorized substitutions. When using electronic signatures, verify they're legally recognized in all relevant jurisdictions. Exchange contract documents only through secure, corporate channels and confirm your counterpart signed the exact version you provided without unauthorized modifications.

The Professional Review Imperative

Given the complexity of international law and constantly evolving regulations, professional legal review isn't optional: it's essential insurance for your global business success. Legal oversight helps identify potential operational restrictions, ensures compliance with current regulations, and protects against unfair terms that could create significant imbalances in your business relationships.

At TEIL Firms, we've seen how proper contract structuring can transform international business relationships from sources of stress into engines of growth. Our clients in food, manufacturing, and transportation have avoided countless disputes and seized opportunities that might otherwise have been lost to legal uncertainty.

Your Next Steps

The international business landscape of 2025 demands more sophisticated contract strategies than ever before. New tariff realities and changing trade compliance requirements make professional legal guidance not just helpful, but necessary for sustainable international growth.

Don't let contract mistakes derail your global expansion plans. Whether you're a startup preparing for international growth, an established business expanding into new markets, or a company looking to strengthen existing international partnerships, addressing these seven critical areas will significantly reduce your legal risks while building stronger business relationships worldwide.

Ready to bulletproof your international contracts? The investment in proper legal structure today prevents the exponentially higher costs of disputes, enforcement issues, and missed opportunities tomorrow.

Legal Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. International contract law is complex and varies significantly by jurisdiction. The information provided should not be relied upon as a substitute for consultation with qualified legal counsel familiar with your specific circumstances and applicable laws. Always consult with experienced international law attorneys before entering into cross-border business agreements or making decisions based on this content.