Contents
Businesses enter into contracts for almost every important business decision, whether written or verbal. In today’s dynamic 2025 landscape, having a robust contract in place is essential because it clearly sets out the terms of an arrangement, making it easy to refer back to if something goes awry later.
This way, all parties involved are crystal clear on their respective obligations.
However, the reality is that businesses expand internationally at an unprecedented rate. This trend not only boosts their reach and profitability but also necessitates adjustments to standard contracts and other core business aspects to accommodate diverse regulatory environments.
Since other countries operate under different legal systems, a frequent question is which country’s laws apply to your contracts. So, how do international contracts work in 2025?
In this article, we’ll explore the clauses commonly used in international contracts and discuss how they can be enforced across different jurisdictions. Read on to learn more about expertly navigating this complex area – and for additional insights, you might also check out our Legal Requirements for Starting a Business guide.
What Is A Contract?
Before we dive into the specifics of international contracts, let’s take a quick look at the basics. A contract is a legally binding agreement between two or more parties. It outlines the details of an arrangement in writing, providing extra security and a clear framework for risk mitigation (although, as many have discovered, verbal promises can also be enforceable under certain conditions).
The standard rule is that a contract needs to have the following elements to be binding:
- Offer/acceptance
- Intention
- Consideration
- Capacity
What Is An International Contract?
An international contract is an agreement that applies and can be enforced across borders. In 2025, with digital tools and innovative legal practices on the rise, these agreements often incorporate provisions that account for electronic communications and digital signatures – ensuring that they meet modern standards of enforceability.
However, to successfully enforce an international contract in another country, it must contain specific clauses tailored to the complexities of global trade and differing legal systems.
As the parties to such a contract, investing time in negotiating and fine-tuning these terms is crucial since they can significantly influence your ability to conduct cross-border business activities. For further guidance, refer to our insights on key contract fundamentals and practical approaches.
Let’s go through these considerations below.
Which Country’s Laws Apply?
One of the most pivotal questions in international contracts is determining which country’s laws will govern the agreement. In other words, which legal system should the contract comply with?
A common approach is to incorporate international arbitration clauses, which can help streamline dispute resolution and avoid the complications of navigating multiple legal systems.
Should I Have An International Arbitration Clause?
An international arbitration clause outlines the process for resolving disputes between contract parties, usually through one or more appointed arbitrators. In 2025, where businesses increasingly operate on a global scale, such clauses are not only highly encouraged but also provide a neutral, legally binding method of dispute resolution that can be enforced in numerous jurisdictions.
When drafting an international arbitration clause, you should consider the following:
- Seat of the arbitration
- Venue of the arbitration
- Language to be used
- Choice of substantive law
- Number of arbitrators
If you need help drafting an international arbitration clause, our expert contract lawyers are on hand to assist.
New York Convention
For businesses keen to have their contracts enforceable across multiple jurisdictions, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention) is crucial. This convention, to which Australia is a signatory, enables the enforcement of arbitral awards in any member country.
If your international contract does not include an arbitration clause, you should consider alternative dispute resolution provisions such as specifying the governing law and jurisdiction.
This includes carefully addressing the following aspects:
- Governing law
- Jurisdiction
Governing Law And Jurisdiction In International Contracts
If an international contract lacks an arbitration clause, it must detail both the governing law and the jurisdiction. The governing law is the legal framework that the contract’s terms must adhere to, while the jurisdiction refers to the court system that will hear any disputes.
In drafting these provisions, ensure that the selected laws and courts are familiar with international commercial practices and offer a fair process for dispute resolution.
What Should I Look Out For In International Contracts?
Before finalising an international contract, it is crucial to scrutinise certain clauses or terms that might affect your business operations. In 2025, free trade agreements continue to play a pivotal role in facilitating smooth cross-border transactions. For example, the Singapore-Australia FTA removes numerous trade barriers, which can significantly influence your contract negotiations.
Additionally, be mindful of any conflicts in employment law between countries, especially if you engage overseas contractors or source from international suppliers. Such conflicts can create unforeseen liabilities and complications.
What Else Should I Know?
At its core, an international contract remains a contract. Ensure that it contains all the required details found in a standard contract, including a thorough review for any potential unfair contract terms. Such terms might:
- Cause a significant imbalance in the rights and obligations of the parties
- Be deemed unnecessary for protecting the interests of the advantaged party
- Create undue detriment
Should A Lawyer Review My International Contract?
When dealing with any contract, it is always wise to have a lawyer review its terms to ensure your interests are well-protected. In the complex realm of international contracts, legal oversight is even more critical, as it can help identify potential issues that might impact your operations or restrict your future business opportunities.
A legal review also verifies that your international agreements are enforceable across jurisdictions – a key requirement in today’s globalised market. For such assistance, our team is ready to provide bespoke contract reviews, ensuring every clause stands up to scrutiny.
If you need help, our lawyers are happy to chat with you and review your contracts.
Emerging Trends in International Contracting
As we continue through 2025, digital transformation plays an increasingly significant role in international contracting. The widespread adoption of digital signatures – as detailed in our guide to signing contracts with e-signatures – and blockchain technology is revolutionising contract validation and enforcement. These technologies enhance both security and efficiency, making it easier to manage contracts across multiple jurisdictions.
Moreover, evolving legal frameworks are being developed to accommodate these technological advancements, ensuring that modern international contracts remain robust and enforceable regardless of where they are executed.
Next Steps
International contracts are a common aspect of business growth in 2025. However, it’s essential that these contracts incorporate specific clauses to ensure their enforceability across diverse jurisdictions.
Drafting international agreements isn’t always straightforward, particularly when your business has unique requirements and faces the challenges of an increasingly digital world. Ensuring that your contract addresses these modern complexities-from appropriate dispute resolution mechanisms to the integration of digital execution methods-can safeguard your interests effectively.
Luckily, our expert contract lawyers can draft and review your international agreements to guarantee their enforceability. For a free, no-obligations consultation on your options, call 1800 730 617 or email team@sprintlaw.com.au today.
Meet some of our Contracts Lawyers
Get in touch now!
We'll get back to you within 1 business day.
Top 3 Legal Mistakes
Book in a free consultation with us to discuss your legal needs.