I’m in Karlsruhe, visiting some of the firm’s numerous clients in the German state of Baden-Württemberg. In a conversation with a colleague earlier today I was reminded of one of the most important things I tell my German clients about doing business in the US.
Ultimately, the US legal system (much like US society as a whole) provides businesses with flexibility to do what they want, at the expense of higher risk. For example, a company in the US can come up with a number of different scenarios in hiring an independent sales representative which meet the needs of both parties, but which would simply be forbidden under German law. The catch is that any one of those scenarios may in fact be to the great disadvantage of one of the two parties, creating a risk for that party which would probably be prevented under German law.
That, in a nutshell, is why US contracts are so much longer than German contracts. German law tends to proscribe much of what any two parties might want to put in an agreement and, therefore, those terms are not needed. Because US law tends to allow more freedom in setting terms, the parties must go to the additional effort of putting all of those terms into a contract or they will be undefined or, at best, defined in such a way as may not meet the desires of the parties. That’s also why US companies tend to work more closely with their lawyers, because the law is not nearly as clear-cut as it would be in most German transactions.
Of course, the devil is in the details, and a variety of state and federal laws may add layers of regulation which complicate matters significantly. Still, generally speaking, there’s a lot of room to structure a transaction the way you’d like to in most states.
Efficient? Perhaps not, but if you can dream up a deal in the US you can probably make it happen.
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