Contracts in Foreign Countries
from the desk of Judy Mendoza
We are occasionally asked to review contracts for projects in foreign countries. We provide a contract review service to assist our policyholders in identifying potential coverage issues relating to their professional liability policies. We use principles of U.S. common law precedent when performing these reviews. We have no expertise in the laws of other countries.
The Schinnerer and CNA professional liability policy will respond to a claim anywhere in the world. The professional services a policyholder provides in other countries are covered by the professional liability policy. We suggest that policyholders seek advice from local legal counsel who can provide more specific guidance based on the specific jurisdiction.
When reviewing contracts for foreign projects, firms should keep in mind that the CNA policy contains the following exception to the contractual liability exclusion:
The CNA policy excludes coverage for any claim:
B. arising out of:
1. your alleged liability under any oral or written contract or agreement, including but not limited to express warranties or guarantees; or
2. the liability of others you assume under any oral or written contract or agreement.
However, this exclusion shall not apply to your liability that exists in the absence of such contract or agreement.
In a foreign jurisdiction where your liability to a client is predicated only on contractual liability, subparagraph B.1 does not apply except to the extent that you have agreed to pay consequential or liquidated damages.
Also, remember that the Schinnerer risk management website contains an entire section of management advisories on international practice. Here is a link to the management advisories on our website: http://www.schinnerer.com/risk-mgmt/Pages/Management-advisories.aspx