When entering a new market, the adaptation of the contract terms to the new environment should not be regarded as a mere formality, for the contents of the contract terms are decisive for crucial contractual issues in a large number of contractual relationships. Furthermore, well-drafted business terms are a good advertisement for the company with regard to potential customers. They should therefore be drafted with great care.

Using standardised contract terms in order to make contractual relationships easier to handle is an attractive option, especially for enterprises that co-operate internationally with a large number of business partners or customers. For these enterprises, it may seem tempting to use the same business terms or contract forms internationally without troubling to make country-specific modifications. This is, however, not advisable.

The contract terms will need to be adapted to take account of the legal particularities of each country. If the terms from the home country are used without scrutiny, it may well be that some potentially important clauses turn out to be ineffective.

For example, if a limitation of liability clause is found to be invalid due to a conflict with national law, the result may be that the enterprise is held fully liable for all damages. It may also transpire that this problem could have been avoided by replacing the ineffective clause with another clause which both conformed with national law and satisfied the enterprise’s need to protect its own interest.

The enterprise’s general business terms should therefore be adapted to the legal framework of each country. The need for adaptation cannot be removed by simply adding a clause to the contract stating that the law of the enterprise’s home country shall be applied. The following issues are especially relevant in Finland:

In turn, Finnish law may present options for contract drafting that are unknown to the foreign vendor. Insufficient attention to the adaptation of contract terms may lead to the vendor seeking to rely on a clause that is ineffective under Finnish law while, at the same time, an alternative solution offered by Finnish law remains unused. Therefore, the contract will fail to fulfil its intended function.

When a foreign company sells goods or services on the Finnish market, it will in many cases be necessary to draft the contract in the Finnish language. In particular, general business terms become a valid part of a contract only if the party using such terms gives the other party a reasonable opportunity to become apprised of their contents. This will often require the terms to be in Finnish language.

In practice, many enterprises content themselves with having their contract terms translated into Finnish by a professional translator. Unfortunately, such translations only rarely achieve the desired legal results.

One of the main reasons for this is that most translators are not familiar with the legal use of language. For example, in legal English the terms to avoid or consideration have very specific legal meanings that are quite different to their meanings in general language. Translators very frequently fail to recognise such usages and are highly likely, therefore, to produce a translation that lacks the legal effect of the original text.

On the other hand, an accurate legal translation often cannot be made word-for-word, because certain terminology either does not exist in the target language or has a different meaning. As an example from German, the term Verzug does not only mean a delay in delivery but also automatically implies a corresponding liability for the provider. If this term is translated simply as delay then the contract may lack the desired consequence of liability.

Therefore, even if tailored contract terms for the target country are not drafted, translated contract terms should never be used without specific legal scrutiny.

Those not familiar with Finnish law are often surprised by the possibilities it provides to adjust contracts or specific contract clauses where they place one party at an inappropriate disadvantage. The inappropriateness of contract clauses in this regard may even derive from circumstances that have arisen only after the contract was made. The presiding judge has a wide discretion over the question of what may be regarded as inappropriate, and therefore it is sometimes difficult to foresee the results.

Like most Nordic countries, Finland has far-reaching consumer protection legislation. Most of the provisions of the Finnish Act on Consumer Protection are mandatory and cannot be overridden by general business terms or individual contracts. The consequence of this is that in consumer contracts almost any deviation from the legal standard model to the disadvantage of the consumer will be regarded as invalid.

Such general business terms that are regarded as unfair with regard to consumer interests can also be generally prohibited by a trade court. This prohibition does not directly annul specific terms, but the use of terms in a contract which conflict with a prohibition can lead to the imposition of fines.

In contracts between enterprises, the parties have significantly more freedom to negotiate their relations and, for example, agree on limitations of liability in general business terms. However, judicial control of contract clauses takes place even with regard to such contracts.

It is in any contracting party’s interest to limit its own liability as much as possible. Unlike some other European legal systems, no detailed enumeration of clauses to be regarded as invalid exists under Finnish law. The appropriateness of clauses in general business terms and conditions is evaluated on a case-by-case basis, taking into account all relevant circumstances.

On a general level, the following possibilities for limitation of liability can be stated. It is necessary, however, to take into account that the validity of each clause depends on the circumstances of the individual case:

When evaluating the appropriateness of any limitation of liability, the following criteria play an important role:

The limitations of liability contained in general contract terms must be evaluated both individually and in their entirety. Certain provisions that would represent an inappropriate disadvantage for one party in a normal case may nonetheless be deemed valid if other provisions ensure the balance of the contract as a whole.

In Finnish law, the main focus when evaluating general contract terms is on the whole of the contract rather than on specific clauses. Therefore, contract terms that have been tailored for other legal systems cannot necessarily be transferred to contracts with Finnish partners one by one. Expert advice is necessary in order to take sufficient account of the particularities of Finnish contract law.

Great care should be taken when using means of security common in the company’s home country. For example, reservation of title is, as such, an extremely common means of securing credits granted by the supplier of goods, and in many countries very specific forms of retention of title have been developed in order to provide optimal security. In Finland, the peculiarities of insolvency and execution law render these measures of security ineffective in most cases. This is true even if the parties have agreed on the application of another country’s law, because it is not possible to derogate from the applicable law in this case.

If the supplier of goods uses business terms used in his or her home country, there is a risk that the receivables will be left totally unsecured. In order to remedy this situation, alternative means of security, such as bank guarantees, should be agreed when doing business in Finland. The business mortgage is a highly effective means of obtaining security in Finland. This is often the means of choice, especially if the supplier is the main supplier of the Finnish contract partner.

In Finland, the use of model contracts for specific business sectors is very common. Such model contracts exist, for example, in the construction industry, the metal industry and in the electronics industry. The model contracts are general business terms that have been drafted by the relevant industry associations.

Such model terms of contract are applied only if the parties so agree in their contract. However, their use is so common in many industries in Finland that foreign business partners often have no other choice than to accept them. Consequently, the specific provisions of the model business terms must be taken into account when drafting the individually negotiated parts of the contract.