Jennifer Paley | Attorney in Los Angeles and Legal Writer

Managing Supplier Credit Risk in a Cross-Border Sale of Goods Most sale of goods agreements involve a supplier extending credit to a purchaser, exposing the supplier to credit risk (i.e., the risk associated with the purchaser’s failure to fulfill its payment obligations). As the globalization of our economy continues, an increasing percentage of these agreements are being entered into by parties located in different countries. With this cross-border element added to the mix, supplier credit risk increases, oftentimes dramatically. This Practice Note presents several of the factors affecting supplier credit risk (with a focus on U.S. suppliers), along with recommended actions that may be taken in order to mitigate this risk. Governing Law and Judgment Enforceability When a U.S. supplier enters into a sale of goods agreement with a purchaser from a different country, the contract will most likely be governed by the United Nations Convention on Contracts for the Intern...