Entry into the US market

There are various ways to enter the US market: direct sales from Germany, working with a distributor, or setting up a company of one’s own in the US. Each of these options has a different impact on liability, may give rise to a separate tax liability in the US (keyword: nexus) and influences how intellectual property rights are allocated. Which option is most suitable in a specific case depends on the business model, the planned sales volume and the desired market presence.

We assess the options outlined above in the context of your specific circumstances and use this to develop a recommendation for the most suitable structure. If necessary, we will liaise with your tax advisers to ensure that corporate and tax law issues are considered together, and we will then support the implementation – from incorporation or the drafting of contracts through to the ongoing management of the chosen structure.

Contracts governed by US law definitively determine the terms of the contract – unlike under German law, there is no recourse to statutory fallback provisions of the sort found in the German Civil Code (BGB). Clauses relating to indemnification, limitation of liability, warranties, governing law and venue therefore directly determine the commercial risk associated with a contract. A review of standard terms and conditions, as is customary under German law, does not exist in this form under US law, meaning that each clause must be negotiated and scrutinised individually.

We draft, review and negotiate contracts directly in accordance with US law, rather than simply translating German contract templates. Where any deviations from the German understanding have economic implications, we explain them to you in concrete terms so that you can assess the implications of individual clauses before concluding the contract.

When setting up a sales structure in the USA, the first decision is whether to use a distributor, a sales agent or to establish your own sales company, and each of these options manages sales risk, pricing and customer relationships differently. Individual states also protect distribution partners through their own dealer and franchise laws, which may restrict termination to specific grounds or safeguard exclusivity even if this conflicts with the wording of the contract. Territorial and termination rules are primarily governed by the contract, but are subject to these state-level protective provisions, which vary in strictness from state to state.

We structure your sales organisation in such a way that it remains possible to change distribution partners or expand the structure at a later date, and to this end we check in advance which dealer or franchise laws apply in the relevant state. We ensure that termination, exclusivity and territorial rules comply with the law of the relevant states, so that your structure remains legally sound even in the event of a change of distribution partner.

Supply, licence and cooperation agreements with US partners are governed by the Uniform Commercial Code (UCC) and the contractual practices of the relevant US state. Warranties and disclaimers, as well as the allocation of liability between the parties, differ significantly from German sales law: the UCC provides for its own implied warranties, such as those relating to the merchantability of the goods, which can only be effectively excluded by contract under certain conditions. A literal translation of German contract templates does not account for these differences.

We draft and negotiate these contracts, working alongside our colleagues in New York, Boston or San Francisco where necessary, and take particular care to ensure that the agreed terms are enforceable on your behalf in the event of a dispute – for example, with regard to the choice of jurisdiction, applicable law and dispute resolution mechanisms.