One of the stereotypes about North Americans is that we are very litigious in nature. Gotta love all the lawyer jokes out there — speaking of which, have you heard the one about the lawyer, the kangaroo, and the ATM? We can save that for another day, and I will try to keep myself focused international business culture.

Consider for a moment how North Americans look at contracts. We live in a society where the “rule of law” provides stability for its citizens. When contracts stipulate our responsibilities, boundaries, and limitations, everyone has a better sense of their obligations and protections. Basically, North Americans believe that things simply work better when we all follow the rules. For this reason, it is important to specify what the rules are in the first place.

Spanish executive Juan Carlos de la Osa shares an anecdote about signing a contract between his company and another one from Sweden. The contract was three pages long. He then signed a similar contract with an American company — same terms, same issues — but the contract was 24 pages long! And Juan Carlos notes that the contract contains many sections that deal with issues that are “culturally weird.” It stipulates, for example, “that you put that you are not involved in immoral conduct or that you are not involved in alcohol or dependent on drugs,” things that have nothing to do with the actual business transaction.

What is important to understand is that in many other cultures, the validity of a contract remains only as long as the original circumstances remain the same. The logic is, “If the circumstances have changed, how could you expect anyone to still follow an outdated contract?” So where North Americans believe that a contract protects us even when something changes, other cultures feel that a contract is no longer applicable. Try to see it from their vantage point. It kind of makes sense, doesn’t it?

In this video, de la Osa discusses a possible explanation for these differences. (The clip is in Spanish, and the English translation is below.)

My perception about this stereotype is that you Americans are much more worried, not because Spaniards aren’t worried about legal issues. I feel this way because when I sign a contract in Spain with my company CRG, this contract is in Spanish and in Swedish, and it takes up three pages. However, when just now I signed it with a new [American] company that we are merging with, the same terms took up 24 pages. I suppose part of it is because of legislation. In Spain we have very clear legislation, for good or for bad, but it is very spelled out. Nevertheless, I know that in Anglo-Saxon circles there is much more jurisprudence which requires that everything be in writing and include topics that are culturally strange. In a contract that puts that you are not involved in immoral conduct or that you are not involved in alcohol or dependent on drugs, culturally it is strange. It is also true that … legislation in Spain tends to absolutely specify everything, and as such it is not necessary to put it in writing.

At the UT Center for International Business Education and Research (CIBER) we have developed a series of online materials related to international business, culture, and language. All of the materials are provided open access and without password restriction. Feel free to visit Prof. Kelm’s Homepage and the CIBER website for more materials and information.