Due Diligence: Knowing Who's Under Your Roof

Jonathan Nilsen, Counsel, Spire Corporation

Invariably in international commercial contracts, there comes a time when all of the boilerplate clauses, the indemnification agreements, and liquidated damages provisions don’t anticipate every bump in the road. At that point, the parties must extend a certain amount of ‘trust’ to their potential business partner. Such ‘trust’ is extended in the commercially reasonable sense, in that it is not extended blindly, but rather is based on each party possessing some understanding of the base nature, personality, and character of the other party. Some businesses rely on the ‘gut feelings’ or instinct of those on the front lines of the transaction. This article instead discusses a more methodical and defensible method of gaining increased transparency into any proposed business partner via systems of background checks and redundancy searches in order to uncover potential issues that could undermine the relationship.