If you are not used to thinking about law and the virtual world, the chances are you will think that any contract you make with a client or associate will be effective in the country you are based in.

If you and your client or associate are both based in the same country that is likely to be the case but in the virtual world, things are not always like that.

There is nothing to stop you from doing business all over the world. After all, that is one of the points of working virtually in the first place. But even working between Scotland and England, or Northern Ireland, never mind the UK to the USA, or France to the UK, can lead to complications unless you get your contracts set up properly.

Why choose a country?

If you don’t choose a country and something goes wrong, you can find yourself arguing or even defending legal actions in other countries.

Get the wording wrong on how you choose your country and you will find that you are drawn into arguments about whether California law trumps Scottish law when it comes to enforcement of contracts.

Unless you are a multinational with a large legal team you simply don’t want to go there.

Which country should you choose?

There are usually only two practical options.

  • The country you are based in.

  • The country your client is based in.

A lawyer will tell you to base your contract in a country where your client has assets – since if things go wrong it is assets and cash that will pay your bill. However, from a practical point of view, it is tough enough to keep on the right side of legal issues in your own country, never mind another one, and there is a lot to be said for making your client contracts enforceable where you are.

If your client is not based in the same country you will need to check out whether their country has an agreement to ‘mutually enforce judgements’.  If they don’t, you are not going to want to let them run up a large bill with you as there is little practical way of getting your hands on their cash.   Even if they do, you may simply prefer to work on a deposit, prepayment, or staged payment basis to avoid complications.

Similarly, you will want to choose the country in your associate contracts that are enforceable. 

 Digital nomads?

If you or your client are moving around, it is doubly important to make sure you have sorted out which country’s laws you are working under. While the internet means we can work wherever we are, the world’s legal systems are still operated on a country by county basis.

Professional Indemnity

Your professional indemnity insurer will need to know that you are trading outside of your home country – which you are if you are contracting with clients and associates overseas – even if you never leave the house.

If you don’t let them know, you may invalidate your insurance and you don’t want that particularly if you are dealing with clients in the USA where the risks of being sued and the costs of defending a claim are much higher than in the UK.

If you are taking an overseas working holiday, touch base with them and make sure they know. While some policies don’t mind, others do need to know in order to cover you whilst travelling.

 GDPR and cross border contracts

If you are handling personal data about UK or EU Citizens, then GDPR applies to you, wherever you are. Accessing, sharing and using such information with clients who are not in the same country as you, requires a specific paper trail to be in place before you get started.  And if you are handling information that is ‘special category data’ such as health-related data or handling children’s data, you will need to put in place a lot more than the basic paperwork before you get started.

For these purposes working across the UK is not a cross border data transfer, even though Scotland and Northern Ireland have their own legal system which needs to be specified for enforcing your contract in general.

If you are interested in more information about GPDR for your clients, there is plenty more information available, specifically for Virtual Assistants here.