Chapter 4. For Businesses/B2B: Strategic Alliances and Invisible Shackles

While transactions with individuals focus on ‘protection’, B2B (Business-to-Business) is a war of ‘Strategic Advantage’ and ‘Risk Transfer’. Courts assume companies know what they are signing and apply the principle of ‘Freedom of Contract’ strictly. Once you sign, there’s often no going back.

1. “Talk Only to Me”: ROFR and Exclusive Deals

This is a common ‘shackle’ to watch for in investment or major partnership deals.

Toxic Pattern: ROFR (Right of First Refusal) - You must offer to sell to me first before selling to a third party, and can only sell to them if I refuse.
Impact: It can indefinitely stall an Exit (M&A) and scare away potential third-party buyers.
Defense: Negotiate for ROFO (Right of First Offer) instead, and strictly limit the negotiation period (e.g., 30 days).

2. “No Complaining Later”: Limitation of Liability and Indemnity

Commonly found in contracts with large corporations.

Clause Name	Client (Acquirer) Intent	Provider (Target) Risk
Exclusion of Indirect Damages	Avoid large claims like lost profits	Cannot be compensated even if my business fails due to their mistake
Liability Cap	Limit liability to contract value	Only compensated up to the cap even if actual damage is huge
Unilateral Indemnity	Infinitely expand force majeure	Responsibility becomes blurred

3. The Minefield of Global Business: Governing Law

Often the most overlooked part when contracting with foreign companies.

The Risk: If a Korean company signs with a US company using ‘New York Law’ and ‘London International Arbitration’, the legal fees alone could sink the company if a dispute arises.
Pro Tips:
1. Choose a Neutral Third Country (e.g., Singapore, Hong Kong) rather than the opponent’s or your own.
2. Arbitration might be better than litigation for speed and confidentiality in international disputes.

4. Technical Scouting Guide for B2B Contracts

Definitions

Prevent disputes arising from different interpretations of terms

Force Majeure

Ensure modern risks like pandemics and cyber-attacks are included

Termination

Secure an 'Exit' clause to escape the deal when necessary

Key Checklist

B2B is an area for managing risk through ‘Skill’, not ‘Protection’.
Simulate whether the Liability Cap is beneficial or detrimental to you.
Governing Law and Dispute Resolution location are key factors directly linked to costs in global deals.
Ensure ROFR doesn’t block future M&A or investment rounds.