Joshua D. Roth and Arthur Kutoroff Terminating Contracts Based on Known or Suspected FCPA Violations
While 'McConnell' and 'Cicel' may provide a basis for companies to terminate a contract based on FCPA violations by a counterparty, there is uncertainty about how a New York court will analyze any related breach claim, including the degree of connection that a court will require between the FCPA violation and the counterparty's performance under the contract.
April 13, 2022 at 11:00 AM
9 minute read
Contracts
Companies are understandably eager to terminate their contractual relationships with counterparties that are known or suspected to be violating the Foreign Corrupt Practices Act (FCPA) because of the severe repercussions, legal and reputational, associated with violating the FCPA—or even being subject to internal or external investigations relating to the same. This is particularly the case because a significant number of FCPA enforcement actions against companies are based on misconduct by their contractual agents and other third-party representatives. However, companies may also be concerned about the legal risks associated with breaching a valid contract, especially if the damages could be significant.
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