Send from Exchange 2003, Client Host Rejected

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One of our VPs is trying to send an email to a vendor in another country, yet his emails are getting rejected.  The message returned says:
"You do not have permission to send to this recipient.  For assistance, contact your system administrator.  < #5.7.1 smtp;554 5.7.1 Client host rejected: cannot find your hostname, ['our ip address']>"

I have double checked that our host name resolves to our IP address, so I'm not sure if this is a problem on our end or a problem on the recipients end.  Any thoughts would be appreciated.
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To verify if the problem is at your domain or at remote domain, you may try sending mail from a personal account (hotmail/gmail/yahoo) domains and compare the result.
seems like problem with reverse DNS .. do you have PTR records for ur mail server

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