International commercial contracts are greatly influenced by the United Convention on Contracts for the International Sale of Goods (CISG). Other sources of uniform contract law used in drafting this contract include the Uniform Law on the International Sale of Goods or the UNIDROIT Principles of International Commercial Contracts.
The essential clauses of an international commercial contract are: the contractual partis, the object of the contract, the price or consideration in the contract, the applicable law and jurisdiction, the modification and termination of the contract.
1. The parties to the contract
International commercial contracts are based on the principle of contractual freedom. In this sense, the parties benefit from the full possibility to establish the rights and obligations that form the content of the contract, as well as to add amendments to the contract.
In the field of private international law, the principle of contractual freedom gives the parties power to designate the law applicable the contract (lex voluntatis).
2. The Object of the Contract
The subject matter clauses are part of the general common law clauses in international trade contracts. These clauses must necessarily be inserted in these contracts, so that they are valid and useful for the complete and effective regulation of legal relations in the fields of activity specific to international trade.
The clauses referring to the object of the contract include:
- Clauses regarding the goods, work or service, as material object of the contract
- Quantity clauses
- Quality clauses
- Technical assistance and service clauses
- Clauses regarding the procedure for claiming quantitative and qualitative deficiencies
- Packaging and marking clauses
- Clauses regarding the obligation of delivery (delivery) of the goods and delivery terms (delivery)
- Clauses regarding the other delivery conditions, the moment of transferring the risks and the ownership right over the goods
- Clauses regarding the conditions of shipment, loading-unloading, transport and insurance
- Clauses regarding the obligation to take over the goods
3. Payment Conditions
The third essential clause of an international contract is the price clause. This clause refers to the payment conditions and the method of payment (by letter of credit, collection or other method), the way of guaranteeing the payment, the moment and place where the price is collected, the documents necessary to make the payment and the payment instruments. Within the legal limits, the parties are free to establish through clauses the payment instrument (such as currency, payment by securities) and, possibly, account.
At the same time, the contract must specify the obligation of the buyer to pay the price.
4. Applicable Law and Jurisdiction
Most international commercial contracts include a clause related the law and jurisdiction applicable in the event of a dispute concerning the substantive aspects of the contract. This clause designates the law applicable to the contract (lex voluntatis).
At the same time, the parties must include in the contract a jurisdiction clause, either in favor of the courts, Romanian or foreign, or opt for an alternative dispute resolution method, such as arbitration. In recent years, the settlement of contractual disputes has been resolved through arbitration. This method became highly popular due to the flexibility offered to the contracting parties. If the contractual parties opt for arbitration, they must specify the applicable law, the place of arbitration and the language. Other alternative dispute resolution methods include negotiation or mediation.
In complex, medium- and long-term contracts, the parties often insert pre-litigation clauses. They provide for the organization of regular meetings, in order to examine the stage of fulfilling mutual obligations, analyze the difficult event to defend and take the necessary measures for the execution of the contract.
5. Clauses related to the amendment and termination of the contract
International trade contracts concluded in the medium or long term have specific clauses regarding the modification and termination of the contract.
One of the most common elements that lead to the modification and termination of the contract are risks. Risks are events that could occur after the conclusion of the contract, independently of the fault of one of the parties and which, if realized, may make impossible or significantly more onerous the execution of the contract, as well as harm to one or even both contracting parties.
Legal Intern R&R Partners Bucharest
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