1、Chapter 2 Commercial Contracts o Law of contract(revision+additional points)o Drafting/reading of contracts(sample contract)o International commercial contracts2Drafting/Reading of Contracts(Sample Contract)Drafting of Contracts(1)General rule:most contracts are valid in any form(no written contract
2、 required)Advice for(commercial)contracts:Draft a written contract as complete and precise as possible!Reasons:nproof of termsnavoidance of legal disputes(risk to lose,expensive,time consuming,detrimental to reputation)4Drafting of Contracts(2)Essential points:ouse of term contract“ocorrect name of
3、partiesodefinition of all important termsodetermination of rights and dutiesouse of plain languageodate+signature of all partiesTypical sources of mistakes in international contracts:odifferent date formates(e.g.03/04/2008=3 April or 4 March 2008)odifferent currencies(e.g.exchange rates,$=USD or AUD
4、)odifferent units of measurement(e.g.ton=metric ton(1000 kg)or short ton(907 kg)or long ton(1016 kg)oimprecise translation5Drafting of Contracts(3)Typical structure of an international commercial contract(see sample contract):oheading(type of contract)oname+address of partiesactual clausesodescripti
5、on of goods to be delivered or services to be provided(incl.quality,quantity,time etc.)ofixation of price and details of paymentoother duties and rights of the parties(e.g.warranty,payment of tax/duty)olimitation of liabilityoremedies in case of breach of duties 6Drafting of Contracts(4)Typical stru
6、cture of an international commercial contract:o confidentiality clauseo duration/termination of contracto force majeure clause(excuse of non-fulfilment in case of natural disasters,war etc.)o clause on governing law+arbitrationo miscellaneouso date+signature of partieso supplements containing defini
7、tions,timetables etc.7International Commercial ContractsContract Law and Global Business(1)Problem:oContract law(like most other fields of private law)is mainly national lawoThis does not satisfy the needs of global business:ncontracts can touch different national lawsndetermination of applicable la
8、w and enforcement of rights difficultnhaving expertise in law of numerous jurisdictions is expensivensame legal term can have different meanings in different jurisdictionsnlanguage/translation issues9Contract Law and Global Business(2)Possible solutions:oapplication of one national private law to be
9、 determined by conflict of laws principles(see 1st IL II session)oharmonisation or unification of national laws(e.g.EU,WTO TRIPs agreement)ocreation of universal laws/sets of rules applicable regardless of national borders(todays topic)oarbitration(see session on international arbitration)10Universa
10、l Rules on Contracts There are numerous sets of universal rules on contracts,covering different aspects of international commerce and created by different institutions.Important sets of rules:(for international commercial transactions)oUN Convention on Contracts for the International Sale of Goods 1
11、980(CISG)oUnidroit Principles of International Commercial Contracts 2004oICC Incoterms 2000 Application(depends on the set of rules in question):oeither automatically oroonly if parties to a contract agree application(difference to national law)onot all sets of rules available in all states11UN Conv
12、ention on Contracts for the International Sale of Goods 1980(CISG)(1)Link:http:/www.uncitral.org/pdf/english/texts/sales/cisg/CISG.pdfBackground:oset of rules covering certain aspects of international sale of goodsodrafted by UNCITRAL(United Nations Commission on International Trade Law)oadopted in
13、1980,came into force in 1988ooriginally signed by 11 states(Argentina,China,Egypt,France,Hungary,Italy,Lesotho,Syria,United States,Yugoslavia and Zambia)onow 70 parties(incl.most European states)12UN Convention on Contracts for the International Sale of Goods 1980(CISG)(2)Application(see Article 1-6
14、 CISG):oautomatic application to contracts of sale of goods between commercial parties whose places of business are in different states and neither both of those states are contracting states nor the rules of private international law lead to the application of the law of a contracting stateoparties
15、 can exclude application of the CISG or derogate from or vary the effect of any of its provisions(freedom of contract)Contents:oformation of contracts(e.g.offer,acceptance,counter-offer)oobligations of buyer and seller(e.g.delivery,quality of goods,payment)oremedies for breach of contract(e.g.perfor
16、mance,discharge of contract,price reduction,delivery of substitute goods,damages)(similar to sales contract provisions in a civil code)13Unidroit Principles of International Commercial Contracts 2004(1)Link:http:/www.unidroit.org/english/principles/contracts/principles2004/blackletter2004.pdfBackgro
17、und:oset of general rules for international commercial contractsocreated by Unidroit(International Institute for the Unification of Private Law),nindependent intergovernmental organisation based in Romenset up in 1926 and re-established in 1940 on the basis of a multilateral agreement(currently 60 m
18、ember states)npurpose of studying needs and methods for modernising,harmonising and co-ordinating private(mercial law)between states and groups of stateso1st edition adopted in 1994,2nd edition 2004(currently work on 3rd edition)overy successful in practice14Unidroit Principles of International Comm
19、ercial Contracts 2004(2)Application(see Preamble):oapplicable to all types of international commercial contracts(not only sale of goods)worldwideono automatic applicationoshall be applied if agreed so by partiesomay be applied nif agreement of parties that contract be governed by general principles
20、of law or nif parties have not chosen any law to govern their contractomay also be usednto interpret or supplement international uniform law instrumentsnto interpret or supplement domestic lawnas a model for national and international legislators15Unidroit Principles of International Commercial Cont
21、racts 2004(3)Contents,i.p.:ogeneral principles(e.g.freedom of contract,good faith)oformation of a contractoagencyovalidity of a contractointerpretation of contractsocontent of contractsothird party rightsoperformance of a contract,hardshiponon-performance of a contract,right to performanceoterminati
22、on of contractsodamagesoset-offoassignment of rightsotransfer of obligationsoassignment of contractsolimitation periods(similar to contract provisions in a civil code)16ICC Incoterms 2000(1)Link:http:/www.uncitral.org/pdf/english/texts_endorsed/INCOTERMS2000_e.pdfBackground:o“Incoterms”=short for In
23、ternational Commercial Termso=set of standard trade definitions most commonly used in international sales contractsodevised and published by the International Chamber of Commerce(ICC)nglobal business organisation nthousands of member companies and associations in around 130 countries(members not sta
24、tes)nfounded in 1919o1st version introduced in 1936overy important in commercial practice17ICC Incoterms 2000(2)Application:oWorldwideoonly if express contractual agreementoonly to contracts on the delivery of movable goodsosome apply to certain modes of transportation onlyContents:oset of(currently
25、)13 terms divided into four groups regardingndelivery(When is ownership transferred to the buyer?)ncosts(Who pays the costs of transportation?)nrisks(Who bears the risk of damage/loss during transportation?)oThe use of a certain term replaces an otherwise necessary detailed agreement on what the sel
26、ler must do to fulfil his obligation to deliverExamples:n“FOB”(free on board)=delivery by seller when goods pass ships rail at named port of shipmentn“CIF”(cost,insurance and freight)=delivery by seller when goods pass ships rail in port of shipment;in addition seller must pay the costs and freight necessary to bring the goods to the named port of destination and procure insurance against buyers risk of loss of or damage to goods during carriage18
