Contents of an international business contract Emmanuel Breen and Ann Y. Du emmanuel.breen@paris-sorbonne.fr ayd7@georgetown.edu

I. Typology of international business contracts 2

Commercial exchange

transactions

International sales

International transport

Other transactions

- Distribution contracts

- Franchise contracts

- Employment contracts

- Financing contracts

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A. Contracts for international sale of goods 4

What is an international sales contract 5

Seller Transfer / arrange transfer of the goods

Buyer Pay agreed upon price for the goods

Laws applicable to international sales contacts 6

CISG

Only applicable to contracts for the

international sale of goods

Only applicable to the development of the

contract

Incoterms

Generally applicable to sales contracts

Characteristic oblgiations

The written contract

•  CISG, article 96: national laws requiring contracts be fomralized in writing trump provisions in the Convention do not require a writing

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Obligations of the parties according to the CISG

Seller

•  Delivery and transfer of goods

•  Conformity of merchandise

•  Transfer of risks (?)

Buyer

•  Accept delivery •  Pay price

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Obligations of the parties according to Incoterms

Ex Works Free Cost, Carriage Delivered

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B. Contract for the transport of international merchandise 10

What is a contract for international transport?

•  Secondary contract attached to sales contract •  Flow of merchandise from the transporter to the client •  Client pays the agreed upon price

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Methods for transporting international merchandise

Roads Maritime Railway Air

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1. Transport by road

Applicable law

•  CMR

Transport

•  Costly •  Cars and

trucks •  Traverses at

least two territories

Parties’ obligations

•  Transportor

•  Shipper

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2. Transport by water

•  Between the transporter and shippe •  Often preceded by preparatory

contracts

Conclusion of contract

•  The Hague Regulations •  Hamburg Regulations •  Rotterdam Regulations

Applicable law

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3. Transport by railway

•  RU-CIM Applicable law

•  Goods accompanied by letter of carriage •  Traverses at least two territories Transport

•  Expéditeur •  Transporteur Duties

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4. Transport by air

• Warsaw Convention • Montreal Convention

Applicable law

•  By air •  Traverses at least two territories •  Sur la base d’une LTA

Transport

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C. Other international business contracts 17

Distribution Financing Employment Transfer of technology

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1. Distribution contracts

•  Contract between a supplier and distributor

•  Sale or promotion of goods/services Definition

•  Agency/intermediary contracts •  Concession contracts •  Franchise contracts Types

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2. Financing contracts

•  Obtaining financing from a bank for an international business operation Definition

•  Financing of exports •  Financing of imports Types

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3. Employment contracts

•  Key contracts within international business •  Applicable laws: national laws / private sources (codes of

conduct)

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4. Contracts for the transfer of technology

•  Company/enterprise contracts •  Transfer of know-how Definition

•  Basic form: technical training visits •  Other forms: cooperation or

partnership agreements Types

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II. International business contract clauses 23

General clauses Legal clauses

Commercial and financial

clauses Ethics clauses

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A. General clauses

•  Type of contract •  Identities of parties involved •  Definition of terms •  Language of contract •  Entry into force date •  Duration and procedure for renewing contract •  Termination procedure

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Duration and termination clause

“1. This contract shall be for an initial period of 12 months from the commencement date. Either party will have the right to terminate the contract by giving at least 30 days notice in writing to the other party to expire at the end of the initial period or at any time after that. 2. Either party may terminate this contract by written notice to the other at any time if the other party: (a) commits a breach of this contract and, in the case of a breach capable of remedy, fails to remedy the breach within 14 days of being required to do so in writing; or (b) becomes insolvent, or has a liquidator, receiver, manager or administrative receiver appointed.”

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B. Legal clauses

Basic clauses

•  Choice of jurisdiction • Arbitration •  Choice of applicable

law •  Liability

Other clauses

•  Transfer of property / risks

•  Exclusivity / non-compete

• Hardship •  Indemnification and

penalty

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Arbitration clause – ICC

“All disputes arising out of or in connection with the present contract shall be submitted to the International

Court of Arbitration of the International Chamber of Commerce and shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with

the said Rules.”

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Applicable law clause

“This Agreement shall be governed and construed in accordance with the laws of Singapore.”

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Exclusivity clause

“Author grants to Publisher the exclusive rights to print, publish, distribute, sell and license the rights to any and all editions and/or formats of the Book, in whole or in part, in

the English language throughout the world.”

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C. Commercial and financial clauses

•  Price and form of payment

•  Payment terms and bank gaurantees •  Choice of invoicing currency

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Payment terms clause

“1.1. Payments are due and payable in full within [30] days after the date of the [invoice] [Product shipment]. 1.2. The fees do not include any taxes, import or export fees, duties, or similar charges, all of which are [payee]'s responsibility.”

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D. Ethics clauses

•  Clause established by the company

•  Based on international conventions

•  Types: •  Environmental rights •  Human rights •  Labor and employment rights •  Anti-corruption

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Anti-corruption clause

“Each Party hereby undertakes that, at the date of the entering into force of the Contract, itself, its directors, officers or employees have not offered, promised, given, authorized, solicited or accepted any undue pecuniary or other advantage of any kind (or implied that they will or might do any such thing at any time in the future) in any way connected with the Contract and that it has taken reasonable measures to prevent subcontractors, agents or any other third parties, subject to its control or determining influence, from doing so.”

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