INTERNATIONAL CONTRACTS

 

Most contracts, on which economic activities are based, are not very complicated from a legal point of view. The most important contract in business life is the purchase contract: in most cases it does not require a certain statutory form to become valid, which means that detailed written contracts are rare. The deal is often carried out on the basis of general terms and conditions of trade.

This happens because most of the time single deal cases do not involve large financial investment. But if they do, the contracting parties should formulate a legal agreement. This is especially true about international transactions, since such transactions can give rise to many questions or problems. Therefore, a transaction with a value of EUR 50.000.00 or more should have a written contract tailored to the individual needs of the deal.

International contracts often contain a whole string of details, but omit the question of which law is applicable: if a dispute arises this can lead to serious problems.

There is, however, the United Nations Convention on Contracts for the International Sale of Goods (CISG), this is an international agreement that most countries of economic importance have signed. This convention is applied to all international contracts between the signatory countries but it does not contain provisions on all aspects and problems that might arise in connection with the purchase. It leaves many questions open like, for example, the payment of interest on debts. For most other complex contracts, like leases or service agreements, there are no international agreements that can be relied on.

The question of which law is applicable is determined by the court which has to decide the dispute. Most national laws allow the stipulation of jurisdiction of the court in the event of litigation; it is also possible to choose the specific court that will manage arbitration proceedings in the case of litigation. Clear provisions minimize the risk of disputes and avoid such inconveniences as litigation in countries which are known for their slow proceedings.

TIME SCHEME

Complicated contracts should not be hurried. As a rule a time period of about 4 weeks should be allowed for the negotiation of an agreement. This applies to cases in which the essentials of the deal - for example the time of delivery, the quantity to be delivered, and the sales conditions and of course the product as such - have already been specified and agreed upon. If this is not the case, the negotiations can take much longer.

 

In general, it is useful to come to an understanding as to the actual drafting of the agreement. It is not necessary or useful for each party to draft a contract, since this only doubles the work. It is preferable to let one party come up with a draft that will be modified according to the wishes of the other party. It is advisable to first communicate with each other in writing, to clarify any points that need further discussion. These aspects should be discussed in a personal meeting, which would ideally be followed by the signing of the contract.

 

As regards complex international contracts hourly fees are applied (cfr. Fees). If the deal involves high financial transactions, we might be forced to account for our risk by charging you according to the German Attorneys' Fees Act (Bundes- rechtsanwaltsgebührenordnung). Of course, we will talk with you about the details before we go any deeper into negotiations.