INTERNATIONAL CONTRACT LAW

1. INTERNATIONAL CONTRACT LAW • Topics Covered in Chapter on International Contract Law • Comparative Law in Negotiations • Generally Recognized International Principles in Commercial Law • National Contract Law of Various Nations • UNIDROIT Principles of International Commercial Contracts

2. NEGOTIATIONS • Differences in Negotiation Styles Among Nations • Language and Cultural Differences Affects Negotiations • Confucius philosophy of “harmony” influences negotiations in Japan • Japanese “wa” concept is reflected in the Japanese negotiation style by placing an emphasis on developing a trusting long term relationship. • In Japan, there is an aversion to litigation and emphasis on contracting parties working out differences among themselves • Decisions are based on “ring-sho” consensus.

3. NEGOTIATIONS • Factors that must be taken into consideration in cross-cultural negotiations • That the negotiations lead to a written contract that is enforceable in the countries of both parties. • Conflicts that result from cross-cultural misunderstandings can be avoided if both parties understand their respective rights and duties. • Dispute resolution system should be completely and fairly addressed.

4. RECOGNIZED PRINCIPLES OF COMMERCIAL LAW • Sources of International Commercial Law • Customary International Business Law • International Chamber of Commerce Uniform Customs and Practices for Documentary Credits addressing Letters of Credit • International Commercial Arbitration Decisions • Arbitration decisions are based on the application of international commercial law • Conventions and Treaties • United Nations Convention on the International Sales of Goods which has been incorporated into the national law of many nations.

5. RECOGNIZED PRINCIPLES OF COMMERCIAL LAW • Harmonization of Commercial Law • Good Faith Principles-adoption of nachfrist notice in which a party request an extension of additional time. • Contract Interpretation-reason to know and should know contractual obligations. Common among nations to provide judicial interpretation (should know) v obligation to know on individual basis (reason to know). • Exculpatory Clauses generally unenforceable among nations if unfair to the contracting party.

6. RECOGNIZED PRINCIPLES OF COMMERCIAL LAW • Harmonization • Liquidated Damage Clause generally enforceable among nations • Differences Among Nations • Law in Fact and Law in Action varies among nations. • Islamic nations use of the Shari’a is a body of religious principles that governs secular contractual transactions

7. NATIONAL CONTRACT LAW • Russian Civil Law-similar to common law contract law. • Article 158 allows silence in acceptance if prior relationship. • Article 160 applies Article 2 of UCC in terms of statutes of fraud.s • Section 428 applies common law adhesion provisions. • Article 162 applies writing requirement for statute of frauds in common law. • Section 451-material changes circumstances which are similar to common law.

8. NATIONAL LAW • Russia • Preliminary Contract are not enforceable. Contract must be complete. • Section 469-implied warranties of merchantability and particular purpose applied along with price reduction remedy. • China • Foreign Economic Contract Law • Law divides contract law into general provisions, formation, performance and remedies, transfer and assignments, modification and miscellaneous provisions

9. NATIONAL LAW • China-continued • Article 17 is a version of the American concepts of anticipatory repudiation and adequate assurance. • Article 19 adopts Hadley v. Baxendale limitation on damages. • Article 20 is similar to the American law on liquidated damages. • Article 22 adopts common law’s principle of mitigation of damages. • Article 24 and 25 recognizes excuse of force majeure. • All contracts must be in writing under Chinese Law.

10. NATIONAL LAW • China-continued • Article 32 requires that recission and modification be in writing. • Article 12 requires the certainty of terms in the offer. • Article 37 recommends the alternative disputes resolution system of arbitration and mediation. • The Foreign Contract Law of China provides that the statute of limitation is four years.

11. NATIONL LAW • European Contract Law • European Union’s Commission on Contract published the “Principles of European Contract Law”. • Quite similar to the common law of contracts and Uniform Commercial Code in the United States. • Contractual existence may be proven by any means including testimony of witnesses. • Modifications must be in writing. • Merger clauses similar to UCC. • Notice is effective when it reaches offeror. • Advertisement could constitute offer if certain information included. • Firm Offers are irrevocable for an extended time.

12. NATIONAL LAW • European Community • Principles of European Contract Law-continued • Mail Box Rule rejected. • Additional Terms of the Acceptance quite similar to Article 2 of the Uniform Commercial Code in United States. • Pre-Contractual Liability applicable in European Community. Parties have a general duty to negotiate in good faith. Failure to do so can result in pre-contractual liability. Not applicable in United States. • Each party has an affirmative duty not to disclose confidential information. • Obligation of contracting parties to disclose agency relationship

13. NATIONAL LAW • European Community • European Principles of Contract Law-continued • Party has right to avoid contract due to mistake, fraud, unfair advantage and unconscionability. • Adopts principle of nachfrist notice and extension of time to perform. • Recognizes unforeseeable impediments that may excuse performance. • Specific performance is a remedy. • Reduction in price is an available remedy.

14. UNIDROIT’S PRINCIPLES ON INTERNATIONAL COMMERCIAL LAW • Recommended Principles on International Contract Law by UNIDROIT • Similar to Uniform Commercial Code of United States • Open Terms in Offer • Pre Contractual Liability • Hardship Excuses for Performance • Promissory Estopple applied to Pre-contractual liability • Failure to negotiate in good faith can lead to pre-contractual liability. • Party may recover damages and incidental expenses associated with pre-contractual liabilty