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

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.

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.

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.

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.

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

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.

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

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.

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.

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.

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

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.

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