International Commercial Law
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1 International Commercial Law International contracts are affected by national law University of Oslo Giuditta Cordero-Moss, Ph.D., Dr.Juris Professor, Oslo University
2 1. Applicable law and interpretation Do terms of contract have an absolute meaning? Can you exclude any external interference if you write an extremely detailed and clear contract?
3 Summer night
4 English contract models and Civilian governing laws Contracts written to meet requirements of a contract law that: Interprets literally Does not imply terms Does not consider negotiations or subsequent conduct Does not integrate with good faith or loyalty Caveat emptor Fairness = Predictability Governing law interprets contracts: According to their purpose and the parties intentions Implies terms Considers negotiations and subsequent conduct Integrates with good faith and loyalty Reasonableness Fairness = balance in the specific case
5 Entire Agreement clause This Contract contains the entire agreement between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of the Contract.
6 Facts During the negotitions the parties had discussed detailed specifications. These are not referred to in the contract. The buyer assumes that the specs apply. The supply does not comply with the specs
7 Literal meaning Entire Agreement clause prevents using external elements to interpret the contract
8 Purposive meaning Entire Agreement clause does not prevent using external elements to interpret the contract
9 Entire Agreement Literal interpretation may permit speculative conduct Purposive interpretation may override wording
10 The wording does not have an absolute meaning detached from the governing law Clauses with the same wording may have different effects under different laws The closed circuit is interrupted
11 Force Majeure Clause A Party shall be excused for non-performance of any of its obligations hereunder, if failure to perform is due to an impediment beyond that Party s control that could not be reasonably foreseen or overcome
12 Facts The Seller of car components carries out an extensive process to select the best supplier of aluminium; The selected supplier does not supply the cheapest aluminium, but is the most reliable and professional; Due to unforeseen events, the supplier is not able to deliver according to schedule; The Seller s production is delayed; The Seller is not able to comply with the contractual time schedule
13 Excuse for non performance due to event beyond the party s control Is failure by the supplier beyond the party s control? English law: no Norwegian law: yes
14 Boilerplate clauses Entire Agreement No Waiver No Oral Amendments Severability Conditions/Essential Terms Sole Remedy Subject to Contract Material Adverse Change Liquidated Damages Indemnity Representations and Warranties Hardship Force Majeure Applicable law English law EDWIN PEEL German law ULRICH MAGNUS French law XAVIER LAGARDE, DAVID MÉHEUT, JEAN-MICHEL REVERSAC Italian law GIORGIO DE NOVA Danish law PETER MØGELVANG- HANSEN Finnish Law GUSTAF MÖLLER Norwegian law VIGGO HAGSTRØM Swedish law LARS GORTON Hungarian law ATTILA MENYHÁRD Russian law IVAN S. ZYKIN
15 2. Applicable law and mandatory rules Formation of contracts Penalties
16 Irrevocable offer This offer is binding on the Offeror and may not be revoked before 30 days have elapsed from the date hereof May the offer be revoked before the 30 days term?
17 Firm Offer and National Law Romanistic systems of law - Art Italian Civil Code: Firm offer is binding. Revocation is ineffective Germanic systems of law German BGB: Firm offer is binding. Revocation is ineffective Common Law systems USA: Promissory estoppel (irrevocable to the extent it has induced offeree s action) England: Revocable if there is no consideration
18 3. Applicable law and default rules Force majeure
19 Partial Impediment Non performance by a party of its obligations hereunder is excused if such party was prevented from fulfilling its obligations by an event beyond that party s control, that was not foreseen at the date hereof and that could not be reasonably avoided or overcome. Impediment reduces the debtor s capacity by 50% If plurality of creditors, how is the reduction allocated?
20 Partial Impediment and National Law Norwegian law: Full delivery to the first creditor in time (Rt 1970 s. 1059) German law: Delivery to all creditors reduced pro rata ( 275(1) BGB) Common Law: Full delivery to all creditors (J. Lauritzen A.S. v. Wijsmuller B.V. (The Super Servant Two) [1990] 1 Lloyd s Rep. 1 )
21 International Contracts and National Governing Law Not always a clause is enforceable or selfsufficient Not always a lacking clause is unenforceable Contracts are not self-sufficient
22 Int. contracts How do they differ from domestic contracts? Assesment of parties interests is the same Clauses to protect parties interests are (mostly) the same Drafting should be on the basis of the governing law, as for domestic contracts Need: accommodate to g.l. s requirements Need: intergrate g.l. Need: avoid violations
23 Int. contracts How do they differ from domestic contracts? II Determine scope of soft law Determine international treaties Determine governing law Determine dispute resolution (forum, enforcement)
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