Nowadays, in such globalised world, international sale, leasing, franchising, factoring, distribution, and licensing agreements are increasingly widespread. Such contracts fall under the scope of International Commercial Contract law together with the application of a Member State jurisdiction in case of breach.
Under EU International Commercial Contracts law, parties choose the applicable law together with the competent Court to settle possible disputes caused by breach of international contractual obligations. Since international commercial relations among undertakings are becoming more and more frequent, EU is seeking to standardise the rules of International Commerce Law through international treaties and conventions. The most important Commercial regulations are:
- Brussels Convention of 1968;
- Rome Convention of 1980;
- Regulation (EC) N. 593/2008
- Vienna Convention on the international sale of Goods of 1980.
Breach of International Contracts and related clauses
An international breach of contract may occur because of a) non-performance b) acts in violation of the contract c) a party preventing another from completing its obligations.
In addition, a relevant aspect of international contract is represented by the cultural, social, political, and legal issues that may occur after the drafting of the agreement in one of the countries where one of the contracting parties resides. Such events are able to influence the legal balance on which a contract is based. Under these circumstances, International Contract Law provides for hardship clauses and force majeure.
Hardship clauses refer to a change in economic circumstances that prevents no party from fulfilling its contractual obligations and makes performance of the whole contract much less profitable for this party. Hardship clauses purpose is making sure that the agreement continues when one party’s circumstances have been altered with the consequence of not being able to meet contractual obligations. Generally speaking, circumstances that alter the contract do not eliminate the obligation to fulfil contractual obligations. In fact, hardship clauses cannot be claimed unless the event that altered the balance of the parties is considered fundamental to the contract. For instance, in the Italian jurisdiction parties may include clauses defining the circumstance of hardship and what a change of economic conditions could mean.
On the other hand, force majeure clauses allow parties to suspend or terminate the fulfilment of its obligations in the event certain circumstances arise; making the performance of the contract inadvisable, commercially impracticable or impossible or illegal. A typical clause of force majeure is the so-called “Acts of God” which provide protection against natural and accidental events (war, riots, strikes) that may alter the contract.
VGS commercial lawyers have been working in International Commercial negotiation and contracts for years. Thanks to tailored legal assistance, they are able to understand clients’ needs and business objectives better than average commercial lawyers. Should you need further information on international contract assistance, do not hesitate to contact us.
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