Any business dealing has a risk of misunderstandings or unfair dealings. Cross-border business transactions may have added difficulties due to the differences in culture, expectations, languages, and legal systems. Given these potential obstacles or risks, it is important to have a clear agreement on a transaction with overseas partners, preferably in writing, in order to avoid potential future disputes and to foster productive long-term relationships.
The contract should contain terms and conditions upon which both parties agree. It is generally recognised that the parties, i.e., you and your business partner(s), are free to choose and agree on the terms and conditions in your contract (freedom of contract). In particular, some international organizations aiming at harmonising substantive rules in international trade and business. These organizations include the United Nations Commission on International Trade Law (UNCITRAL), the Hague Conference on Private International Law (HCCH), and the International Institute for the Unification of Private Law (UNIDROIT), have developed a wide range of Conventions, model laws, and principles that can be used by the parties for international business contracts.
Noteworthy among these are the United Nations Convention on Contracts for the International Sale of Goods (CISG), also known as the Vienna Convention; the HCCH Principles on Choice of Law in International Commercial Contracts; and the UNIDROIT Principles of International Commercial Contracts. These instruments contain sets of rules that can either be incorporated in your contracts for international business transactions and/or can govern your contracts, in addition to national law rules. To assist you in navigating the various international instruments, the three organizations have jointly published in six languages the Legal Guide to Uniform Instruments in the Area of International Commercial Contracts, with a Focus on Sales.
Within a contract, it is also important to use specific and well-established terminology in the field of international business transactions. For example, Incoterms (international commercial terms), established by the International Chamber of Commerce (ICC), can help standardize a contract’s terminology and assure that parties have the same understanding (see the guide on Incoterms).
For information on what to do in the event of a breach of contract, see the guide on Dispute Settlement.