International Commercial Notebook PDF

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INTERNATIONAL COMMERCIALContents COMMERCIAL CONTRACTS............................................................................................................................................. - What is Commercial Law....................................................................................

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INTERNATIONAL COMMERCIAL

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Contents

COMMERCIAL CONTRACTS.............................................................................................................................................. 5 What is Commercial Law......................................................................................................................................... 5 Types of Commercial Contracts...............................................................................................................................5 Drafting a commercial contract...................................................................................................................................6 ‘boiler-plate’ clause................................................................................................................................................. 6 Common and civil law.................................................................................................................................................7 International aspects of commercial law.....................................................................................................................7 Sale of goods act 1979.................................................................................................................................................8 TIME IS OF THE ESSENCE............................................................................................................................................. 9 Price, payment and delivery......................................................................................................................................10 Seller’s main concerns:..........................................................................................................................................10 Price.......................................................................................................................................................................... 10 PRICE NOT INCLUDED IN CONTRACT.....................................................................................................................10 VAT........................................................................................................................................................................ 10 Payment (duty to pay the price)................................................................................................................................11 TIME FOR PAYMENT............................................................................................................................................... 11 Delivery..................................................................................................................................................................... 12 DUTIES OF THE SELLER..........................................................................................................................................12 DUTIES OF THE BUYER...........................................................................................................................................12 PASSING OF RISK.................................................................................................................................................... 12 Rights and remedies of the seller..............................................................................................................................14 SELLERS RIGHTS AGAINST THE GOODS..................................................................................................................14 PERSONAL RIGHTS OF THE UNPAID SELLER...........................................................................................................14 Rights and remedies of the buyer.............................................................................................................................15 Breach of contract structure for liability of the seller............................................................................................15 RETENTION OF TITLE.....................................................................................................................................................16 STRUCTURE FoR DEALING WITH RIGHTS OF THE UNPAID SELLER IN A SALE OF GOODS CONTRACT (ROT)...............16 Retention of title....................................................................................................................................................... 17 What if the Goods are Mixed or used for Manufacturing......................................................................................17 What if the Goods are Sold on?.............................................................................................................................17 Effective Retention of Title Clause.............................................................................................................................17 EXAMPLE ROT CLAUSES.............................................................................................................................................19 International ROT...................................................................................................................................................... 20 LIEN...............................................................................................................................Error! Bookmark not defined. 2

LIABILITY AND EXCLUSION.............................................................................................................................................22 Terms imposing liability on the Seller Structure....................................................................................................22 1)

What are the relevant terms which may impose liability on the seller?............................................................22

2)

Have those terms been Breached?....................................................................................................................23

3)

WHAT REMEDY IS SOUGHT?..............................................................................................................................24

4)

Have the terms been excluded UCTA 1977?......................................................................................................24 Incorporation.........................................................................................................................................................24 Construction.......................................................................................................................................................... 24 UCTA...................................................................................................................................................................... 25 The Reasonableness Test...........................................................................................Error! Bookmark not defined. ENTIRE AGREEMENT CLAUSE.................................................................................................................................26 ENTIRE AGREEMENT STATEMENT..........................................................................................................................26 EXCLUSION OF LIABILITY FOR MISREP...................................................................................................................26

Non contractual liability............................................................................................................................................27 Exclusion clause checklist......................................................................................................................................27 Drafting an exclusion clause...................................................................................................................................... 28 CONTRACTS FOR INTERNATIONAL SALES......................................................................................................................30 EFFECT OF TRANSFER OF THE DOCUMENTS..........................................................................................................31 Bill of exchange & Documentary credit.....................................................................................................................31 METHODS OF PAYMENT........................................................................................................................................31 Documentary Credits.............................................................................................................................................33 ADVANTAGES & DISADVANTAGES OF DOCUMENTARY CREDIT..............................................................................33 Incoterms.................................................................................................................................................................. 34 INTERNATIONAL CONVENTIONS AND TREATIES............................................................................................................36 Choice of law and jurisdiction................................................................................................................................... 38 JURISDICTION........................................................................................................................................................38 Choice of Law........................................................................................................................................................ 39 Electrosteel Europe – sale of good contract..........................................................................................................40 MARKETING STRATEGIES...............................................................................................................................................41 Types of Marketing Arrangement..........................................................................................................................41 EXCLUSIVITY........................................................................................................................................................... 41 CHOICE BETWEEN AGENCY AND DISTRIBUTION....................................................................................................42 Agency.......................................................................................................................................................................43 TYPES OF AGREEMENTS.............................................................................................Error! Bookmark not defined. Agent’s Authority...................................................................................................................................................43 Commercial Agent (Council Directive) Regulations 1993 – termination of agency....................................................44 3

DISTRIBUTION AGREEMENTS........................................................................................................................................46 Structure for article 101/Chapter 1...........................................................................................................................48 Article 102/s.18 CA 1998........................................................................................................................................... 52 ECOMMERCE & DATA PROTECTION...............................................................................................................................53 The Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013)...........................................................53 The Consumer Protection (Distance Selling) Regulations 2000 (SI 2000/2334).....................................................54 The Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426)..............................55 European regulation..................................................................................................................................................56 Main intellectual property rights...........................................................................................................................57 Data protection.........................................................................................................................................................58

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COMMERCIAL CONTRACTS

  WHAT IS COMMERCIAL LAW 

TYPES OF COMMERCIAL CONTRACTS

The law of trade and about the way a business makes money A business’s success may depend on: o Reputation o The way the products are packaged and sold o The technology necessary to create them o Intellectual property rights Sale of goods; provision of services; distribution, agency and franchising; competition law

UPSTREAM  Are typically those which provide the client with the resources needed in order to carry on his business i. supply of goods ii. supply of services iii. supply of funds through loan agreements iv. permission to manufacture through IP licences v. overhead contracts; employees, utilities, software, maintenance and security DOWNSTREEM  Are typically those under which the client passes on the fruits of his labour i. simple sale contract ii. contracts for the supply of services iii. agency iv. distribution and franchising contracts v. contracts for the exploration of the client IP rights

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DRAFTING A COMMERCIAL CONTRACT  Useful to help put a contract in context or explain the reason for a contract being entered into THE RECTITALS  Provides the factual background to an exclusion clause  They must be used with care to ensure they do not introduce ambiguity FEW BASIC RULES: a) Should do no more than give a clear meaning to defined terms b) Capital letters c) Listed alphabetically d) Should only be used where they are recurrent in the body of the agreement e) Should be defined in the defined terms DEFINITIONS f) They must meet the requirements of the agreement AND INTERPRETATION g) Care should be taken with things which might be subject to change during contract

CONDITIONS PRECEDENT AGREEMENTS

REPRESENTATIONS AND WARRANTIES INDEMNITIES LIMITATIONS AND EXCLUSIONS

INTERPRETATION CLAUSE  Should be non-controversial – it cover the basics of interpretation  For example, by providing that the headings do not form part of the agreement  According to the Principles of European Contract Law the rules we should apply to interpret a commercial contract include  Conditions that have to be satisfied before the agreement comes into effect      

Agreements define the rights and obligations of the parties These are statements of factual and legal matters which one of the parties requires to be made to it in a legally binding way Warranties are promises that a given statement or fact is true – they tend to be less important in sale of goods contracts, where any specification or description of the goods is a condition of the contract The warranties section can provide for remedies Are different to warranties in that one party promises to make good another loss Whether the clause is liable to come within the scope and effect of UCTA 1977

PREVAIL CLAUSE

ENTIRE AGREEMENT CLAUSES NO AUTHORITY CLAUSES WAIVER

‘BOILER-PLATE’ CLAUSE

BUYER BECOMING INSOLVENT CHOICE OF LAW AND JURISDICTION SERVICE OF NOTICES

Standard clauses

FORCE MAJEURE NO PARTNERSHIP CLAUSE NO ASSIGNING/ SUBLETTING CLAUSE

SCHEDULES



States that in the event of a dispute, one parties (e.g. the seller’s) terms shall prevail – if not the contract lacks certainty Provides that all of the obligations of the parties are recorded in one document – seek to avoid evidential difficulties associated with oral representations and discussions  Entire agreement statement  Exclusion of liability for misrepresentation  Express carve-out in respect of fraud State that variation of the contract will be effective only if made by certain people (e.g. directors) or in a certain way (e.g. evidenced in writing) Clause to prevent any waiver arising as a result of one party agreeing to a relaxation of a contractual provision Often linked to the retention of title clause in a sale of goods agreement Important that the contract includes an express choice of law and the jurisdiction which will govern the contract in the event of a dispute A notice clause has to provide for the places where notice is to be served, the method of service and the time at which the notice is deemed to be served Intended to suspend or terminate the contractual obligations in the event of an occurrence outside the control of the parties – make sure it protects the buyer and the seller Seeks to ensure that the agreement cannot be construed as a partnership between the parties to the agreement – otherwise liable for each other’s debts If buyer has selected a specific supplier, it will not want that supplier to subcontract the work to an unknown third party – increases risk and creates a lack of uncertainty

If any provision becomes illegal/impossible can be modified/deleted (blue pencil) SEVERANCE HOWEVER court can use blue pencil test to sever but they must not alter the balance of the contract CLAUSE THIRD PARTY Excludes 3rd party liability – usual rights of privity of contract apply A way of removing unnecessary detail from the body of an agreement and thereby improving its readability

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COMMON AND CIVIL LAW  Intended to be self-contained  An act of parliament is meant to tell you all you need to know about that particular law, in such a detailed way as to leave little freedom of interpretation for judges  Parties can only rely on the content of clauses in the contracts  Contracts are therefore very carefully drafted to accurately reflect exactly what has been agreed COMMON  Rare for them to use general principles which guide the direction in which the law goes  Statutes guide the direction of the law  Courts are typically bound by the decisions of higher courts – higher courts therefore have to consider that decisions they make may affect thousands of cases taking place in courts below them  See all contracts as within one category  Typically have the requirement of consideration  Favour form over substance  Intended to be accessible to the people  Often simply drafted and contain general statements  Detailed regulation is left to government regulations  Principles of equality and fairness and good faith CIVIL  There is rarely a system of precedent in civil law jurisdictions and so judges can make decisions without having to take into account the impact on later decisions  Judgments are normally short  No concept of consideration  Favour substance over form – clever drafting does not help one escape penalties Three categories of contract: 1) Public law 2) Civil law 3) Commercial law INTERNATIONAL ASPECTS OF COMMERCIAL LAW A comprehensive code of legal rules governing the formation of contracts for the international sale of goods THE VIENNA CONVENTION

THE UNIFORM COMMERCIAL CODE (UCC) PRINCIPLES OF EUROPEAN CONTRACT LAW (PECL)

THE UNIDROIT PRINCIPLES

One of the uniform acts that has been promulgated in the us in an attempt to harmonise the law of sales and other commercial transactions in all 50 states Optional common European sales law drawn up by an independent body of experts from each MS of the EU Independent intergovernmental organisation whose purpose is to study the needs and methods for modernising and harmonising private international law and in particular commercial law between states and to draft international conventions to address the needs.

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SALE OF GOODS ACT 1979 s2