International Sales Contract. Legal practice.

The trade contract practice is based on the rules of the UN Law, on the international Conventions and on the internationally recognised trade principles. The international trade law is generally prior to the national trade and to the national civil law of the contracting parties. At the same time, the international regulations can be individually amended and replaced by the national law regulations or by individual contract clauses.

Codification of the international trade law. 

The most important legal sources of the international trade law are the following: Convention on Contracts for the International Sale of Goods (CISG / 1980), ratificated by over 80 countries; the Hague Convention on the law applicable to international sales of goods (1955); Convention on the Limitation Period in the International Sale of Goods (1974); Convention on the Contract for the International Carriage of Goods by Road (CMR / 1956); Convention concerning International Carriage by Rail (CIM / COTIF 1980); Agreement concerning the International Carriage of Dangerous Goods by Road (ADR / 1957); Convention for Safe Containers (CSC / 1972); Regulation No. 593 / 2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I Regulation / 2008); EU transport law directives.

Contractual regulations within the international trade law.

Most international trade contracts are subject of regulation of the Convention on Contracts for the International Sale of Goods CISG/1980, Art. 1 Sec. 1 CISG (UN- Trade Law). The regulations of the CISG are generally comparable to the regulations of the german trade law, but have more basical legal systematik and legal goals.  

The international sales contract is to be set by the negotiating parties as a framework, which determine clearly the imported goods, the material quality and the legal quality of the imported goods, the supplied trade documentation, the delivery terms, the transport, the transport insurance, the safety obligations, the warranty for any material or legal defects, the customs and the import obligations of the parties, the taxation of goods, the applicable law and the place of juristiction.  

The legal practice refers usually to the Incoterms clauses, to set and to standartize the obligations of the contract parties. Incoterms, in the current version 2020, is passed by the International Chamber of Commerce (ICC). It is not legally regulatory, but it is a reference for the dispositive legal regulation of contracts. It formulates standardizing clauses, which can be integrated into the sales contract. The current version of Incoterms contains eleven standaritized clauses: EXW, FCA, FAC, FOB, CFR, CIF, CPT, CIP, DAT, DAP, DDP. Most clauses of Incoterms define the liability of the contracting parties during the international transport of goods.

For the contract practice it is also very significant, which general trading policy the contracting partner have and if the General Terms and Conditions (GTC) of another party could or should apply. The applicable General Terms and Conditions (GTC) must be prooved and negotiated before signing the contract.

Warranty for material and legal defects of goods in the contracting practice. 

The legal regulations for sales defects and warranty is one of the most relevant parts of the CISG and must be detailed regulated in sales contracts. The material defects are, for example,the technical, the health or the hygienic defects of goods or package. The legal defects are, for example, the patent or the utility model infringements or infringements of the rights by the contracting parties. The relevant regulations on the termination of the contract, on the reduction of purchase price, on the restitution, on the subsequent performance in cases of defects are mostly regulated in the Articles 30 ff. CISG.

Agreements on the place of jurisdiction. 

In the international sales practice it is important to meet the proper agreement on the place of the international arbitration or on the place of the national juristiction for any cases of claims. The agreement has to meet the advantage for the initiative contracting party to claim the demages and to execute efficiently the court`s decicion.  

Legal summary.

The international sales contract is governed by the international Conventions (UN- Trade Law), by the acknowledged international trade principles and can be dispositively regulated by the contracting parties. The legal practice can moderate effectively the economical advantage and the arbitration of the international sales conflicts.

The law firm FAITZER advices in all matters of the sales and transport law and supports the dispute resolution in the international trade law. 

Author: Attorney Yana Krause 

Law Company FAITZER

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