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What Is International Contract Law?

Books on international law.
The United Nations, which is based in New York City, introduced the Convention for Contracts on the Sale of International Goods in 1980.
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  • Written By: Elise Czajkowski
  • Edited By: A. Joseph
  • Last Modified Date: 14 September 2014
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International contract law concerns the legal rules relating to cross-border agreements. When parties from different countries enter into a contract, they are governed by this type of law unless they agree to abide by the laws of one of the countries. It is frequently applied to international sales contracts.

This type of contract law is broadly based on the idea of good faith and fair dealing in contracts. These principles are the basis of contract law in most jurisdictions. Good faith includes fair negotiations, an obligation to cooperate and good faith when terminating a contract. It also ensures that unfair contracts or deals are not enforced.

International sales contracts are governed by the United Nations Convention on Contracts for the International Sale of Goods from 1980. The convention was developed in the hopes of promoting international trade by developing a global set of rules for contracts. The convention is a compromise between legal systems of common law, civil law and socialist law.

One key element of international contract law includes the provision that the parties' nationality does not play any role when applying the law, thereby placing all parties on an equal playing field. Rules of the contracts are interpreted by what a reasonable person would consider fair and appropriate given the circumstances. International contract law is a branch of private international law, which relates to the cross-border dealings of individuals or companies. This differs from public international law, which concerns the interaction between governments and other state agencies.

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A contract is a legally enforceable agreement between two or more parties that creates a legal obligation between them. The rules related to contracts can vary substantially between different types of legal systems. In common law jurisdictions, for example, the participants in a contract are typically allowed a very wide scope concerning the terms of the agreement and the repercussions of breaking the pact. In civil law jurisdictions, however, established legal principles are often applied to individual contracts.

The most basic element of any contract is the mutual agreement between two parties to participate in an arrangement. Common law jurisdictions typically require consideration in a contract, meaning that both sides receive something of value as part of the contract. In civil law countries, however, consideration is not considered a necessary component.

Historically, merchants developed their own sort of international contract law. Traders wanting to deal despite differences in language, culture and laws developed their own code for international dealings. These rules have evolved into the good faith contract laws of today.

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anon322553
Post 5

Does anyone have any idea if there are forms that would allow me as a real estate agent working out of Germany (being German) entering into a contract with a farmer from Australia to sell his property to international clients? And where to find this form? As far as I know, Australia has its own regional licence regulation for real estate agents. --D.

anon307457
Post 4

Where I can learn more about the international contract law?

anon299675
Post 3

It is not at all clear, neither in the UN Convention on CISG nor in this article whether consideration is a necessary component of international contract. Or could we call it 'implied consideration' - seller promises to deliver, buyer promises to pay?

strawCake
Post 2

@ceilingcat - Well maybe we should do away with international contract law then! If we made it more difficult to do business internationally, at least it would keep some business in this country.

I'm only kidding. I do have to say though, I'm shocked that the world was able to come up with international business contract law that many countries could agree on. If you take into account cultural and governmental differences, it's really amazing.

Plus, think about the whole "reasonable person" thing. I'm sure the definition of what is "reasonable" varies from country to country!

ceilingcat
Post 1

I can see how problems might arise if two people from different legal systems were doing business. Which laws should apply? Where would a case be tried for breach of contract?

I think it makes a lot of sense that international contract spells out the answers to those questions. I'm sure it makes doing business internationally much easier.

Also, if we didn't have this system in place, I bet less businesses and people would want to do business with people in other countries. After all, without legal protection you'd be taking quite the gamble!

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