International Contracts


International contract refers to a legally binding agreement between parties, based in different countries, in which they are obligated to do or not do certain things. International contracts may be written in a formal way. Most businesses create contracts in writing to make the terms of agreement clear, often seeking legal counsel when drawing important contracts. Contracts can cover all aspects of international trade, although the most commonly used are:

  • International sale contract.
  • International distribution contract.
  • International agency Contract.
  • International sales representative contract.
  • International supply contract.
  • International manufacturing contact.
  • International services contract.
  • International strategic alliance contract.
  • International joint contract.
  • International franchise contract.

In international trade, the UNIDROIT Principles establishes general rules applicable to commercial contracts. They shall applied when the parties have agreed that their contract be governed by them. They also may be applied when the Parties have not chosen any law to govern their contract. In other cases they may be used to interpret or supplement domestic law.

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.

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.