Business Contracts in International Markets

Transcription

1 Bruno Linden Gertrud Roos Business Contracts in International Markets (f^studentlitteratur

2 Contents Preface 11 PART ONE Business Decisions in the International Market Place 13 1 Components of International Trade The International Business Contract Contractual Methods Used to Enter Foreign Markets 16 (i) Direct Export 19 (ii) Agency 21 (iii) Distributors 21 (iv) Licensing 22 (v) Joint Venture 23 (vi) Electronic Commerce System The Legal Environment 24 (i) Regulation of Anti-competitive Business Practice 26 Further Reading 27 2 Principal Sources of International Business Contracts Freedom to Contract The Business Contract and Supplementary Sources Agreements between States 30 (i) Treaties and Conventions 31 (ii) Customary Law 32 (iii) Agreements Passed by International Organisations 32 (iv) Soft Law The European Community 33 (i) The Nature of Community Law 34 (ii) Supremacy 34 (iii) The Principle of Direct Effect Lex Mercatoria 37 (i) Is There a Lawyer's Law? 38

3 2.6 Sources of International Procedural Law 39 (i) Business Disputes 39 (ii) Jurisdiction (forum) in the EC 40 (iii) Interpretation of the Brussels and Lugano Rules on Jurisdiction 42 (iv) Conflict of Laws; the Rome Convention 42 (v) Interpretation of the Rome Convention 43 (vi) Recognition and Enforcement of Foreign Judgments and Awards Procedural Issues in the United States 45 Further Reading 47 3 Formation of Business Contracts Agreement or Contract 49 (i) How to Define a Contract? Pre-contractual Conditions 50 (i) Capacity to Contract 50 (ii) Statements Which May Induce a Party to Contract 51 (iii) Illegality and Public Policy 52 (iv) Other Restraints on the Contract The Formation of the Business Contract Intention to Create Legal Relations in Commercial Relations 54 (i) Good Faith and Fair Dealings and Best Endeavours Offer, Acceptance and Consideration 55 (i) Offer 55 (ii) Acceptance 57 (iii) Differences between offer and acceptance 58 (iv) Battle of forms 59 (v) Modifications in the contract 60 (vi) Consideration Communication of Acceptance 61 (i) Methods of Communication 61 (ii) Electronic signatures Relief Clauses and Excuses for Non-performance 62 (i) Exemption from Liability and Unfair Contract Terms 62 (ii) Force Majeur and Frustration Must a Contract be in Writing? Interpretation of Contracts 66 (i) Standard Form Contracts 68

4 3.10 Skeleton Structure of a Business Contract 69 Further Reading 72 4 Performance and Breach of Contract: General Features Breach of Contract 73 (i) Introduction 73 (ii) What is a Breach of Contract? 73 (iii) Fundamental (Major) or Minor Breaches 74 (iv) What is a Warranty? Performance of the Contract 74 (i) Delivery 75 (ii) Passing of Risk 75 (iii) Passing of Title to the Goods 76 (iv) Pay the Price and Take Delivery 77 A A Remedies 77 (i) Damages 77 (ii) Specific Performance 78 (iii) Price Reduction 78 (iv) Avoidance of the Contract 78 Further Reading 79 PART TWO International Sale of Goods 81 5 The United Nations Convention on Contracts for the International Sale of Goods Introduction The Individual Sale of Goods Contracts and the CISG The Structure of the CISG 84 (i) Sphere of Application 84 (ii) Sales of Goods The Seller's Obligations 86 (i) Delivery and Handing Over the Goods 86 (ii) Conformity of the Goods and Third Party Claims The Buyer's Obligations 88 (i) Payment and Taking Delivery Passing of Risk Remedies for Breach of Contract 89 (i) The Buyer 90 (ii) The Seller 90

5 5.8 Common Provisions for Buyers and Sellers 91 (i) Anticipatory Breaches 91 (ii) Damages and Interest 91 (iii) Exemptions (Force Majeur) 92 (iv) Effects of Avoidance and Preservation of the Goods 92 (v) Final Provisions Issues Outside the CISG 93 Further Reading 94 PART THREE Long Term Industrial and Commercial Cross-Border Contracts 95 6 Agency Introduction 97 (i) The Principal-Agent Relationship 98 (ii) The EC Agency Directive 98 (iii) Types of Agents 99 (iv) Authority 100 (v) Agency and Standard Form Contracts The Agency Contract 103 (i) The Form 103 (ii) Binding Contract by a Party's Failure to Act The Obligations of the Agent and Liability 105 (i) The Fundamental Obligations 105 (ii) Delcredere 109 (iii) Remedies Obligations of the Principal 110 (i) The Obligations 110 (ii) Remedies Remuneration 111 (i) The Nature of Remuneration/Commission 111 (ii) When is the Agent Entitled to a Commission? 112 (iii) When shall the Commission Due be paid to the Agent? 113 (iv) Is the Agent Entitled to Commission when the Transaction is not Completed? 113 (v) Calculating the Commission Correctly 114 (vi) Reimbursement for Expenses 115

6 6.6 Remuneration Securities Termination of the Agency Agreement 117 (i) Notice of Termination and Adjoining Issues 117 (ii) Termination "at will" 119 (iii) Early Terminations 119 (iv) Early Termination Due to Breach of Contract and Exceptional Circumstances Post-contract Remuneration 120 (i) Different Kinds of Post-contract Remuneration Agency and Non-competition 122 Further Reading The Distributor Introduction Background The Distribution Contract 127 (i) Distribution Defined 127 (ii) The Territory 128 (iii) Sole or Exclusive Distributorship The Legal Framework 131 (i) Distribution in Some Countries 131 (ii) Case Law 134 (iii) Standard Models etc The Formation of the Distributor Agreement Obligations of the Supplier 135 (i) The Loyalty Obligation 135 (ii) The Delivery Obligation 136 (iii) Non-competition Obligations of thd distributor Termination of the Distributor Contract 139 (i) Term of Notice Indemnity and Compensation Competition Law and Distributor Agreements 145 Further Reading: Licensing and Franchising Introduction The Patent 151 (i) Governing Laws Know-how 153

7 8.4 The Licence Agreement 154 (i) The TRIP Agreement Licensing Strategies 157 (i) Competition Law The Skeleton Structure of the Licence Agreement The Franchise Agreement The Franchise Agreement and Contract Law 170 (i) The Formation 170 (ii) The Definition 170 (iii) The Know-how 171 (iv) The Price 172 (v) The Products Legislation The Performance and the Execution of the Contractual Obligations 173 (i) The Obligations of the Franchiser 173 (ii) The Obligations of the Franchisee The Franchise Agreement and Competition Law 178 Further Reading The Joint Venture Agreement Introduction 181 (i) Advantages and Disadvantages The Agreement Other Agreements Related to the JV Governing Civil Law and Competition Law 183 (i) Civil Law 183 (ii) Competition Law The Term and Termination of the JV Co-operation 185 Further Reading 185 PART FOUR Common Features in International Business Contracts Special Trade Terms in Sales of Goods Contracts 189 Introduction 189 PART A 10.1 The Contract of Sale and Supplementary Terms Delivery - the Point of No Return? Incoterms (20004) and Distribution of Risk 191

8 10.4 Common Features of Export Sales 192 (i) Uni- and Multimodal Transports 192 (ii) Licence 193 (iii) Packing 193 (iv) Commercial Invoice 194 (v) Insurance Documents Used in Export Sale 195 (i) Must the Documents be in Writing? 195 (ii) The Bill of Lading 196 (iii) Sea Way Bills Incoterms - The Four Categories 197 (i) E-terms 197 (ii) F-terms 198 (iii) C-terms 199 (iv) D-terms The Hague (Hamburg) Rules Conclusions 202 PARTB 10.9 Documentary Credits and Payment Methods in International Trade 202 (i) What is Documentary Credit? 203 (ii) The Rules Applicable to a Documentary Credit The Role of Banks 204 (i) The Legal Relationship between the Parties Involved in a Documentary Credit 205 (ii) The SWIFT-system Securing of Payment 206 (i) Payment in Advance 206 (ii) The Sellers' Retention of the Title to the Goods 207 (iii) Documentary Credit 207 (iv) Instructions to Carriers 207 (v) The Right of Stoppage in Transit Bankruptcy (Insolvency) Across Borders 208 Further Reading Resolution of International Business Disputes When to Bring a Lawsuit? Dispute Resolution Methods 211 (i) Alternative Dispute Resolution 212 (ii) Litigation 212

9 11.3 Arbitration 213 (i) The Arbitration Clause 213 (ii) Arbitrators 214 (iii) Certain Aspects of the Arbitration Clause Enforcement of the Award Conclusions 216 Further Reading Competition Legislation in the European Community Introduction Illegal Restraints on Trade 219 (i) The Market Structure The Community's Competition Law Reform 221 (i) Business Contracts and Competition Law in the EC Article 81: General Features 223 (i) Agreements 224 (ii) Consten and Grundig v Commission 225 (iii) Concerted Practices 225 (iv) Undertakings 226 (v) Agreements Affecting Intrastate Trade 227 (vi) Article 81(2): Effect of Restrictive Contracts 228 (vii) Article 81(3): Agreements Outside the Prohibition Article 82: Abuse of Monopoly Situations 230 (i) Dominant Position 230 (ii) Abuse 232 (iii) Undertakings Enforcement under Regulation 1/ (i) Enforcement at Community Level 233 (ii) Enforcement at National Level 234 (iii) Allocation of Cases and Complaints Conclusion 235 Further reading 236 Appendices 237 CISG 239 Annex I - Products and Territory (Article 1.1) 269 Useful Web Addresses 305 Case List 307 Index 309