Standard Contracts

General

Because international trade involves multiple jurisdictions, various international bodies, governmental and private trade bodies have developed uniform rules, forms and conventions in order to facilitate trade.

Some uniform rules are intended to apply to all international trade transactions of a particular type. Some are given the force of law by Conventions entered by States and made into domestic law in those States. Prominent examples are the Conventions in relation to the carriage of goods by sea, by road and by air.

Other rules apply in particular sectors in relation to certain types of commodities or goods. They are usually by way of certain standard contract forms which apply, provided that the parties to the particular transaction agree.  They are often the general terms of business which, for reasons of history, convenience, predictability and standardisation, are accepted by parties in the trade and are incorporated into their dealings.

UNCITRAL promoted Conventions

There are a number of international organisations which have the objective of harmonising international trade Law. They may be regional inter governmental or private. Many are sponsored by international and state agencies and are accepted and applied by the international business community in the sector concerned.

The United Nations Commission on International Trade Law (UNCITRAL) is one of the most prominent bodies in formulating international texts and standards. Its purpose is to progressively harmonise and unify the law on international trade. It is based in Vienna.

The United Nations has adopted Conventions which have been promoted by UNCITRAL including.

• UN Convention on Contracts for International Sale of Goods
• UN Convention on Independent Guarantees and Standby Letters of Credit
• UN Convention on Limitation periods in the International Sale of Goods.
• UN Convention on the Carriage of Goods by Sea
• UN Convention on International Bills of Exchange.
• UN Convention on the Use of Electronic Communications in International Contracts.
• UN Convention on the Assignment of Receivables in International Trade

UNICITRAL Model Laws

UNCITRAL has produced a number of model laws. These are designed to assist countries in modernising and informing their laws. These include model laws in the following areas:

• The UNICITRAL Model Law on International Commercial Arbitration
• The UNICITRAL Model Law UN Commercial Credit Transfer
• The UNICITRAL Model Law on International Commercial Conciliation
• The UNICITRAL Model Law on Electronic Commerce 1996
• The UNICITRAL Model Law on Cross Border Insolvency 1997
• The UNICITRAL Model Law on Procurement of Goods, Construction and Services (1994),
• The UNICITRAL Model legislative provisions on Privately Financed Infrastructure Projects

The following are commonly incorporated by traders as model dispute resolution provisions in their contracts.

• The UNCITRAL Arbitration Rules
• The UNCITRAL Conciliation Rules
• The UNCITRAL Notes on Arbitral Proceedings

International Chamber of Commerce Model Rules I

 The International Chamber of Commerce (ICC) is affiliated to the United Nations. It prepares and publishes rules which promote and assist uniformity in International Trade.

The INCOTERMS are the International Rules on the Interpretation of Trade Terms. They are updated and amended from time to time. See the article on the INCOTERMS, which are widely used in export trade. They can be readily incorporated in an international sale contract by use of the relevant acronym e.g. “CIF”; “carriage, insurance and freight” in order to designate the responsibility of the buyer and seller in relation to the relevant matters.

The Uniform Customs and Practice for Documentary Credits are widely used.  The new version of UCP600 came into effect in 2007.  The International Rules for Collections (1995) are also widely used in international payments.

The ICC Rules on Conciliation and Arbitration 1998 confer jurisdiction on the ICC Court of Arbitration for the settlement of disputes under international commercial contracts.

ICC Model Rules II

 There are a number of standard ICC commercial contracts and clauses. They include the

• ICC Model Commercial Agency Contract
• ICC Model Distributorship Contract
• ICC Model International Franchising Contract
• ICC Model Confidentiality Agreement
• CC Model Mergers and Acquisitions Contract

In the context of container transport, the ICC Rules for Combined Multimodal Transport Documents provide a combined transport document for the transportation of goods by means of two or more modes of transport.

The Uniform Rules for Contract Guarantees relate to performance and bank guarantees for international contracts obligations.

Private Organisations / Bodies Contracts

Standard forms of contract used in certain sectors of international trade have been prepared by international trade associations. In the commodities sector, the trade bodies have published standard commodity contracts;

• wool,
• juice,
• precious metals,
• sugar, coco,
• oil,
• seeds,
• grain
• timbers.

Construction and Projects

In the area of construction and procurement, FIDIC publish widely used and influential terms of contract.  They include

• FIDIC Conditions of Contract for Construction for Building and Engineering works designed by the Employer
• FIDIC Conditions of Contract for Construction for Building and Engineering works designed by the Employer; for bank financed projects
• FIDIC Conditions of Contract for Plant and Design Build for Electrical and Mechanical Plant and for Building and Engineering Works designed by the Contractor
• FIDIC Conditions of Contract for EPC/ Turnkey contracts
• FIDIC Short form of Contract

FIDIC contracts use similar wording where possible across the various documents.  There are provisions for disputes to be adjudicated by a Dispute Adjudication Board.

The United Nations Economic Commission for Europe working parties have prepared standard documents in relation to the supply of capital items. Important forms include those in relation to

• the Supply of plant and machinery for Export
• the Supply and erection of plant and machinery for Export and Import

The contracts are used in installations and Construction. Guides are published in tandem with the contract forms.

US Commercial Code

The United States of America Uniform Commercial Code is influential. It was prepared by the American Law institute and the National Conference of Commissioners on Uniform State Laws. The Codes have been adopted and updated in all US States.

Parts of the code have influenced the drafting of the United Nations Convention on Contracts for the International Sale of Goods (CISG)). Article 5, governing letters of credit, has been influential in international trade finance because many major financial institutions operate in New York.

Article 9, which established a unified framework for security interests in personal property, directly inspired the enactment of legislation in Canada, New Zealand and Australia.

The UCC covers most basic legal issues in trade including sale contracts, negotiable instruments, letter of credit, bills of lading, title documents to goods, security and the transfer of funds

The UCC is divided into articles, as follows:

• Article 1: General Provisions (such as definitions and rules of interpretations)
• Article 2: Sales (sales of goods)
• Article 2A: Leases (leases of goods)
• Article 3: Negotiable Instruments (banknotes and drafts)
• Article 4: Bank Deposits
• Article 4A: Funds Transfer (transfer of money between banks)
• Article 5: Letters of Credit
• Article 6: Bulk Transfers and Bulk Sales
• Article 7: Warehouse Receipts, Bills of Lading and other Documents of Title
• Article 8: Investment Securities
• Article 9: Secured Transactions