6 Articles We Need To Consider While Preparing International Commercial Contracts

While conducting international business, each sector may have their own type of contracts to use. Or you may be facing a standard contract imposed on you by your foreign trade partner. However, there are certain contractual articles that each contractor must carefurlly consider.

In this article, I will briefly talk about the long and complex items of foreign trade contracts which usually trade professionals do not like or are not interested in. This items are required part of the contract, which are different from items such as price, payment, delivery, description of goods etc.

1-)Confidentiality (Gizlilik)

Sometimes your business relationship may involve exchanging important information about your business. Especially in terms of financial and product / service issues, the risk of getting your financial secrets into the hands of your rivals may leave you in a very difficult situation. In order to eliminate this risk, it is necessary to prepare a contract article which is prepared considering the benefits of the parties and taking into consideration the confidentiality of the information.

2-)Force Majeure (MücbirSebep)

There may be circumstances outside the control of the contracting parties. For instance, in a contract you have made by sea, natural disaster, earthquake, typhoon, terrorist attack may cause unexpected changes in the cruise calendar. So, in this kind of events rights and obligations of the parties should be regulated in the article of the contract. In particular, if the party based on the force majeure clause does not fulfill obligations of the contract, it is not considered as a violation of the contract and therefore no liability for compensation is created.

3-)Reasons for Termination (Fesih Nedenleri)

In commercial life not everything goes as planned. In order to manage this risk, the parties provide some flexibility with their termination clauses. In such cases, the parties are expected to clearly set out in which situations the contract will be terminated. For example, in a distributorship agreement, in case the ownership changes the one giving distributorship may hold the right to terminate the contract.

4-)Applicable Law (Uygulanacak Hukuk)

The most important feature of the International Commercial Contracts is the rights and obligations to the issues regulated by the legal systems of more than one country. If this situation is not well established during the preparation of the contract, unclear or unexpected legal consequences may arise, especially, in terms of the performance of the parties and the termination of the contract. In this context, it is important to specify which law to apply in matters which are not necessarily determined by the contract.

5-)Dispute Resolution (Uyuşmazlıkların Çözümü)

Even in a well-prepared contract, there is always a risk of future conflict. Therefore, it is of great importance to establish a mechanism for how to resolve disputes before issues arise. In the new generation international commercial contracts, arbitration and mediation requirements are established which provide quick and inexpensive solution for commercial disputes.

6-)Damages (Zararlar)

It is a standard practice in commercial contracts to place a contract article on the losses incurred according to the frequency and the size of the contract violations. In most of the contracts there is a determined fixed price, i.e. lump sum compensation, previously agreed against violations of the contract. It should be noted that the amount of the compensation that violated the equity according to the law to be applied to the contract, may be considered invalid by the court or arbitration committees.

In our studies, we found that there are more than 300 types of articals in the international commercial contract. I wanted to write the most eye-catching items above. I suggest you to consult with your legal counsel if you face a confusing matter or you are unsure about any matter in your contracts.