UNIT 4 International contracting:

regulations and uses.

1.- The international sale and purchase.

First of all, let's define an international sale and purchase.

It is a commercial transaction between a person who lives in a certain place
and another who does not, that is, between a resident and a non-resident,
whereby one of the parties, the seller, is obliged to deliver a good or provide
a service, in exchange for the other party, the buyer, giving him money,
which is the national currency, or a representative currency or document,
such as a bill of exchange, cheque, etc.
Who conducts international sales operations?
The most important rule currently governing international sales contracts
is the United Nations Convention on Contracts for the International Sale
of Goods, which was signed in Vienna in 1980.
There are also other conventions that complement its regulation, such as the
Hague Convention and the Rome Convention.

2.- Harmonisation instruments: LEX MERCATUM.

Lex Mercatum comes from the Latin. It was a market law and began to be
used in the Middle Ages.
The Lex Mercatum was a set of rules and principles established by the
merchants of medieval Europe themselves in order to regulate their relations.

How did the Lex Mercatum come about?

This law arises from the customs and traditions of European merchants,
customs that were spread homogeneously throughout Europe and that ended
up becoming rules and principles.
The aim of this law was to seek a correspondence between the interests of
buyers and sellers, that is to say, to seek harmony.
After the end of the Second World War, the progress and development of
international trade led to the emergence of the New Lex Mercatum.
The new Lex Mercatum seeks to adapt to new customs and practices, to a
space without transnational borders, and to companies and contracting
parties that are also transnational.
UNIT 4 International contracting:
regulations and uses.
3.- UNIDROIT Principles.
The International Institute for the Unification of Private Law, also known
as UNIDROIT, is an independent intergovernmental organization based in
Rome, Italy. Its objective is to study the needs and methods for modernizing,
harmonizing and coordinating private international law and commercial law,
and to formulate uniform law instruments, principles and rules to achieve
these objectives.
ORIGINS
Set up in 1926 as an auxiliary organ of the League of Nations, the Institute
was, following the demise of the League, re-established in 1940 on the basis
of a multilateral agreement, the UNIDROIT Statute.
The first edition of the UNIDROIT Principles was published in 1994 and the
second edition on International Commercial Contracts appeared ten years
later.

The UNIDROIT Principles represent a step forward in the development of a

new international Lex Mercatum, as an autonomous body of law.

MEMBERSHIP
UNIDROIT has 63 Member States.
Membership of UNIDROIT is restricted to States acceding to
the UNIDROIT Statute. UNIDROIT's 63 member States are drawn from
the five continents and represent a variety of different legal, economic and
political systems as well as different cultural backgrounds.

APPLICATION
These principles establish general rules that can be applied to international
commercial contracts according to certain circumstances.

Do you want to know what those circumstances may be?

The principles may be applied when the parties:
• Have agreed to have their contract governed by them.
• They have not chosen the law applicable to the contract.
• They wish to use them to interpret or supplement international
legal instruments or national law.
• Want to use them as a model for national and international
legislation.
UNIT 4 International contracting:
regulations and uses.
The UNIDROIT Principles are based on
1. Freedom of contract.
2. Freedom of form and evidence.
3. Interpretation and integration.
4. Good Faith and Business Loyalty.
5. Recognition of international customs.

4.- Vienna Convention.

What is the Vienna Convention?

It is the agreement resulting from the Vienna Convention on contracts for the
international sale of goods.
The application of the Convention relates to contracts for the sale of
goods concluded between parties having their headquarters in the
territories of different states, and only in cases of states which signed
and ratified the Convention or when the rules of private international
law refer to the application of the rights of one of the contracting states..

When did this Convention take place and what is its purpose?
The Convention was adopted in 1980 and its purpose is to provide a modern
and uniform regime for contracts of international sale of goods, thereby
assisting legal certainty and commercial exchange.
Why is this convention necessary?
It is necessary to regulate the international contracting of goods because the
contract of sale is the basic principle of international trade regardless of the
legal tradition or development of the countries.
What is this convention for and who is it for?
The CISG applies to contracts between domestic corporations, if their
relevant places of business are in different Contracting States. The CISG
does not apply to contracts to provide services. Generally, it does not apply
to sales of goods bought for personal, family or household use, contracts for
the sale of securities or negotiable instruments, auctions, consumer sales or
sales of aircraft or vessels.

Basic principles

The basic principle of the Vienna Convention is that of good faith. Other
principles on which it is based are:
UNIT 4 International contracting:
regulations and uses.
> autonomy of the will of the parties.
> "reasonableness" of the parties' behaviour.
The gaps in the Convention are filled by trade usages, and by the usages and
practices established by the parties

5.- Rome Convention.

The Rome Convention is a pact signed in Rome in 1980, constituting a treaty

of the European Economic Community, now the European Union, on
contractual obligations.
The purpose of this treaty is to unify the rules setting out the commitments
made by the parties to a contract when it is signed between two different
States.

Do you want to know who this treaty is signed for and what it is for?

For this convention or treaty was signed for the eight member countries that
at that time made up the European Community and what it sought was a
common legal basis on which to rely in situations involving legal disputes
when defining contractual obligations.

The Rome Convention was repealed by Regulation 593/2008 of the

European Parliament and of the Council of 17 June 2008, but it was
undoubtedly a great basis for the harmonisation of the international
legislature on contractual matters.

7.- Unification of law.

Why do you think it is so important to unify international law?

Because it is the way to make trade relations at an international level flow

without conflict, which means not only economic enrichment but also
improved relations between countries.

There are currently several bodies responsible for unifying the law. They are:
UNIT 4 International contracting:
regulations and uses.
ü The Council of Europe, which among others, one of its missions is
to promote democratic stability in Europe by supporting legislative,
constitutional and political reforms.
ü The Hague Conference on Private International Law, whose
mission is to promote the gradual unification of the rules of private
international law by means of negotiations, multilateral treaties and
conventions.
ü The International Institute for the Unification of Private Law,
UNIDROIT, whose function is to seek ways of harmonizing and
coordinating the private law of States and to that end it develops model
laws and sometimes conventions.
ü The International Commission on Civil Status, ICCS.
ü And the United Nations, specifically the United Nations
Commission on International Trade Law (UNCITRAL), which, by
order of the General Assembly, has the task of promoting the
harmonisation and unification of international trade law by drawing
up international conventions, model laws and uniform laws.

9.- ICC Rules on International Contracting.

The International Chamber of Commerce is a business organisation with its

own personality and legal status as an association representing the world's
business interests.
When and where was it constituted?
The ICC was founded in 1919 in Paris where it still has its headquarters.
Its main mission is to act in favour of a system of trade and investment,
providing tools that enable it to achieve general prosperity and peace
between countries through international economic relations.

The rules and usages of the International Chamber of Commerce are not
binding laws, they are binding only when the contracting parties decide to
add them to the clauses of their contracts.

Its mission is to facilitate the delimitation of the obligations and duties of the
contracting parties in international business so that in case of conflict it is
reflected in the contract how they should act.
UNIT 4 International contracting:
regulations and uses.

10.INCOTERMS
What are they?
Incoterms are a set of international rules, governed by the International
Chamber of Commerce, which determine the scope of the commercial
clauses included in the international sales contract.

The main function of Incoterms is to establish global criteria on risk transfer

and cost distribution between seller and buyer in a contract for the
international sale of goods (never of services, i.e., intangibles).

Difference between multimodal and maritime incoterms.

Multimodal Incoterms are international trade terms that can be used by
buyers and sellers to move goods in any type of transport.
Maritime Incoterms are the exclusive international trade terms for
transporting goods by sea or inland waterways.

11.- International Arbitration.

The International Court of Arbitration is one of the instruments that are
created to facilitate one of the objectives of the International Chamber of
Commerce, the resolution of disputes. The International Court of Arbitration
is part of the International Chamber of Commerce.
What are its functions?
They are to ensure that the Arbitration Rules of the International Chamber
of Commerce are applied, to supervise the arbitration process, to appoint the
arbitrators, to decide on the number of arbitrators, to determine the place and
duration of the arbitration, etc.

What is arbitration?
It is a process that is established in order to settle an extrajudicial conflict
between two or more parties.
How is a conflict resolved?
It is resolved with the intervention of a third party, arbitrator or arbitral
tribunal, agreed by the parties, to determine a solution. This solution is called
UNIT 4 International contracting:
regulations and uses.

the Arbitral Award and it has the value of a judicial sentence.

12.- New normative instruments to promote the harmonization and

unification of private international law.

First, on 2 July 2019, the 22nd Hague Conference on Private International

Law ended with the adoption of the Hague Convention on the Recognition
and Enforcement of Foreign Judgments. Like other texts on this subject, this
international treaty seeks to facilitate the recognition and enforcement of
foreign judgments in civil and commercial matters by unifying criteria and
eliminating the "exequatur" procedure, based on the principle of "free
movement" and mutual recognition of judgments without review or
duplication of procedures.

• The material scope of that Convention is solely and exclusively the

recognition and enforcement of foreign judgments whose substance
relates to civil and commercial matters between Contracting States.
• Judicial decisions relating to tax, customs or administrative matters
are therefore outside its framework.
• Together with Spain, 68 other countries have signed the Final Act of
this Convention. We highlight the signature of the Convention by the
United States of America and Canada, States that have traditionally
been very reluctant to sign international treaties in this area to
safeguard their commercial interests.

Secondly, on 7 August, Resolution No. 73/198, designed by the United

Nations Commission on International Trade Law and adopted by the General
Assembly on 20 December 2018, on international settlement agreements
resulting from mediation, known as the "Singapore Convention", was
opened for signature in Singapore. This instrument sets out the rules for the
enforcement and recognition of settlement agreements resulting from
mediation.
UNIT 4 International contracting:
regulations and uses.
In conclusion:
In today's globalized and interconnected world, the need to achieve these
objectives is evident. The parties to a dispute, once they have managed to
overcome the conflict of which courts to turn to and which law to apply, are
faced with a new problem: whether the judgment they will obtain can be
enforced in practice, whether they will have to duplicate procedures, and
what price and time they will have to invest in it; and the same is applicable
to mediation.

Taking into account all the above, we can conclude that no other normative
instrument with the same potential has existed until today. These
Conventions have been designed to become essential tools in the facilitation
of international trade and in access to justice and the rule of law.

Concept Map: unit 4

• INTERNATIONAL CONTRACTING
o uses the Instruments of Harmonisation
§ like Lex Mercatum
§ as Model law
§ the Unidroit Principles
§ The Rules of International Chamber of Commerce
o has International Agreements
§ with the existence of Viena Convention
§ as the now derogated Rome Convention
o Thanks to the ICC, it has the Incoterms
§ Can be Multimodales
§ are
§ EXW
§ CPT
§ CIP
§ DDP
§ FCA
§ DPU
§ DAP
§ Can be Maritims
§ are
§ FOB
§ CIF
§ CFR
§ FAS
o Can resolve contractual disputes with International Arbitration.