The Pitfalls of Drafting International Commercial Contracts 1

International Commercial Contracts: Tips to Avoid Common Pitfalls

All cross-border commercial transactions can be risky. Each party to an international commercial
contract wants to minimize its risk exposures to the lowest extent possible and maximize the benefits.
Allocating and controlling risk is crucial for getting the best deals possible. This article outlines the
common pitfalls in cross-border commercial contracts that people generally do not recognize them
until the dispute actually arises, but when it arises it is very cumbersome and time-consuming and
even more lamentable when you realize that you could have avoided them, if necessary precautions
were taken at the outset. This paper aims to provide a general guidance about commercial contractual
risk issues that can help you mitigate such risk by drafting and incorporating appropriate contract
clauses.

The first step, in my view, is to focus on the issue that magnifies all risks: (i.e., Lack of transparency). In
cross-border contracts, there are often extra challenges of linguistic and cultural differences.
Sometimes due to cultural and linguistic implications in international transaction, contract terms are
susceptible to more than one meaning. This situation can be terribly difficult, and it is more likely to
lead to frequent disputes that take unnecessary time and efforts by parties. Sometimes, little or no
transparency may cause misunderstanding, miscommunication and subsequently result in
extra expenses, increased costs and more. 1 Use ‘plain language’2 when drafting contract. Language
clarity and transparency of terms and conditions are the first and foremost practical principle in risk
allocation and allows the parties to have a solid understanding of contract’s parameters and makes
the terms less susceptible to multiple interpretation.

Key Risk Management Provisions:

Although it is difficult to completely eliminate the risks associated with commercial contracting, and
of course, all aspects of a contract and all provision in an agreement can affect contractual risk

1
China Privatization Fund (Del), L.P. vs Galaxy Entertainment Group Limited [2019] (NYSCEF DOC. NO. 617)
<https://cases.justia.com/new-york/other-courts/2019-2019-ny-slip-op-30804-u.pdf?ts=1554412296> retrieved 23
May 2019. I mentioned this case as an example. Sometimes, little or no transparency or the failure to use simple and
plain language costs you and your firm an inordinate amount of time and money, particularly in international contracts,
which are often subject to extra challenges of linguistic and cultural differences. Therefore, always use clear, direct and
straightforward terms and clauses when drafting contract. It should allow the readers to concentrate on the terms and
conditions and on the messages conveyed not on the complexity and difficulty of legal language.
2
Robert Eagleson, The Case for Plain Language, (Canadian Law Information Centre, Toronto, Ontario, 1988). Robert
Eagleson, former Professor of English at the University of Sydney, described plain English as: “Plain language’ is the
opposite of obscure, convoluted, entangled language. It's the opposite of language that takes a lot of effort and energy
to understand and unravel. Plain language should not be equated with ‘simple’ in the sense of simple minded. Nor
should it be equated with ‘simple’ in the sense of ‘childish’ or broken language – a kind of pidgin. Nor should it be
equated with ‘simple’ or ‘simplified’ in the sense of a reduced document that only gives part of the message … Plain
language, on the contrary, makes use of the full resources of the language. It's good, normal language that adults use
every day of the year. It lets the message come through with the greatest of ease. That's the best definition and the
best way we should look at plain language.”

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 The Pitfalls of Drafting International Commercial Contracts 2

management; however, there are certain key clauses commonly used as risk allocation tools that can
reduce the impact of a breach or other misfortune. These include:

➢ Governing Law and Dispute Resolution

➢ Representation and Warranties
➢ Indemnifications
➢ Confidentiality
➢ Force Majeure
➢ Assignment/Subcontracting/Novation
➢ IP Use & Ownership Allocations
➢ Price and Payment
➢ Delivery and Acceptance Criteria
➢ Modifications
➢ Termination Criteria
➢ Termination Procedure
➢ Express Contractual Remedies
➢ Limitation of Liability, and
➢ Term (Period of Performance)
➢ Severance Clause
➢ Entire Agreement Clause

A. GOVERNING LAW & DISPUTE RESOLUTION

The key concern in the drafting of a cross-border commercial contract is the choice of its governing
law and the forum for resolving disputes related to the contract. Pre-selection of forum and a national
law as the governing law of the contract ensure that the designated law is upheld and applied. Note
that choice of law provision is not the same as choice of forum provision. Choice of law provision
determines the national law of a particular country that applies to the contract, whereas jurisdiction
clause or forum clause sets out which country’s courts shall hear the matter and includes arbitral
tribunals or processes.3 In transnational contracts, the forum need not be the same as
the country whose law governs the contract, the parties may choose the law of one country to govern
the contract and select the courts of a different country to resolve the disputes in accordance with the
chosen law.4

When you draft a cross-border contract, consider the inclusion of a choice of law provision and draft
it carefully. It is important to remember that momentous differences may exist between both the
substantive law and the conflict of laws rules of the potential forums.5 Thus, the choice-of-law clauses
should include a clause for exclusion of conflicts of laws rules.

3
George A. Zaphiriou, Choice of Forum and Choice of Law Clauses in International Commercial Agreements, 3 Md. J.
Int'l L. 311 (1978) <https://digitalcommons.law.umaryland.edu/mjil/vol3/iss2/3> retrieved 23 May 2019.
4
Childress, Ramsey & Whytock, Transnational Law and Practice, (Aspen Publishers & Kluwer Law International, 2015)
5
Karen Denise Untiedt, International Contracts under the Conflict of Laws Rules of Great Britain and Japan, 7 Loy. L.A.
Int'l & Comp. L. Rev. 193 (1984) <http://digitalcommons.lmu.edu/ilr/vol7/iss2/2> retrieved 23 May 2019

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 The Pitfalls of Drafting International Commercial Contracts 3

Another situation where the issue of choice of law, choice of forum and dispute resolution arises, is
where a company buys goods and/or services using a Purchase Order (PO) or by email or verbally via
the telephone, and they have not considered how and where to resolve disputes arising from
commercial transaction. For example, a Canadian-based business orders goods from a Dutch-based
business and concludes the transaction by email. If a dispute arises, the Dutch supplier will probably
wish to resolve the dispute with reference to Dutch law in a Dutch court. Whereas, the Canadian-based
business may assert that Canadian law applies, and Canadian courts have jurisdiction. This preliminary
dispute about how and where to settle the substantive dispute, may lengthen the overall process and
increase both parties’ costs.

In such situations, where the parties fail to express a clear choice of law, the rules of private
international law (conflict of laws rules) will bring the contractual dispute under the national law of a
country with which the contract has its ‘closest connection’. In the above-mentioned example, the
probable outcome is that the courts may decide that the contract was formed in the Netherlands, so
the applicable law is Dutch law. But because the goods were due to be delivered to Canada, Canadian
courts have jurisdiction. The probable outcome of this struggle will be undesirable for both parties.

It is important to reiterate that any transnational contract you enter into should include a clearly
drafted choice of law and choice of forum clauses, stating expressly the substantive law and
determining which courts (whether state courts or arbitration courts) are responsible for ruling on any
dispute that ensues. You should furthermore proofread your draft and give it a final edit to make sure
it is error-free. Remember that your choice of law clause may be rendered inapplicable by a mere
typographical error. In Shanghai Dongshen Import & Export Corporation vs The Shanghai Branch of the
Jiangsu Unite Transport Co. and Oceanic Bridge International Inc.6

“the carrier Oceanic Bridge International Inc. (Oceanic Bridge) was a corporation registered in the United
States. On the Bills of Lading it issued, there was a clause that provided: ‘the contract evidenced by or
contained in Bill of Lading shall be governed by the law of the United States of Anerica …’ The defendant
Oceanic Bridge did not appear before the court, and the defendant Shanghai Branch of the Jiangsu Unite
Transport Co. argued that the word ‘Anerica’ actually meant America and thus American law should be
applied, as was stipulated in the bills. The Shanghai Maritime Court held that since that clause was a standard
clause pre-printed in the bills issued by Oceanic Bridge, it should clarify whether the word ‘Anerica’ was in
fact a typographical error. Since the Oceanic Bridge did not appear in the proceedings, this question could
not be determined. The court considered that a choice of law clause in a contract would ultimately determine
parties’ rights and responsibilities and therefore, Oceanic Bridge should be prudent and careful when drafting
this clause so as not to make it ambiguous. Moreover, the court said that the error in the bills would lead to
the holder’s misunderstanding on that clause. Since it was unclear which law the choice of law clause referred
to, and that Oceanic Bridge did not appear to explain this, the court held that the choice of law clause on the
Bills of Lading was not effective and that the parties did not arrive at an agreement on the governing law.
The court then applied the closest connection principle and determined that Chinese law was applicable.”

The aforementioned examples illustrate why, when entering into an international commercial contract
whether in writing or orally, a business should always pay attention to governing law, jurisdiction and
dispute resolution mechanism.

6
Jieying Liang, Party Autonomy in Contractual Choice of Law in China, (Cambridge University Press, 2018), P.84

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 The Pitfalls of Drafting International Commercial Contracts 4

B. REPRESENTATIONS & WARRANTIES

Contract law is not only concerned with ensuring that the parties receive the expected financial and
economic benefits associated with the contract but to ensure that the parties comply fully with their
respective obligations. Representations and warranties are a fundamental part of every commercial
contract and their primary purpose is to disclose all relevant ‘material’ facts and serve as the basis for
an indemnification claim in the event of any breach or inaccuracy of reps & warrants.

We cannot draft representations and warranties (hereinafter reps & warrants) clauses without
understanding the legal differences and effects between the two. Representation is defined by Black's
Law Dictionary as “a statement made by one of two contracting parties to the other, before or at the
time of making the contract, in regard to some fact, circumstance, or state of facts pertinent to the
contract, which is influential in bringing about the agreement”, while warranty is defined as “An
undertaking or stipulation, in writing, or verbally, that a certain fact in relation to the subject of a
contract is or shall be as it is stated or promised to be.” See also Ready-Mix Concrete Co. vs L&L
Construction, Inc.7, and Sycamore Bidco Limited v Breslin & Anor.8

It is important to note that there are certain fundamental differences between reps & warrants

The key differences between representations and warranties are briefly explained as follows

Representation Warranty

Representation is an assertion or statement of fact Warranty is a promise that the assertion of fact is
given by one party (seller) to induce another party true.
(buyer) to enter into contract.

Representation may be written or oral. Warranty is always written on the face of the
contract.

Upon a false representation (or misrepresentation), But in case of breach of warranty the injured party
the injured party may elect to terminate the will only have the right to claim compensation,
contract and/or claim compensation. under contract law.

Representations are generally made prior to a Whereas warranties are terms of the contract, and
contract being entered or at the time of closing. hence they cover existing and future statements.
Thus, they cover past and existing statements.

Representation is usually only a collateral Warranties are also not the main purpose of the
inducement. contract. But they are generally provided in sales
agreements to give you extra confidence to enter
into the contract. For example, a warranty for the
replacement or free repair of a machinery. You are
paying €50,000 to buy the machinery not to get the
promise of a free repair.

7
Ready Mix Concrete Company, Inc. vs L & L Construction, Inc. [508 S.E.2d 722 (1998)]
<https://law.justia.com/cases/georgia/court-of-appeals/1998/a98a1549-0.html> retrieved 24 May 2019
8
Sycamore Bidco Limited vs Sean Breslin & Andrew Dawson. [2012] EWHC 3443 (Ch)
<http://www.bailii.org/ew/cases/EWHC/Ch/2012/3443.html#para444> retrieved 24 May 2019

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 The Pitfalls of Drafting International Commercial Contracts 5

The question now is: what do each of these provisions achieve for the supplier and purchaser?

Each of these provisions is structured to achieve a specific purpose for the purchaser/buyer and
supplier/seller and to allocate risk or provide a right or remedy to one of the parties to the commercial
contract.

As a basic premise, a typical seller attempts to avoid making any reps or warrants, and will prefer to
sell the property and/or product “as is” and without warranty. The broader the reps or warrants are,
the more risk is assumed by seller. If the seller is given the opportunity to draft the contract, the seller
will often make no, or try to narrow his risk by limiting the scope, breadth, and number of reps &
warrants.9 Seller will further make an attempt to minimize the survival of reps & warrants provisions.10
In complex commercial transactions, seller may also Include anti-sandbagging provisions.11 Moreover,
no seller wants to remedy the buyer when the buyer discovers problem after the closing date; specially
when the seller did not know about it at the time of closing or he did not cause the defect.

A sophisticated buyer on the other hand, seek a fully warranted and represented transaction to gain
sufficient confidence and comfort, regarding the absence of negative circumstances, for example, by
incorporating some price adjustment if representations are not true and a clause entitling him/her to
claim damages for any loss resulting from the breach or inaccuracy of reps and warrants. From Buyer’s
perspective, the main purpose of reps & warrants is to cause the seller to reveal any potential issue
that may impact buyer’s willingness to enter into contract.

Regardless of who prepares the contract, the seller must read and review representations and
warranties provisions carefully and understands the consequences of representations and warranties
being false.

In sum, the process of negotiating the detailed wording of representations and warranties is the
process of allocating risks between the parties. Transaction-specific reps and warrants relate to the
type, nature and conditions of goods and/or assets. The parties, particularly seller, must understand
what is requested and try to ensure that all of the reps & warrants are accurate and can in fact be
given, and then will have to provide those reps & warrants, and confirm they are true and correct at
the time of Closing. The buyer generally would make it conditional upon the seller’s representations
and warranties being correct, by expressly stating that the buyer can elect not to complete the
purchase if that is not the case.

9
Dr. Billie Ellis and Dr. Douglas A. Yeager, Practical Implication of a Seller’s Representations and Warranties in a Highly
Competitive Commercial Real Estate Transaction, American College of Real Estate Lawyers (2006).
10
Ibid
11
A typical anti-sandbagging provision may state: “The Purchaser acknowledges that it has had the opportunity to
conduct due diligence and investigation with respect to the Company, and in no event shall the Seller have any liability
to the Purchaser with respect to a breach of representation, warranty or covenant under this Agreement to the extent
that the Purchaser knew of such breach as of the Closing Date”
Daniel Avery, Goulston & Storrs, Daniel H. Weintraub, Audax Group, Trends in M&A Provisions: Sandbagging and Anti-
Sandbagging Provisions, BLOOMBERG Law Reports - MERGERS & ACQUISITIONS (2011)
<https://www.goulstonstorrs.com/content/uploads/publications/trends-in-ma-provisions-sandbagging-and-anti-
sandbagging-provisions-mergers-acquisitions-law-report-a8c734b0d33032b93f521aeb12f27d0f.pdf> retrieved 25
May 2019

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 The Pitfalls of Drafting International Commercial Contracts 6

C. INDEMNITIES
Indemnities are commonly used in modern commercial contracts, in order to shift risks and expenses
from one contractual party to another. "Indemnity Clause" is described by Black's Law 837 (9th ed.
2009) as “[a] contractual provision in which one party agrees to answer for any specified or unspecified
liability or harm that the other party might incur.” – “Also termed hold-harmless clause; save-harmless
clause”.12

When you as a party to the contract indemnify another party, you accept the liabilities related to a
specific product and/or service. For example, you are a custom-machines builder and you agree to
indemnify your customers against intellectual property claims related to the custom-made machines
you are designing or building for them. After the machinery is installed in the customers’ sites, they
get sued by another company for patent infringement, trademark infringement, software issues, or
some other IP related issues. Now, per the indemnity clause, you must cover your customers’ costs
and expenses defending against this intellectual property lawsuit, and you will also be liable for
customer’s damages if they were found liable.

Indemnity (hold-harmless clause) is an important risk allocation tool, which is usually closely tied to
warranties and representations, explained on previous pages. For example, your laptop, like every
other product of technology, is probably warranted to be free of all manufacturing defects. In the
custom-machines example, your contract with the customers may have required you to warrant that
the machinery is new, merchantable, of high quality and free from defects in design, material and
workmanship and clear of all liens, charges, encumbrances and rights of others of any kind whatsoever.
Your breach of that warranty provision would give the customer the right to invoke the indemnity
clause if they were sued by a 3rd party for intellectual property (IP) infringements.

If you are the party giving the indemnity, it is important to read the indemnity clause and the rest of
the contract carefully and to ensure that the language of the contract is clear and definite, and the
words used accurately records the parties’ agreement. Remember, the phrases ‘defending against
claims’, ‘defending against reasonable claims’ and ‘defending against all claims’ are not the same. In
the same way, there is a huge difference between ‘arising from’, ‘in connection with’, ‘arising directly
or indirectly’ and ‘direct’ or ‘reasonably foreseeable loss and damage’. If court determines that the
terms of the contract are clear, the words used in the indemnity and the rest of the contract will be
given their natural and ordinary meaning and the contract will be enforced according to what it clearly
states. 13 Furthermore, limit the coverage of the indemnity by limiting the warranty. To take the
previous example, if you are a custom-machines builder being asked by the customer to warrant that
the machinery does not violate on any 3rd party’s IP rights, with or without your knowledge, you should
reword the clause to state that you will only warrant known infringements, but if the indemnified party
wants a broad indemnification for a wide range of situations, negotiate a higher price in exchange for
it. In addition, always put a cap on the total amount of money you would pay in the event of
indemnification.

12
Garner, Bryan A., & Henry Campbell Black (2009). Black's law dictionary. PP 837-838. 9th ed. St. Paul, MN: West.
13
Roger LeRoy Miller, Business Law Today, Standard: Text & Summarized Cases. 11th ed. (Cengage Learning 2015), P
254

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 The Pitfalls of Drafting International Commercial Contracts 7

D. CONFIDENTIALITY CLAUSES
Why are they so important? Why is it necessary to incorporate these clauses in the agreement?

No one wants his individual or family secrets or his private discussions displayed before the world.
Similarly, no company wants its proprietary information and trade secrets to be known by third parties
or falls into the hands of a competitor or even customer. If competitors get their hands on your
proprietary information, they may use it against you, and your business would undoubtedly suffer
irreparable harm. But when two companies enter into a business collaboration or contract, there will
typically be a significant exchange of information related to a potential transaction between the
parties. In such cases, it is important to include a properly drafted confidentiality clause in your
contract in order to protect information having commercial value or trade secrets that are vital to your
company’s market position. Confidentiality clause preclude both parties from divulging any or all of
information shared throughout the duration of the contract.

There are generally three types of confidentiality or non-disclosure agreements:

1. Unilateral NDA: it is also called a One-Way NDA where only one party agrees to disclose
confidential information to the other and requires that the information be protected.
2. Bilateral NDA: it is also called Two-Way or mutual NDA where both parties agree to disclose
confidential information, and so, both want confidentiality assurance from the other.
3. Multilateral NDA: It involves three or more parties where at least one of the parties discloses
information to the other parties that they wish to keep private.

Regardless of which type of the confidentiality agreement you use, and irrespective of whether you
use a separate NDA agreement or just a confidentiality clause in conjunction with the other agreement,
it is important to consider possible pitfalls surrounding NDAs. Below are the most common errors, if
not avoided, may make your NDA unenforceable.

• Broad or irrelevant definition of confidentiality: limit confidentiality to information which are

relevant as well as necessary for your business. And ensure that all information that’s
confidential should be marked as ‘CONFIDENTIAL’ and the trade secrets should be marked
differently as ‘TRADE SECRETS’. 14 In Trailer Leasing Co. v. Associates Commercial Corp. 15 a
federal court in Illinois state of United States of America refused to enforce an NDA where the
definition of ‘confidential‘ was considered overly broad.
• Wrong name of the other party.
• Signed by an unauthorized person or by a person with no or insufficient authority to bind.
• Scope too broad (clearly define the scope of what you are disclosing to the other party)
• Not specifying how disputes related to NDA will be resolved (clearly outline the results of a
breach)
• Exceptions (information already known by receiving party or in public domain or independently
developed by the receiving party)

14
Aileene Koh, 11 Mistakes That Could Invalidate Your NDA <https://www.everynda.com/blog/11-ways-invalidate-
nda/> retrieved 25 May 2019
15
Trailer Leasing Co. v. Associates Commercial Corp., 1996 WL 392135 at *1 (N.D.Ill. July 10, 1996)

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 The Pitfalls of Drafting International Commercial Contracts 8

E. FORCE MAJEURE CLAUSE

The occurrence of unforeseen circumstances are one of the key issues parties to a contract, particularly
parties to a complex long-term project may encounter. In fact, with globalization and involvement of
more & more countries in production and procurement and strong increase in cross-border trade these
problems has also been increased. 16 Act of God or changes in political & economic factors may
materially affect the overall performance of a contract. For example, if a tsunami, a flood or an
earthquake strikes, or a civil war rages in one of the manufacturing or source countries, or any other
unexpected event outside of a party’s control occurs, may make the performance unduly burdensome
and render him/her incapable of carrying out contractual duties.

Whether international or domestic, Force Majeure clause plays a vital role in protecting the contracting
parties.17 The main purpose of this clause is to exempt one or both of the parties from their contractual
duties, where an unavoidable event intervenes. Force-Majeure Clause is defined as “[a] contractual
provision allocating the risk if performance becomes impossible or impracticable as a result of an event
or effect that the parties could not have anticipated or controlled.”18

A Force Majeure clause is included in almost every commercial contract. Remember, if your agreement
is not containing a Force Majeure clause, and if a Force Majeure event occurs, the other party may
take a legal action against you for breach of contract and requiring you to pay damages, despite the
event being out of your control.

In drafting a force majeure clause in an international commercial contracts, it is therefore, very useful
to know what the UNIDROIT Principles of International Commercial Contracts provide in this regard.

Article 7.1.7 of UNIDROIT Principles of International Commercial Contracts (PICC) states:

(1) Non-performance by a party is excused if that party proves that the non-performance was due to an
impediment beyond its control & that it could not reasonably be expected to have taken the impediment into
account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.
(2) When the impediment is only temporary, the excuse shall have effect for such period as is reasonable
having regard to the effect of the impediment on the performance of the contract.
(3) The party who fails to perform must give notice to the other party of the impediment and its effect on its
ability to perform. If the notice is not received by the other party within a reasonable time after the party
who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting from
such non-receipt.
(4) Nothing in this article prevents a party from exercising a right to terminate the contract or to withhold
performance or request interest on money due.

The so-called force majeure clause lays down a precise procedure that you must follow in the event of
force majeure. If you do not abide by the term thereof or fail to follow the instructions laid down in
the contract, you may be held liable for non-performance.

16
Schwenzer Ingeborg, Force Majeure and Hardship in International Sales Contracts, [2008] VUWLawRw 39; (2008)
39(4) Victoria University of Wellington Law Review 709
17
Marel Katsivela, Contracts: Force Majeure Concept or Force Majeure Clauses? Uniform Law Review, Volume 12,
Issue 1, January 2007, pp 101–119,
18
Garner, B. A., & Black, H. C. (1999). Black's law dictionary. P 657. 7th ed. St. West Group

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 The Pitfalls of Drafting International Commercial Contracts 9

F. ENTIRE AGREEMENT CLAUSE

Many forms of contracts, especially international commercial contracts very commonly include the
‘entire agreement clauses’, which seek to limit the scope of the agreement solely to the terms and
conditions contained in the written contract. They are used to ensure that all prior arrangements,
promises, discussions, negotiations or representations and understandings between the parties are
discharged and have no legal effect.

The entire agreement clause should clearly state that all promises, undertakings and terms, that the
parties have agreed to are sufficiently expressed within the written contract. This may avoid unwanted
expenses and extra-legal costs, if any future claims of unfulfilled obligations or promises are made by
one of the parties to the contract.

We must remember that; the entire agreement clauses are not binding if one of the parties have made
misrepresentations during the contract negotiations. Where a pre-contractual statement proves to be
untrue, the aggrieved party may have a right to terminate the contract, or to claim damages, or both,
regardless of what the agreement states. 19 In some instances, where it can be shown that it was
induced by any intentional false statement to enter into the contract, there may also be criminal
liability for fraud.20

Moreover, a typically drafted entire agreement clause cannot preclude statutory implied terms or the
supplementary function of the reasonableness and fairness (redelijkheid en billijkheid) upheld in civil
law and Dutch law.21 The application of entire agreement clause depends on the rules of interpretation
and gap filling of relevant jurisdiction. After gaps have been identified, the courts may construct terms
into contracts by means of the redelijkheid en billijkheid in the Netherlands and the doctrine of implied
terms in England.22 Under Dutch law an agreement is not only governed by what expressly agreed upon
by parties, but also those which, arise from law, usage (common practice) or the standards of
reasonableness and fairness (redelijkheid en billijkheid).23 In a very recent case of J.N. Hipwell & Son vs
Szurek [2018] EWCA Civ 674,24 the Court of Appeal of England and Wales held that a term should be
implied into a commercial lease agreement requiring the landlord to keep the electrical installations
for the premises safe despite the fact that there was no express term in the commercial lease
agreement requiring the landlord to do so and the lease also contained an ‘entire agreement clause’.

19
Kirsten Massey, James Norris-Jones and Sarah Pollock, Pre-Contractual Statements: When Can They Come Back to
Bite You? CONTRACT DISPUTES PRACTICAL GUIDES ISSUE 3, NOVEMBER 2015.
<https://www.lexology.com/library/detail.aspx?g=b856312a-2424-4e0b-a44b-f5518b139a42> retrieved 26 May
2019
20
Ibid
21
Martha Asio, Gap Filling in Commercial Contracts, (LL.M., University of Amsterdam 2016)
22
Ibid
23
Article 6:248 Dutch Civil Code, Legal effects arising from law, usage or the standards of reasonableness and
fairness: “(i) An agreement not only has the legal effects which parties have agreed upon, but also those which, to
the nature of the agreement, arise from law, usage (common practice) or the standards of reasonableness and
fairness.”
Translation of Dutch Civil Code <http://www.dutchcivillaw.com/civilcodebook066.htm> retrieved 26 May 2019
24
J N Hipwell & Son v Szurek [2018] EWCA Civ 674 <https://www.bailii.org/ew/cases/EWCA/Civ/2018/674.html>
retrieved 27 May 2019

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 The Pitfalls of Drafting International Commercial Contracts 10

CONCLUSION

Whatever type of agreement you are entering into, for the reasons canvassed in this article, it is crucial
to make it sure that the contract is worded clearly, and the terms accurately reflect the parties’
intentions. Although, legal actions to resolve disputes over terms and subject matter of the contract
can be brought, but that is not only cumbersome and time-consuming but waste of money and energy.
To avoid costly litigations, every business needs to ensure that the contracts being signed protect the
business' rights for the future. But practically speaking, the contracting parties focus more on putting
together a good business deal, forgetting the importance of risk allocation tools or they often overlook
or misjudge the provisions’ complexity and impacts. The good thing is that you can avoid risks by
incorporating appropriate contract clauses and that is why we need to avoid the temptation to draft
these clauses by cutting and pasting from other contracts. Albeit, many contracts look very similar, but
the language of the clauses differ and even a few words can drastically change the rights of the
contract. It is therefore important to always consult a contract lawyer before signing a contract,
particularly in case of complex international commercial contracts.

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