REGISTRO DOI: 10.69849/revistaft/fa10202505182317
Rafaella Stradella
ABSTRACT
In an increasingly globalized economy, international contracts have become essential instruments for regulating complex cross-border transactions. This article offers a comprehensive analysis of key elements that contribute to the effectiveness of international contracts, with a focus on legal clarity, risk allocation, and dispute resolution. It examines how global events such as the COVID-19 pandemic have challenged traditional contract frameworks and intensified the relevance of force majeure clauses. The discussion explores the application of Article 79 of the CISG in pandemic-related scenarios and highlights the limitations of relying solely on general international principles without detailed contractual safeguards. Additionally, the article analyzes the strategic importance of choosing appropriate governing law and jurisdiction, the influence of cultural differences in international negotiations, and the value of standardized model contracts developed by institutions such as UNIDROIT and the International Trade Centre. Supported by real academic references and practical case insights, this work aims to provide legal professionals and business actors with guidance on how to draft robust, enforceable, and culturally sensitive international agreements that can withstand both predictable and unforeseen challenges in international commerce.
Keywords: International contracts, Force majeure, CISG, Governing law, Cross-border negotiations.
In the era of globalization, international contracts are fundamental instruments that govern cross-border commercial relationships. They delineate the rights, obligations, and remedies of parties from different jurisdictions, aiming to mitigate legal uncertainties and foster economic cooperation. However, the complexity of these contracts often arises from the interplay of diverse legal systems, cultural expectations, and commercial practices. Therefore, drafting effective international contracts necessitates not only legal precision but also a profound understanding of transnational business environments and dispute resolution mechanisms.
The flowchart outlines the logical structure of the article on international contracts, beginning with the importance of such agreements in a globalized economy. It then emphasizes the need for legal clarity and risk management, particularly in light of global events like the COVID-19 pandemic, which highlighted the value of well-drafted force majeure clauses. The article examines the application of Article 79 of the CISG, noting its limitations and advocating for more specific contractual provisions. It also underscores the importance of selecting appropriate governing law and jurisdiction, the impact of cultural differences on negotiations, and the use of international model contracts as effective tools for standardization and risk reduction—especially for small and medium-sized enterprises.
Figure 1. Logical Structure of the Article: Key Elements in Drafting Effective International Contracts.
Source: Created by author.
The COVID-19 pandemic has underscored the critical importance of well-drafted force majeure clauses in international contracts. Force majeure, a concept derived from French civil law, refers to unforeseeable and unavoidable events that prevent parties from fulfilling their contractual obligations. The pandemic’s global impact led to numerous disputes over whether COVID-19 qualifies as a force majeure event. According to Kiraz and Üstün (2020), arbitral tribunals have examined COVID-19-related force majeure claims by assessing whether the pandemic constituted an impediment beyond the control of the parties, was unforeseeable at the time of contract formation, and whether its effects could not have been avoided or overcome. The International Chamber of Commerce’s updated Force Majeure Clause (2020) explicitly includes epidemics and pandemics, providing clearer contractual guidance.
In the context of the United Nations Convention on Contracts for the International Sale of Goods (CISG), Article 79 addresses exemptions from liability due to impediments beyond a party’s control. However, applying Article 79 to COVID-19-related disruptions has proven challenging. As So, Sooksripaisarnkit, and Garimella (2021) argue, while Article 79 provides a framework for force majeure, its practical application during the pandemic is limited. They suggest that parties are better protected by explicitly including tailored force majeure and hardship clauses rather than relying solely on the CISG’s general provisions.
The pandemic also highlighted the importance of clear and specific language in force majeure clauses. Obeid and Khalifeh (2020) emphasize that the effectiveness of such clauses depends heavily on their precise wording and the explicit inclusion of events like pandemics. In the absence of such specificity, parties may face significant challenges in invoking force majeure defenses, leading to prolonged legal disputes and commercial uncertainty.
Moreover, the pandemic’s disruption of supply chains and contractual performance obligations raised broader questions about risk allocation in international agreements. Januarita and Sumiyati (2021) argue that legal risk management must anticipate such contingencies through detailed and proactive contractual planning. Their study illustrates that comprehensive contractual clauses addressing pandemics can significantly reduce interpretive disputes and economic losses in the event of force majeure.
In conclusion, the COVID-19 pandemic has reinforced the necessity of meticulous drafting in international contracts, especially regarding force majeure provisions. Parties must ensure that their agreements contain clear, specific, and comprehensive clauses addressing foreseeable and unforeseeable global events, including health crises. By doing so, they can better navigate the complexities of cross-border commercial relations and safeguard their interests amid global disruptions.
Another essential element in the drafting of international contracts is the careful selection of governing law and jurisdiction clauses. When parties fail to specify the applicable legal regime, disputes often become entangled in complex conflict-of-law issues. As observed by Born (2021), parties can avoid significant legal uncertainty and litigation costs by expressly designating a neutral and predictable jurisdiction, such as arbitration under the rules of institutions like the ICC or LCIA. Moreover, the law chosen must align with the commercial practices of the parties and the nature of the transaction. This strategic legal planning allows parties to foresee the potential outcomes of disputes and encourages legal uniformity across jurisdictions.
In addition to legal clarity, cultural sensitivity plays a crucial role in the successful negotiation and implementation of international agreements. Differences in negotiation styles, concepts of contractual obligation, and communication expectations can lead to misunderstandings or even contract failure. Salacuse (1998) highlights that Western legal traditions often emphasize written obligations and litigation, while Asian and Middle Eastern counterparts may rely more heavily on relational contracting and informal enforcement mechanisms. Effective international contract management therefore requires intercultural competence and the ability to integrate both legal and relational dimensions of agreement-making.
Furthermore, the use of standard international contract models, such as those developed by the International Trade Centre (ITC) and UNIDROIT, has proven instrumental in reducing drafting errors and harmonizing contractual practices. These model contracts offer structured templates that incorporate international best practices, including dispute resolution, force majeure, and payment clauses. As noted by Fontaine and De Ly (2009), such models serve as valuable tools particularly for small and medium-sized enterprises (SMEs) lacking access to specialized legal counsel. Their adoption promotes contractual efficiency and minimizes legal risks in cross-border commerce.
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