EXAMple questions 🤰🏾 Flashcards
(27 cards)
Main topic: International Chamber of Commerce (ICC)
Subquestions:
1. What does ICC stand for?
2. Where is the seat of the ICC?
3. Name some of the documents published by the ICC which are of relevance to international trade.
- International Chamber of Commerce
It is a global business organization that helps companies do international trade safely and fairly. - Paris, France
- Incoterms - trade terms that clarify the responsibilities of buyers and sellers
Arbitration - privat judge
UPC 600 - Rules to governing Letters of Credit
URC 522 - method of payment in international trade where banks act as intermediaries to handle the exchange of documents
Does EU law supersede national law?
Yes, EU law supersede national law. EU law takes precedence over conflicting national laws, ensuring that businesses benefit from a harmonized legal environment when operating across EU member states.
Main topic: Transnational Law and its Role in Business Contracts
Subquestions:
1. What is transnational law?
2. Is transnational law used as a basis for international business contracts?
3. What are the advantages and disadvantages of using transnational law for international business contracts?
4. What does UCP 600 stand for?
5. What does the ICC have to do with transnational law?
- It is a privat law, never have seen the inside of the parlement but it can be used as a base of the contract. Transnational law (soft law) refers to non-binding rules and principles used in international trade that aim to create common global standards, even though they aren’t officially.
- Yes. Transnational law is often used to create fair and neutral rules for international business contracts, especially when parties are from different legal systems.
- Advantages:
- Neutral and fair for all parties.
- Widely accepted principles.
- Reduces conflict between different legal systems.
Disadvantages:
- No universal acceptance
- No full-scale legal system
- No significant difference to state law
- Convergence of state law
- No valid choice under state jurisdiction - UCP 600 stands for “Uniform Customs and Practice for Documentary Credits,” version 600. It’s a set of rules published by the ICC for handling letters of credit in international trade.
- The ICC (International Chamber of Commerce) creates rules, like the UCP 600 and Incoterms, that are widely used in transnational law to standardize international business practices.
Main Topic: Types of Law – Mandatory vs. Dispositive
Subquestions:
1. What is mandatory law, what is dispositive law?
2. Why is it important to know the governing law and jurisdiction applicable to a commercial contract?
- Mandatory law = must follow, like laws in a country.
Dispositive law = refers to legal rules that apply only if the parties involved have not made their own agreement. Parties can choose to override or change these rules in a contract. - It is different from different state. It tells you:
- Which country’s laws apply – This affects how the contract is understood and enforced.
- Which court has power – It decides where you go to court if there’s a dispute.
- What your rights and duties are – Different countries may have different rules for things like damages, deadlines, or contract terms.
- How to handle conflicts – It helps avoid confusion or fights over which law or court should be used.
Main Topic: Contract Formation – Legal Traditions
Subquestions:
1. What’s the major difference between common law and civil law in terms of contract formation?
2. What’s the concept of consideration?
3. What are the implications of the requirement of consideration in common law?
- & 2. Have consideration in common law which means each party must give or receive something of value (e.g., money, services, or goods). In civil law systems, this is not a requirement for a contract to be valid.
- Both parties must give something: A contract is only valid if both sides give something of value (like money, goods, or a promise). If only one side benefits, the agreement isn’t enforceable.
- No past actions count: Something already done (past performance) cannot be used as consideration.
- Pre-existing duties don’t count: If someone is already legally required to do something, that can’t be used as consideration for a new contract.
- Impacts contract changes: In common law, you need new consideration even for contract changes or amendments. If only one side benefits from a change, it may not be valid.
- Fairness principle: Consideration ensures fairness—no party gets legal rights without giving something in return
Main Topic: Legal Remedies – Equity & Common Law
Subquestions:
1. What’s another difference between common law and civil law in terms of legal remedies?
2. What are the practical consequences of the equity system with regard to contract design in common law?
- Common law uses equity for fairness – it’s flexible but uncertain.
Civil law uses written rules – it’s stricter but more predictable. - Contracts must be very detailed: To avoid relying on uncertain equity remedies, parties often include specific remedies and terms directly in the contract.
- Less reliance on courts to “fix” unfair outcomes: Since equitable remedies are not guaranteed, businesses try to plan for every possible issue in advance.
- Longer and more complex contracts: Common law contracts tend to be more extensive and self-sufficient compared to civil law contracts
Main Topic: Jurisdiction in Absence of Agreement
Subquestions:
1. Is it wise to make no choice of jurisdiction?
2. What happens if you make no choice of jurisdiction?
3. Where can you more or less reliably predict the outcome?
4. Can you name some major harmonizing legislation in terms of jurisdiction?
- No, it is not wise - Failing to choose a jurisdiction can lead to unpredictable and potentially costly outcomes. Jurisdiction is determined by International Conventions / Supranational laws or national law
- First:
- The case goes to court based on default rules (not your choice).
- Usually, the court in the country where the defendant lives will decide.
- International rules (like Brussels Ia or Lugano Convention) or national laws will apply.
- This can lead to uncertainty and legal risk. - More:
- If the contract includes a clear choice of jurisdiction
- If the chosen country is part of a harmonized legal system
- If the chosen jurisdiction has a strong, reliable legal system
Less:
- No jurisdiction is chosen in the contract
- The country is not part of any major international convention
- Courts apply conflicting national rules - Brussels Ia & Hague Choice of Court Convention
- Hague Choice of Court Convention only
- Lugano Convention
Main Topic: Alternatives to Jurisdiction Clauses
Subquestion:
1. Since a choice of jurisdiction is not always a secure choice: is there an alternative?
Yes, there is Arbitration
Arbitration is a way to solve legal disputes without going to court.
- A neutral person (the arbitrator) is chosen by the parties to hear the case.
- The arbitrator listens to both sides and makes a final decision.
- This decision is called an award and it is legally binding.
Main Topic: Recognition of Foreign Judgments
Subquestion:
1. Can you take the enforceability of judgments in foreign countries for granted?
It depends:
Enforceability of litigation can become problematic if one of the parties is not a part of either the Brussels-1a-regulation, the Lugano convention or the Hauge choice of court convention. A large portion of countries is not a part of these
Enforceability of arbitration on the other hand has become less problematic due to the New York Convention. Which very many countries are a part of.
Main Topic: Cross-Border Enforcement via Arbitration
Subquestions:
1. What’s the advantage of arbitration in terms of international enforcement?
2. Can you name an international agreement dealing with the international enforcement of arbitral awards?
- International Enforcement of arbitration has been made possible through the New York Convention where all parties can collect the arbitration award in a foreign country as long the set country is also a member of the convention.
- New York Convention…. taber
Main Topic: Dispute Resolution Comparison
Subquestion:
1. What are the advantages and disadvantages of arbitration in comparison to litigation?
Compared to litigation, arbitration offers several advantages: parties have the opportunity to select the arbitration panel to ensure competency, proceedings are usually faster and confidential, and awards are broadly enforceable under the New York Convention. However, arbitration can be more expensive, especially in fast-track cases, and the limited or absent right to appeal may be a drawback.
Main Topic: Legal Layers Governing Arbitration
Subquestions:
1. Which different layers of law determine arbitration?
2. Would it be true to say that arbitration is not influenced by national law?
1(valid arbitration agreement) arbitration is determined firstly by the law governing the arbitration agreements, this is the state law. second layer is Lex abitri (framework), which is also determined by state law. this is the minimum standards a state sets for the due process of arbitration.
The third level (arbitration procedures) is where arbitration is left to its own (private) self-regulation. Here the arbitration procedures are determined, of course within the standards set by previously mentioned Lex abitri.
the fourth and final layer is the contractual provisions determined by both parties in contract formation.
- no. Read the text above dummy
Main Topic: Common Law vs. Civil Law
Subquestion:
1. What’s the major difference between civil law and common law in terms of contract formation?
Consideration!
Consideration is part of common law contract formation and dictates that both parties must receive some form of benefit from the contract.
The other four prerequisites that must be fulfilled are:
Offer & acceptance
On essential elements
Intention to be legally bound
— Consideration —
[Formal requirements]
Main Topic: Contract Structure & Terminology
Subquestion:
1. What’s a boilerplate clause?
General framework provisions also known as “Boilerplate clauses” are a set of clauses or elements that remain unchanged from contract to contract. They are usually containing specifically tailored elements and can be spread out throughout the contract as well as gathered.
Main Topic: Anatomy of a Commercial Contract
Subquestion:
1. Please describe the main parts / the main structure of a commercial contract.
Introduction:
- Preamble
- Recitals
Definitions
Primary Operative Provisions:
- Price & Payments
- Delivery
Secondary Operative Provisions
- Liability & Limitations
- Indemnification
- Liquidated Damages
Framework Provisions
- Choice of Law & Jurisdiction
- Assignment
- Merger
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Main Topic: Contract Templates & Drafting Practices
Subquestion:
1. Is it a good idea to use a random model contract from the internet as the basis for your own contract?
nope
Main Topic: Uniformity in Contract Language
Subquestion:
1. What are standardized terms?
Standardized terms are pre-drafted, non-negotiable contract clauses used repeatedly, usually provided by one party. Their purpose is to simplify and speed up contract formation, especially in recurring transactions.
They may cover parts of a contract (like INCOTERMS) or the entire agreement and are often issued by individual companies or industry groups (e.g., ICC). These terms appear in documents like “general terms and conditions” and accompany the negotiated parts of a contract.
While efficient, they can be rigid and potentially unfair, especially when used to exploit weaker parties. For incorporation, it’s enough in many legal systems that the other party had a chance to review them, even if they didn’t actually read them
Main Topic: International Trade Standards
Subquestions:
1. What are INCOTERMS?
2. Who publishes the INCOTERMS?
- INCOTERMS are standardised contractual terms used to define delivery obligations in international contracts. They determine which party bears the costs and risks associated with the transport and delivery of goods.
- They are published by the International Chamber of Commerce (ICC)
Main Topic: Effective Incorporation of T&Cs
Subquestion:
1. If you have set up general terms and conditions for your business – would it be enough to store them at your headquarters for everybody to pick them up, if interested?
No, it would not be enough to simply store your general terms and conditions at your company’s headquarters for others to pick up if interested.
According to the book, standard terms must be clearly referred to in the agreement, and the other party must be given a fair chance to take notice of them. It is not required that the counterparty actually reads or acknowledges the terms, but there must be a possibility of notice. This typically means that the terms must be available and visible at the time of contract formation—especially if parties do not meet in person. Simply having them stored away at your premises would not meet this requirement in most legal systems
Main Topic: Binding Nature of Pre-Contractual Instruments
Subquestion:
1. As a general rule, are Letters of Intent always binding or non-binding for the parties? Please state reasons to support your answer.
No, Letters of Intent are not always binding or non-binding. Whether they are binding depends on their wording and content.
* LOIs are usually signed at the beginning of negotiations and often do not contain definite statements about the future contract.
* However, parts of an LOI can be binding if they include strong language like “shall” or “must,” or if the duties are mutual.
Main Topic: Consequences of Omitted Governing Law Clause
Subquestion:
1. Please describe the legal consequences if the contracting parties have failed to incorporate a Choice of Law clause in their contract.
If the parties do not choose a governing law, the applicable law is determined by default rules under international conventions or national law. This can lead to uncertainty and unexpected results.
Conventions:
- Rome 1 regulation
- Brussels 1a regulation
- Lugano Convention
- Hauge choice of court convention
Main Topic: Templates in Contract Drafting
Subquestion:
1. Please describe the advantages and disadvantages of the use of model contracts and terms in the process of contract drafting.
Advantages:
- Save time and legal costs
- Provide reliable, standard terms
- Ensure consistency and reduce errors
- Trusted by industries (e.g. ICC, FIDIC)
- Help manage legal risks
Disadvantages:
- Must be customized to fit each deal
- May be outdated or biased
- Can give false sense of security
- Not always valid in every country
Main Topic: Common Law vs. Civil Law Contract Design
Subquestions:
1. Please describe the typical differences of international commercial contracts drafted to suit common law legal systems on the one hand and civil law legal systems on the other hand.
2. Do you agree or disagree with the following statement? Please state your reasons:
“Forum selection is totally overestimated. In the end, judges and courts in common law and in civil law systems follow the same rules of interpretation. It does not really matter whether your case is tried by a common law judge in London or by a civil law judge in Paris.”
- Common law contracts are:
- Long, detailed, and self-sufficient.
- Based heavily on written terms only.
- Do not require fairness; no duty of good faith.
- Use strict rules of interpretation (e.g. “four corners” rule).
Civil law contracts are:
- Shorter and more reliant on codified rules.
- Consider context and fairness.
- Allow external evidence and broader interpretation.
- Assume good faith and balance as standard - Disagree.
Reason: Courts in different systems interpret contracts differently.
- Common law judges stick closely to written text and limit external input.
- Civil law judges consider surrounding context, fairness, and intent.
So, the choice of forum can lead to different outcomes even with the same contract
Main Topic: Operative Clauses
Subquestion:
1. Please draft a payment clause, representing the interests of the buyer, for an international commercial sales contract that you would consider effective. Give reasons and explain the steps of drafting.
Buyer shall make payment within 60 days after receipt and approval of goods and corresponding invoice. All payments shall be made in [currency] by wire transfer to the Seller’s designated account. Buyer reserves the right to withhold payment if goods do not conform to the contract. No advance payment shall be required. Late payment interest shall be limited to 2% annually.
1. Set payment timing after delivery
→ Protects buyer by ensuring goods are received and inspected before paying.
2. Define payment method clearly
→ Use bank transfer to ensure traceability and speed.
3. Include currency clause
→ Prevents exchange rate disputes.
4. Add non-conformity protection
→ Allows withholding if goods don’t match specifications.
5. Avoid advance payments
→ Shifts risk of performance to the seller.
6. Cap late payment interest
→ Avoids excessive penalties for minor delays.
