Adam concluded the sale agreement of 1,000,000.00 calendars and undertook to send the ordered goods to Spain. The products were to be delivered within the time specified in the contract. The contract with the buyer had a written form. In the agreement the parties regulated mutual rights and obligations, including contractual penalties for late delivery of the ordered goods. In the final provisions of the agreement, the parties indicated that the provisions of Spanish law will apply to any claims arising from the concluded agreement in the field of contractual penalties. The parties also gave jurisdiction to the courts in Spain.
Unfortunately, Adam was unable to deliver the ordered calendars to the buyer, which is why he withdrew from the contract. The buyer called on him to return the advance payment made to him in the amount of half the price of the ordered goods. Adam did not return the amount paid to him within the time limit set for this purpose, due to which the buyer brought the case to court. The Spanish court determined that the provisions of Spanish law would apply to the case. Adam questioned the above, pointing out that the applicable law in the case should be Polish law.
According to given information, the parties concluded a sales contract, in which they specified that Spanish law would govern any claims related to contractual penalties arising from the agreement. However, they did not specify which law would apply to other types of claims arising from the contract. Thus, in order to determine the law applicable to the assessment of other claims, the parties should apply the provisions of the Regulation of the European Parliament and of the Council (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I). According to the provision of Art. 4 sec. 1 lit. a) the above mentioned legal regulation in the scope in which the law applicable to the contract has not been chosen, the sale contract of goods shall be governed by the law of the country in which the seller has his habitual residence.
The above indicates that Polish law will be the applicable law in the discussed factual situation. This is because Adam has his habitual residence in Poland.
Adam is right in this case.
Joanna Lubecka
attorney
However, when there is a dispute in the court, the basic practical difficulty leads to answering the question - where will such a dispute take place. In the contractor country or abroad? Can it be secured somehow?
One of the most important points that needs to be clarified in a B2B contract concluded with a foreign contractor are the terms of payment of the agreed remuneration. Payment after delivery of the subject of the contract or prepayment? And if so, what should be its amount? Which solution to choose? Read below.
Regardless of the form in which the agreement with a foreign partner is concluded, it is important that the parties agree on the most crucial elements of the contract. Incorporating these clauses will enable the parties to execute the contract in a transparent manner, without any ambiguity or uncertainties.
When force majeure events occur in international trade contracts, significant problems may arise in the process of its performance. However, including appropriate clauses in the contract that address such issues can help to manage the situation in a controlled and orderly manner.
As it is for the pandemic the world is slowly returning to normality, and there is much less talking about coronavirus cases, many entrepreneurs still feel the severe effects caused by the pandemic, including: disruptions in supply chains, lack of availability of materials or lack of components.
Case study. Check what Adam forgot when negotiating a contract with a foreign contractor
Although the indicated issues should be clearly regulated in each contract on the basis of which the guarantee is granted, in the case of foreign deliveries they are particularly important.
Below you will find some useful information on how to negotiate contracts concluded with a foreign business partner.
The purpose of the NDA is to secure the confidential nature of information that is provided to the other party in connection with the commencement of negotiations, determining the terms of possible cooperation between the parties, the concluded contract, cooperation or employment.
The standard practice is to start reading each document from the beginning. In the case of B2B contracts concluded with a foreign contractor, it is worth reversing this order.