Final provisions of B2B contracts in the international trade - why should you start reading the contract from them?

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.

Why is it like that?

The most important provisions of B2B contracts in the international trade are often found at the end of the contract. When receiving a B2B contract with a foreign contractor, it is worth looking at the final part of the contract first. The fact that certain provisions of the contract concluded with a foreign contractor are included in this part does not mean that they are the least important. On the contrary, they often have a decisive influence on the content of the entire contract and the future cooperation of the parties.

Very often in the final provisions we can find information about:

1. the jurisdiction of the court;
2. applicable law;
3. arbitration clause;
4. the language appropriate for the interpretation of the provisions of the contract;
5. the possibility of transferring rights and obligations under the contract to third parties;
6. the binding force of the parties’ prior arrangements;
7. the rules for making possible changes to the contract, including the form in which it can be made.

Most of them are decisive, or at least very important, for the content of the mutual obligations of the parties. Why is it like that? Let’s take a look at the individual provisions listed above.

One of the most important provisions of a contract concluded with a foreign contractor is the regulation connected with the jurisdiction of the court. It happens that the issue is indicated as a separate contractual provision, but many times it is simply one of the final provisions of the concluded contract.

Jurisdiction of a court determines the ability of the courts of a particular country to hear a case. This provision will therefore answer the question of where a possible dispute with a foreign contractor will take place – whether it will take place in Poland or in another country. Although at the beginning of cooperation with a foreign business partner we do not think about disputes, but about cooperation, it is worth at least being aware of the jurisdiction of the court if the dispute does occur.

Provisions concerning the applicable law may also be regulated as a separate contractual unit, but, as in the case of jurisdiction, they are most often found in the final provisions. This clause will specify which law will apply to the concluded contract. It is of great importance, e.g. for issues that have not been regulated in the contract, as well as the effects of non-performance or improper performance of the parties’ obligations. If the law of the country of the foreign contractor is indicated as the applicable law, it may happen that the law applicable to the contract will be completely unknown, and the resulting consequences will be difficult to clearly define when concluding the contract.

An arbitration clause is nothing but an agreement to submit a potential dispute arising from a contract to a chosen private court of settlement. In international relations, parties often choose an international arbitration court to resolve disputes, allowing for a faster resolution process and access to specialized arbitrators. The main effects of including an arbitration clause in a contract are granting the chosen court jurisdiction to resolve legal disputes between the parties and excluding the jurisdiction of the general court to decide such disputes.

B2B contracts in the international trade are very often concluded only in the language adopted for communication between the parties and their business relations. Most often it is English. It happens, however, that the contract is drawn up in two language versions (e.g. Polish and English). Then it is advisable to include a provision in the contract that answers the question of which language version will be applicable in case of any interpretation doubts. It is also worth ensuring a reliable translation of the arrangements adopted by the parties.

The final provisions also often contain provisions indicating whether the parties allow the possibility of transferring rights and obligations under the contract to third parties. The parties may be interested in having only specific entities as their counterparties. The above may result from their reputation, scope of activity or position on the market. Thus, if we do not want our contractor to introduce another entity in its place, it is worth regulating the above in the content of the concluded contract.

Before a contract is concluded, it often happens that they exchange a number of messages containing various types of arrangements, or undertake negotiations regarding the scope of mutual obligations. When a contract is concluded at a later stage, the final provisions often include a provision indicating the binding force of any previous arrangements, agreements or understandings concluded between the parties. Most often, the parties waive such arrangements in order to avoid any doubts as to the scope of mutual obligations of the parties and to clearly state that they result only from the contract that is being concluded between the parties.

The final part of the contract is also the right place to determine in what form the contract concluded between the parties can be changed. Most often, the parties reserve the obligation to maintain a written form in this respect. Keeping in mind that maintaining relations with a foreign contractor, but also with a domestic one, is often accompanied by the exchange of a number of e-mails or messages sent in a different way agreed between the parties, this provision has an important practical dimension.

In conclusion, when reviewing a contract presented for signature or drafting a new contract to be concluded with a foreign contractor, it is advisable to begin by identifying the commonly found issues that are typically included in the final provisions of the contract. In practice, these final provisions may prove to be the most significant aspects of the contract.

Joanna Lubecka
attorney