Most Common International Commercial Law Issues – Explained

In today’s globalised economy, cross-border trade is in its peak levels. An overwhelming amount of goods is constantly travelling throughout the world in this very minute. While this practice creates billions of pounds of revenue every day, it also provides a lot of work for lawyers. International commercial law involves numerous transactions, which lead to conflicts and disputes. The main problems arise out of the fact that different countries have different laws; therefore the legal practices and interpretation of obligations vary drastically from state to state. In this article, we have analysed the most common international commercial law issues.

Pre-contractual liability

What happens if you start negotiations with another business and suddenly decide to pull out? Would that create any legal obligations for the parties arising out of the negotiations? Laws of different countries differ as to liability incurred in pre-contractual conversations. It is a common instance that parties come from different jurisdictions, so each of them may be compliant under its own laws; however it is to be decided what happens in the event that these positions clash. This leads us to the next issue – applicable law.

Applicable law

Parties to an international commercial transaction usually agree in the contract on what law will be applicable to it. However, in the case that parties have not expressed previously their desire as to the governing law, its determination may become a hassle. In the EU,  harmonised rules as to conflict of law rules apply, but this is not the case in the other jurisdictions, which apply different approaches. So which law will govern your contract? A big issue in international commercial law is how to establish this crucial issue.

Oral agreements – Are they valid?

In some countries, oral agreements are perfectly enforceable, such as the UK. In others however, such an agreement, will have no value and cannot be relied upon. Imagine the situation where two businessmen from different jurisdictions discuss commercial issues while having dinner. One of them comes from a country where oral agreements are recognised, while the other does not. They both leave at  the end of the night with one of them believing he has concluded a valid contract while the other thinks it was a good chat and may discuss the matter further on paper. Which one is right and which one is wrong? The answer to this question is related to the previous point we made regarding the applicable law. Nevertheless, international commercial transactions pose big issues with regards to law.

Which court is competent to decide a dispute?

Another issue that is common in international commercial law contracts is which court is competent to hear the case in the event of a dispute. If the parties have not agreed to a forum in their initial agreement, the issue will need to be solved on the basis of conflict of law rules. Similar to applicable law, the EU has enacted uniform rules as to the determination of the competent court. Outside the EU however, the procedure is not clear and each state applied its own conflict of law rules.

Conformity of goods

The most common reason for a dispute between commercial entities is a claim from one party due to nonconforming goods. In commercial transactions, it is a common issue that the buyer will not be satisfied with the quality of the goods and will contest their conformity compared to the description agreed in the contract. Since in commercial transactions the volumes and value of goods are usually quite big, even a small difference in the quality of the goods and their fitness may trigger dissatisfaction and therefore claim from the Buyer.

Payment

Payment of the agreed price is another issue that quite often arises in commercial contracts. Either partial payment or non-payment are serious breaches of the contractual obligations of the parties; so they inevitably lead to legal claims from the dissatisfied party.

Conclusion

Commercial transactions involve high volume and value goods or services, and naturally the high stakes in such dealings lead to common conflicts between the parties. Should you have any issues with your international commercial transactions, do not hesitate to contact Linkilaw so we can help you resolve the issue in a prompt and effective manner.