Drafting an international contractExamples

International Business Law

CASE

• Vetati, a French distribution company, sells low price clothes. They concluded a contract with Polovet Company, a Spanish company. The parties planned that Polovet would sell 50.000 pullovers for 2 euros per pullover.

PREAMBULE

• Vetati is the leader on the children low prices clothes market. In order to expand their market, Vetati contacted Polovet, a Spanish producer of wool pullovers. Polovet accepted to become Vetati ’s provider.

SECTION 1 : SPECIFIC TERMS

I- Parties

• Art 1 : Parties• The contract is concluded between the following

parties : • Vetati Company, settled 10 rue Carnot in Lille,

represented by its director M. Tita, hereunder called ‘ THE BUYER ’

• Polovet Company, Settled calle de la libertad, Madrid, represented by M. Figuo, Sales manager, allowed by the board of directors to sign this contract, according to a signed authorization, hereunder stated as ‘ THE SELLER ’.

• Art 2 : Definitions• ‘Pullover ’ is a children pullover which respects

the EN-327 quality norm. • ‘Réceptionnaire’ is the person chosen by THE

BUYER who has the power to take delivery of the goods. His name will be given to THE SELLER by fax at the beginning of each month.

• Art 3 : Object of the contract• THE BUYER promises to buy 50.000 pullovers. • Those pullovers are of a superior quality as stated

on THE SELLER ’s website. • The pullovers are delivered with 20% in 1 year old

size, 20% in 2 years old size, 30% in 3 years old size, 40% in 4 years old size and 20% in 5 years old size.

• Art 4 : Delivery• Delivery is performed by THE SELLER at THE

SELLER ’s cost. THE SELLER promises to ask the carriage company TRANSDEX France to perform the carriage.

• The place of delivery is at THE BUYER ’s storage place, 01 rue Carnot, in Lille. The Réceptionnaire will sign the delivery document.

• The transfer of risks on the sold goods will happen when THE BUYER acceps the delivery of the goods.

• Art 5 : Packaging• The pullovers will be packed by size, with 1 pack

per size. • Each pullover will be packed separately in a

plastic bag and eack pack of pullovers will be protected by a plastic protection according to the TRIFILM technique.

• Art 6 : Way of delivery

• 5.000 pullovers will be delivered every month during 10 month, with 1 delivery per month.

• Delivery will happen on the first Monday of every month between 10 and 11 AM.

• Art 7 : Price

• THE BUYER promises to pay 2 euros per pullover that is a total of 10.000 euros per delivery.

• Art 8 : Way of payment

• Payment will happen 90 days after the date of delivery.

• Payment will happen through a Swift bank transfer on the account number 317-224-429 at the Banque du Commerce in Lille.

• Art 9 : Conformity• THE SELLER promises to deliver goods that

perfectly conform the order. • Any defect in packing can be considered as bad

delivery by THE BUYER. • Proof of conformity lies on THE SELLER. In case

of claim, THE SELLER should be able to show a receipt signed by THE BUYER ’s réceptionnaire.

• Art 10 : Defective goods• THE SELLER promises to accept to take

back any goods that are declared as defective by THE BUYER when THE BUYER opens the packs.

• THE BUYER should send the defective goods back to THE SELLER and should be paid back within 8 days.

SECTION 2- GENERAL TERMS

I- Best efforts

• Art 20 : Sub-contracting• THE SELLER promises to chack that his sub-

contractors do not hire employees under the age of 16. THE SELLER promises to give to THE BUYER the results of an audit conducted in his sub-contractors and dated from the year of delivery.

• If there is no audit or THE SELLER does not fulfil this duty, THE BUYER can cancel the contract and ask for damages.

II- Penal term

• Art 21 : Late delivery

• In cas of late delivery, if delivery happens within 7 days after the planned delivery date, THE BUYER promises not to refuse delivery but THE SELLER promises to pay an indemnity of the amount of 10% of the amount of the order.

III- Liability

• Art 22 : Late payment• If the BUYER pays late, no indemnity is

due if payment is less than 7 days late. • In case of payment between 8 and 15 days

late, THE BUYER will have to pay an indemnity of 2% of the late payment.

IV- Force majeure

• Art 23 : Force majeure• THE SELLER will not be liable for late delivery if

it is due to a force majeure event. • Force majeur events are the destruction of the

factory by fire or due to a natural event. • If a force majeure event happens, THE SELLER

promises to have the goods delivered by a sub-contractor within 2 month from the date of happening of the force majeure event.

• Strike by the carrier WILL NOT be considered as a force majeure event.

V- Hardship term

• Art 24 : Hardship• In case of strike by the carrier ’s employees, if the

strike lasts less than 5 days, the date of delivery will be moved accordingly by the same number of days.

• If the strike lasts more than 5 days, THE SELLER promises to have the goods delivered by plane or train on the next Monday following the initial delivery date. THE SELLER will pay delivery costs.

VI- Change in market conditions

• A- Competing offer• Art 25 : Competing offer• If THE BUYER receives an offer by one of THE

SELLER’s competitors and this offer is 10% less expensive for similar goods produced in the EU, THE SELLER promises to give a discount to THE BUYER by 80% of the difference of price.

VI- Change in market conditions

• B- Client in a better position• Art 26 : Client in a better position• If THE SELLER sells the same goods to one of

THE BUYER’s French competitors, THE SELLER promises to advise THE BUYER before any delivery and to inform THE BUYER of the price. If the price is less than the one agreed on in this contract, THE BUYER can cancel the contract or get a discount of the amount of the difference of price.

VIII- Option term

• Art 27 : Option• At the end of this contract, THE BUYER can

renew the contract with the same conditions. THE BUYER should advise THE SELLER at least 1 month in advance by a recommanded letter with a proof of receipt.

• If THE BUYER does not renew, tthe contract will automatically end after the last delivery and payment.

SECTION 4 : DUTIES SURVIVING THE

CONTRACT

• I- Duties concerning the Past

• A- Stock

• Art 30 : stock

• THE SELLER promises to take any unsold stock at 50% of its price during a period of 1 year after the end of this contract.

• B- Documents

• Art 31 : Advertising documents

• THE BUYER can continue using advertising documents given by THE SELLER until the whole stock is sold.

II- Terms regarding the future

• A- non-competition term• Art 32 : non-competition• During the wole length of the contract and

for a period of 1 year after the end of the contract, THE SELLER promises not to sell any same goods to VETABLE company, which is THE BUYER ’s main competitor.

• B- Confidentiality term• Art 33 : Confidentiality• THE SELLER promises not to display any

information about amount of the sales performed with THE BUYER. In case of breach of this duty, THE SELLER will pay a 30.000 euros indemnity to THE BUYER.

• C- Warranty term• Art 34 : Warranty• THE SELLER promises to guarantee the solidity

of the pullovers during 1 year. THE SELLER will directly answer the clients ’ claims. THE SELLER will put a stamp on each pullover mentioning the existence of this guarantee and THE SELLER ’s after sale phone number.

Section 5 : Other terms

• Art 40 : Language

• The contract is drafted in English and Spanish. In case of difficulty to interpret the contract, the English version will prevail.

• Art 41 : Jurisdiction

• In case of liligation, the parties plan that the judge will be the Commercial Tribunal in Lille.

• Art 42 : Applicable law

• The applicable law to this contract is French law.

• Art 43 : Vienna Convention

• The Vienna convention applies to this contract