The International Trade Contract (ITC)

The ITC is the commercial contract with a foreign element which determines the possibility for the contract to be regulated in the same time by at least 2 different systems of law

The classification of ITC A. According to the criterion of the participants, ITC may be divided into 3 categories as follows: a. Contract concluded between states (CCBS) b. Mixt contracts, meaning contracts concluded between a state and merchants from other states c. Contracts concluded between merchants belonging to different states, which is the most important category of ITC a. CCBS In the CCBS, the state as a contractual party is represented by the Minister of Finance, which in this quality does not need to be fully authorized by the state.When the contract is concluded by another person, then the Minister of Finance or the ambassador of the state in the country where the contract is concluded.This person must be fully authorized and has to present the proof that the state had expressly changed a minister, a head of department or an expert to conclude that contract in behalf of the state .In these contracts concluded between states , the partis , meaning the states, must choose the applicable law to that contract and they must mention it in the contract.It is also compulsory to provide in this contract the jurisdiction that is competent to solve the eventual litigations related to the contract. The states parties must make an express declaration that they renounce the immunity of jurisdiction for that contract. Jurisdiction means the right, the power of the authority to administer justice.Within this context, jurisdiction means the court of law that is competent, to solve the eventual litigations related to the contract.

b. In the contract concluded between a state and merchants from other states, the state as a contractual party is also represented by the minister of finance.The parties may choose the applicable law to the contract, otherwise the contract is regulated by the law of the state, party to the contract. Also, the parties may choose the jurisdiction, otherwise the competent jutisdiction is the Supreme Court of the state party to the contract. The state party must make an express declaration that it renounces the immunity of jurisdiction for the contract.

B.According to their full extent of time, ITC may be classified as follows: -Short Term Contracts, last less than 3 years -Medium Term Contracts, last between 3 and 5 years -Long Term Contracts, last more than 5 years

This classification is important because the extent of time of the contract determines the existence of particular clauses in the contract.

C.According to the structure of the contract, ITC may be classified as follows: -Simple contracts-> contracts that include in their structure a simple juridical operation .ex: sale contract -Complex contracts-> that include in their structure several juridical operations which are normally interdependent. Ex: leasing contract The leasing contract consist of several operations, as follows: 1) Sale Purchase operations between the producer of goods object of th contract and the leasing company 2) Intermediation operation between the leasing company and the user (leassee). Thus the user concludes the contract with the producer of goods acting as an agent of the leasing company.

3) Arenting operation between the leasing company and the leassee(user). Thus the user is allowed to use the goods object of the contract is exchange for a rent. 4) Unilateral promise of sale: the leasing company promises the sale of goods at the end of the contract if the leassee wants to buy it.

D. Acc to the existence or the nonexistence of a specific regulation of the contract in the national legislations on international instruments, ITC may be: - named contracts - unnamed contracts The named contracts are those contracts that are regulated by specific provisions, for example the sale, the transfer, the commission contract dud so on. -commissioner obliges himself to conclude contracts in his name on behalf of the other party. Unnamed contracts are those contracts that have not their own regulations in national legislations. Generally they are regulated by means of anology between them and the named contract.

The Conclusion of ITC Any contract is considered concluded wheb the parties reach an agreement, meaning when the acceptance of one of the parties meets the offer of the other parties. Wishin the int. trade, it is very important to determine the next aspects: 1. The exact moment of the conclusion of the contract, which is important because the term stiputated in the contract is calculated and the obligations undertaken by the parties must be performed. 2. The place of conclusion of the contract, which is important because it determines the applicable law of the contract There are 2 ways for concluding the ITC as follows:

1. The conclusion of the contract between the present parties 2. The conclusion of the contract between the absent parties

1. Concerning the conclusion of ITC between present parties, the moment of concluding the contract is the moment when the agreement is reached, because most contracts are consensual contracts. Unlike formal or real contracts, consensual contracts are those that are concluded by the simple agreement of the parties and the law dose not request any formal conditions for their valid conclusion. The formal contract is considered as concluded once they are observed some additional formal conditions, other than the simple agreement of the parties. For instance, the law requires a written form or even an authentic form for concluding contracts, such as donation sale purchase of the loud. The real contract is considered as concluded once the thing that is considered object of the contract has been delivered to the other party. Therefore the delivery of the thing is not requested in order to perform the real contract, but in order to conclude it in a valid manner. Such real contracts are the loan or the deposit contract. The place of the conclusion of the contract is the place where the negotiations have been reached. Generally, when for consensual contracts, he parties draw up a written document in order to use it as an evidence in future disputes. In this document, the parties stipulate explessly the moment and the place of the conclusion of the contract. 2) When the contract concluded between absent parties that are in diff. geographical locations, the problem of determining the moment and the place of the conclusion of the contract is much more difficult. The contract concluded between absent parties may be divided in 2 categories. a) Contracts concluded by mail, which represent the most important category of contract concluded between absent parties. b) Contract concluded by phone. a) All systems of law provide that the contract is considered concluded when the letter of acceptance meets the offer. If the acceptance is different from the offer, it constitutes a new offer which must be accepted by the party who made the 1st offer in order to concluded the contract. However there are some differences between the systems of law of the states in the

world concerning the establishment of the moment and the place of the conclusion of the contract. Thus there are 3 theories as follows:

1) The sending or the forwording theory used mainly in the Anglo-Saxon system - Acc to this theory the contract is concluded at the date when the party who accepts the offer party - This date is proved by the postage seal which is marked on the letter by the postal service - The place of HQ s of the party who accepts the offer because in this place the acceptance has met the offer 2) The receiving theory used in those states such as Romania and also France, Belgium, Italy - Acc to this theory the contract is concluded when the party that his made the offer receives the letter of acceptance of the other party - This date is proved by the postage seal marjed an the letter by the posting service. - The place of the conclusion of the contract is the place of HQs of the party whp has made the offer because in this place the acceptance meets the offer. 3) The information theory Portugueses, Brazilia system of law - Acc to this theory she contract is concluded wheb she party who has made the offer is informed by any means of the other party`s acceptance - She place of the conclusion of the contract is the place of HQs of party that made the offer

b) Concerning she contract concluded by phone the moment of concluding the contract is the moment when she parties speak over the phone and their agreement is reached. However she are a few theories concerning the place of the conclusion of the contract by phone.

1) In Anglo-Saxon system of law it is she place of HQs of the party who receives the call 2) In continental systems of law it is the place of HQs of the party who makes the call

Furthermore, concerning the concluding of contracts between absent parties we have to determine if the offer and the acceptance may be revoked. This in order for the contract to be concluded, the offer must have the following features.

A. It needs to be precise B. To be serious C. To be kept within the term provided in the offer or within reasonable period of time if the offer doesnt specify the term.If the offer ------------- provide a particular term the acceptance must be made at once.If the offer specifies a term, the acceptance must be within this particular period of time.In order to conclude a contract, the acceptance must fully correspond to the contents of the offer Generally, both the offer and the acceptance may be revoked.Thus, the offer may be revoked if the r(l)evocation letter reaches the offerparty before , or at the same time as the offer/The same rule applies for the acceptance. There is an exception to this rule provided by the English system of law.Thus, there , the postal service is the representative of the receiver.As a consequence, after the offer or the acceptance has been delivered to the post office in cannot be revoked anymore.(shorter period of time)

THE CONTENT OF ITL

In the first place, an ITL must provide identification between elements to the parties of that contract. ---When one of the parties is a state, the contract must mention the state, the name of the person who represent it and his quality. ---When one of the parties is a merchant legal person,the contract must mention its denomination, the HQs,the nationality, the incorporation noted in the Register of Trade , the name of the NP that represent the legal person, hs citizenship, his resistance, his identity card and his quality. ---When one of the parties is an individual merchant, the contract must provide his name, his resistance, citizenship, the incorporation noted in the Register of Trade and his identity card. In the second place, the parties must specif the juridical nature of the contract, for instance, if it is a sale-purchase contract, transport contract , etc. The juridical nature of the contract is a very important element especially in the case of named contracts. Thus, taking into account the juridical nature of the contract, the applicable law to the particular contract may be determined. Also, the parties must mention in the contract the following elements: 1. The rights and obligations according to their contract 2. The price of the contract

3. The means and instruments of payment 4. The quality of the goods that are object to the contract 5. Certain periods of time, for the existence or the performance of the contract Beside all these elements, the parties may incude in the contract specific clauses.

A. Clauses concerning the liability of the parties to the contract 1. The penalty clause:
It represents a prior evaluation of the damage that the parties may suffer as a consequence of the non-perfomance or the improper performance of the contracts This penalty clause cannot be reduced by the judge, for ex: the party that doesnt perform this obligation will pay 15% of the value of the non-performed obligation for each day delay

2. The liability increase clause

->By this clause the parties agree that in the case on non-performance of the contract , their liability will be larger than the usual amount

3. The liability limitation clause Acc to this clause, the parties are liable only for the actual damage that is caused by the nonperformance There are not liable for the gain of which the other party is deprived of as a consequence of the non-performance of the contract

4. The exoneration of liability clause

To exonerate= to relieve of an obligation or charge By this clause , the parties may provide the situations in which thay are not liable for the damages caused by the non-performance or the improper performance of the contract

5. The force evajeure clause It has as a result the liability exoneration of the party who imposed it Force evajeure means the occuranc of an event that does not depend upon the will or the action of
the parties

This event which cannot be overcome by anybody determines the absolute impossibility of one of
the parties to perform the contract

The force evajeure is defined in a different manner by each system of law

 Therefore, when the force evajeure clause is included in the contract, the parties to the contract
must define the force evajeure.It means that they must provide in the contract the events that constitute the force evanjeure for that specific contract. Also, the parties have to mention in the contract the period of time the event must last in order to produce the ending of the contract and the period that is accepted only for the delayed performance of the contract

The paties must provide the term during which they are obliged o give notice to each other
concerning the occurance of the force evanjeure

The event of force evanjeure must be certified by an authority The paties may choose in this contract the competent authority which must provide this
certification

Otherwise, in Romania, the certificate of force evanjeure is provided by the Chamber of

Commerce

B. 2.The currency auction clause > It supposes the esyablishment of the aontractual price in an account currency and the
possibility of the parties to choose the actual currency for the payment of the price among one of the currencies settled at the moment of concluding the contract

3.The currency clause: ->

may be provided in one of the following wais

3.1 The single currency clause

-> the parties mention in the contract the currency for the payment of the price and will be automatically adjusted according to the exchange rate of a hot currency(moneda forte) on that market

3.2 The multiple currency clause -> the parties take into account several currencies and the price is established acc to the is
not listed on the money mmarketweighted mean(media ponderata) of the mutual exchange rates if these currencies

3.3 The special drawing rights clause

->are the structural currency of the IMF -> this clause is generally provided in the contracts based on loans granted by the IMF

4.The gold clause

-> the parties must provide in the contract the currency for the payment of the price, but the
contractual price is calculated acc to the value of 1 gram of gold

-> this clause is not allowed in the states

where the gold is not listed on the money maket

C.Clauses concerning the adjustment of the contract -> are provided by log-term contracts -> actually, in case of legal persons cont. the adjustment of the contract must take into account
several elements and not only the consolidation of the price

-> these clauses are meant to restablish the balance between the promises of the parties that
become unequal due to the evolution of the market

-> these clauses adjust the whole contract and not only the price acc. to the changes of the
market

-> within this category we may include the following clauses

1. THE CLAUSE OF THE MOST FAVORED CLIENT If during the extent of time of the contract the pary who had granted the clause concludes another contract with a third party under more favorable conditions, he is obliged to also adjust the first contract acc. to these more favorable cond. 2. THE COMPETITIVE OFFER CLAUSE It becomes applicable during the extent of time of the contract , the beneficiary of the clause gets from a third party a more favorable offer to conclude the same kind of contract In such a case, the beneficiary of the clause is allowed to inform the other party from the 1 st contract of this offer This party may choose one of the following options: ->to adjust the 1st contract to the competitive offer

-> to suspend the 1st contract during a specified peiod of time.within this period of time, the beneficiary of the clause is allowed toconclde a new contract with a 3 rd party who has made the competitive offer -> to terminate the 1st contract; thus, the beneficiary of the clause will conclude the contract with the 3rd party who has made the competitive offer 3. THE HARDSHIP CLAUSE(IMPREVIZIUNE) > derived from a fundamental juridical principle, namely pacta sunt servanda rebus siestandibus it means that the obligations assumed through contracts are compulsory and must be performed if the conclusion of the contract did not change during its performance > the hardship clause takes into account such an essential change in the existing circumstances which had determined the conclusion of a legal person contract -> the hardship event is unpredictable, it cannot be overcome by the parties and it doesnt depend on the will or the action of the parties -> the performance of the contract by one of the parties becomes very costly due to this event -> therefore the impossibility to perform the contract is not absolute, it is only related to the means, resources of the party -> when the hardship events happens, the party who cant perform the contract must not defy the other party ->if this party would agree to qualify the event as hardship event, thy will renegotiate the contract ->otherwise, the parties must ask an arbitrator or a judge to decide if the event is a hard event ->the decision of the arb/judge is compulsory for the parties. Ex: additional tax from the state

The hardship event is different from the force evanjeure event due to the the following aspect: The f.m event determines the absolute impossibility to perform the contract The h. event->the performance of the contr is possible but it becomes very costly for one of the parties The f.m event must generally be provided by the contract The h event cannot be mentioned in the contract because they antt be predicted

4.Clauses that produce their effects after the expiry of the contracts
Tgey are continuity meant to preserve the supply of the distribution market or event the relations between clients. Within this category the most important is the:

1.First denial clause -> acc. to this clause after the expiry of the contract , one of the parties is allowed to conclude a new contract of the same kind with a 3rd party only if he has made an offer to the other party of the 1st contract and this party does not accept it

5.The election juris clause: - it means the clause for choosing the applicable law of the contract