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We are a law firm specialized in International Law and International Trade. Internationa Law in Spain.

What is an international contract?

A contract is a voluntary, deliberate, legally binding and enforceable agreement creating mutual obligations between two or more parties.


A contract is international when it has certain links with more than one State.


The term party in international law is very broad

The notion embraces any natural or legal person, including:




-unincorporated bodies.

-partnerships and publicly owned entities.



Form of international contracts

Contracts are usually written. But, unless the applicable law requires them to be in writing, contracts may be verbal or implied.


As lawyers experts in international law we recommend the international contract to be in writing.


Obligations of the parties in an international contract

Each contracting party undertakes the obligation to do something for the other or others in exchange for a benefit.

All parties may expect a fair benefit from the contract, since otherwise the courts may set it aside as inequitable.

In order for a contract to be valid, the parties must be competent.


The parties must have the legal capacity to enter the contract.


This means that they must be:

-of legal age,

-of sound mind and

-not under the influence of drugs or alcohol.


The offer and the acceptance in an international contract

A contractual relationship is evidenced by,

-an offer

-the acceptance of the offer, and

-valid (legal and valuable) consideration.

Consideration frequently implies that one party pays a sum of money to the other party, typically in exchange for goods or provision of services.


When an international contract can be unenforceable

A contract may prove unenforceable if certain mistakes are committed by one or more parties in its making.


When an international contract can be void

Likewise, a contract may be declared void if one party has committed fraud against or exerted undue influence over another.


The breach of an international contract

If one party fails to fulfil his or her obligations, that party will be liable at law for breach of contract. In this case, the other party may seek compensation for the economic loss suffered as a consequence, by suing either for damages or for performance of the obligations assumed under the contract.


The conflicts of law in the international commercial contract

Internationality concerns all cases involving a choice between the laws of at least two distinct States. Hence the notion of conflict of laws used to identify the set of rules and criteria, amongst two or more theoretically applicable “conflicting” national laws. It means which application is the most suitable for governing the parties’ relations.


The above will obviously be the case:

-when parties from different countries have entered into a contract.

-when a contract contains, irrespective of the parties’ citizenship or nationality, one or more foreign elements putting it in contact with one or more legal systems.


International cases may be when parties are based in different countries, or when a contract is to be executed abroad.



When a contract is not international

A contract cannot be classified as international and is therefore to be deemed purely domestic, when all of its significant elements are connected with one State only.

In this regard, it must also be noted that when one or more significant elements of a contract are connected with different territorial units within the same national State, such fact does not constitute internationality of the contract.

Additionally, the mere circumstance of the parties’ having chosen a foreign State’s law to govern their contractual relationship is not per se an element sufficient to classify a contract as international.


The ascertainment of internationality is thus an exercise that always implies careful case-by-case analysis.


 International trade contract

An international trade contract is a contract for a commercial transaction, or a contract made by a trader for the purpose of his business.

International trade contracts are those in which each party intends to act in the exercise of its trade or profession.

The question whether a party is acting in the exercise of its trade or profession depends on the circumstances of the contract. Not on the mere status of the parties.

A same person may act as a trader or professional in relation to certain transactions and as a consumer in relation to others.

We are a law firm specialized in International Law and International Trade.

The definition comprises:

– the commercial activities of merchants, manufacturers or craftsmen (trade transactions)

– also the commercial activities of professionals, such as lawyers or architects (professional services)

– Insurance contracts

– contracts transferring or licensing intellectual property rights between professionals

– agency or franchise contracts.


For example, a contract between a Spanish entrepreneur and a British commercial agent constitutes an international trade contract.


Such may also be the case when a joint venture agreement is made between a French and a Spanish company.


Private international law and international civil procedural law

When parties enter into an international contract, it is crucial for them to know which law will be applicable to their relationship.

As provisions governing contractual obligations can vary substantially between different countries, and differences in local laws may have a substantial impact on the outcome of a dispute.

The answer to this question will also be important for a court or arbitral tribunal vested with the power to settle disputes that may arise between parties in contractual relation.

Private international law may be defined as that branch of law which, in each State, deals with cases of private law involving a foreign element.

Thus, the term “international” in cases of private international law can actually be considered a bit misleading, since it refers to the character of a case rather than to the international origin of the rules governing it.


Private international law:

-Set the rules that are used to identify the national law applicable to a given international case rather than to dictate the rules governing the relationship in question.

-is the procedural technique used to determine what national law is applicable to a private matter having cross-border implications.


On the other hand, international civil procedural law will address the following questions:

1.- What court has jurisdiction in such a matter?

2.- Under what conditions may a court’s decision be recognized and enforced in another country?


Connecting factors on international law

Both private international law and international civil procedural law rely on connecting factors to identify the applicable law or the court or arbitral tribunal with jurisdiction.

Connecting factors are elements that link a transaction or occurrence with a particular national law or jurisdiction.

We are a law firm specialized in International Law and International Trade.

Amongst the most significant connecting factors in international contracts are:

a) the citizenship or nationality of the parties,

b) the parties’ domicile or habitual residence (in cases involving individuals),

c) the parties’ place of incorporation or establishment (in cases involving legal persons),

d) the place where the contract was made,

e) the place where the contract is to be executed,

f) the place where the object of the contract is located,

g) the currency of payment,

h) the place of payment.


Different countries may hold different views on which connecting factors are to be deemed most appropriate for establishing legal links.

As an alternative to private international law, international contracts may be subject to national or international substantive rules.


For instance, by virtue of an international agreement, like the Vienna Convention on International Sale of Goods.


The closest connection in international law

The most recent theories in private international law share the view that an international contract should preferably be governed by the legal system with which it has the closest connection.

This approach, also known as the proximity rule, considers it appropriate, in the absence of a choice of applicable law made by the contracting parties, to subject a contract to the law of the country with which it has the most immediate ties.

The identification of the country with which a contract is most closely connected is left to the appreciation of the judge, who will have to consider all of its factual elements on the basis of an ad hoc analysis.


Characterization, qualification or classification

One of the major difficulties that parties and judges have to face when considering the question of the national law governing an international contract lies in the fact that a given situation may be deemed to be of one nature under the law of the forum (so called lex fori, i.e. the law of the country where the judge sits) and of another nature under the law of the country with which the contract is connected (so called lex causae, i.e. the law of the country which will substantially govern the contractual relationship).

For instance, the same situation may be regarded by one national law as presenting an issue of contract and by another national law as one of succession.

A similar problem may arise when the lex fori and the lex causae differ on questions of capacity and form. The question then is: are these issues to be classified according to the lex fori or the lex causae?

Similar matters may surface with respect to the classification of connecting factors: e.g. is the notion of domicile to be understood according to the lex fori or the lex causae?


We are a law firm specialized in International Law and International Trade.

Despacho de Abogados Ferrer-Bonsoms & Sanjujo

Ferrer-Bonsoms y Sanjurjo

Ferrer-Bonsoms y Sanjurjo


Si tienes problemas, podemos ayudarte, si tienes dudas, podemos ayudarte

Somos abogados expertos en Derecho Mercantil, Derecho Internacional, Derecho Civil, Derecho Bancario

Despacho de Abogados Ferrer-BonSoms & Sanjurjo

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