Workshop: contract clauses Emmanuel Breen and Ann Y. Du emmanuel.breen@paris-sorbonne.fr ayd7@georgetown.edu

General clauses Legal clauses

Commercial and financial

clauses Ethics clauses

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A. General clauses

•  Type of contract •  Identities of parties involved •  Definition of terms •  Language of contract •  Entry into force date •  Duration and procedure for renewing contract •  Termination procedure

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Duration and termination clause

“1. This contract shall be for an initial period of 12 months from the commencement date. Either party will have the right to terminate the contract by giving at least 30 days notice in writing to the other party to expire at the end of the initial period or at any time after that. 2. Either party may terminate this contract by written notice to the other at any time if the other party: (a) commits a breach of this contract and, in the case of a breach capable of remedy, fails to remedy the breach within 14 days of being required to do so in writing; or (b) becomes insolvent, or has a liquidator, receiver, manager or administrative receiver appointed.”

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B. Legal clauses

Basic clauses

•  Choice of jurisdiction •  Arbitration •  Choice of applicable

law •  Liability

Other clauses

•  Transfer of property / risks

•  Exclusivity / non-compete

•  Force majeure •  Hardship •  Indemnification and

penalty

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Arbitration clause – ICC

“All disputes arising out of or in connection with the present contract shall be submitted to the International Court of Arbitration of the International Chamber of Commerce and shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

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Applicable law clause

“This Agreement shall be governed and construed in accordance with the laws of Singapore.”

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Transfer of risk clause

“Party A shall hold title to and risk of loss of Products under this Agreement until tender to the carrier, at which time title and risk of loss and damage to Products shall transfer to Party B.”

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Confidentiality clause

“The Parties undertake to adopt the appropriate measures to ensure that the Confidential Information is handled confidentially. The aforesaid measures shall not be less thorough than those applied by the Parties to their own Confidential Information, and shall consist of …”

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Exclusivity clause

“Author grants to Publisher the exclusive rights to print, publish, distribute, sell and license the rights to any and all editions and/or formats of the Book, in whole or in part, in the English language throughout the world.”

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Hardship clause (ICC)

“1. A party to a contract is bound to perform its contractual duties even if events have rendered performance more onerous than could reasonably have been anticipated at the time of the conclusion of the contract.

2. Notwithstanding paragraph 1 of this Clause, where a party to a contract proves that: [a] the continued performance of its contractual duties has become excessively onerous due to an event beyond its reasonable control which it could not reasonably have been expected to have taken into account at the time of the conclusion of the contract; and that [b] it could not reasonably have avoided or overcome the event or its consequences, the parties are bound, within a reasonable time of the invocation of this Clause, to negotiate alternative contractual terms which reasonably allow for the consequences of the event.”

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Force majeure clause (World Bank)

“1.1 In this Clause, ‘Event of Force Majeure’ means an event beyond the control of the Authority and the Operator, which prevents a Party from complying with any of its obligations under this Contract, including but not limited to: …

1.2 Neither the Authority nor the Operator shall be considered in breach of this Contract to the extent that performance of their respective obligations (excluding payment obligations) is prevented by an Event of Force Majeure that arises after the Effective Date.”

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C. Commercial and financial clauses

•  Price and method of payment, •  Date of payment, payment terms and bank guarantees •  Choice of invoicing currency •  Place of delivery •  Method and cost of transportation •  Warranty •  Etc …

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Payment terms clause

“1.1. Payments are due and payable in full within [30] days after the date of the [invoice] [Product shipment]. 1.2. The fees do not include any taxes, import or export fees, duties, or similar charges, all of which are [payee]'s responsibility.”

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D. Ethics clauses

•  Clause established by the company

•  Based on international conventions

•  Types: •  Environmental rights •  Human rights •  Labor and employment rights •  Anti-corruption

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Anti-corruption clause

“Each Party hereby undertakes that, at the date of the entering into force of the Contract, itself, its directors, officers or employees have not offered, promised, given, authorized, solicited or accepted any undue pecuniary or other advantage of any kind (or implied that they will or might do any such thing at any time in the future) in any way connected with the Contract and that it has taken reasonable measures to prevent subcontractors, agents or any other third parties, subject to its control or determining influence, from doing so.”

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Human rights clause

“The parties reaffirm their obligations concerning democratic principles and human rights, as laid down in the Universal Declaration of Human Rights and other relevant international human rights instruments, and the rule of law, and undertake to comply with these obligations in their internal and international policies.”

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Environmental/ sustainability clause

“Supplier agrees to provide goods/services which accord with the Purchaser’s policy on the environment. ”

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