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LPC Law Notes International Commercial Law Notes

Intro To Commercial Contracts Notes

Updated Intro To Commercial Contracts Notes

International Commercial Law Notes

International Commercial Law

Approximately 179 pages

A collection of the best notes for new University of Law module 'International Commercial Law' the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

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INTRODUCTION TO COMMERCIAL CONTRACTS
Contract types

  1. Upstream provide client with resources to carry on business

  2. Downstream contracts under which client passes on + exploits fruits of labour; contracts for supply of goods and services by business
Formation

  • One party must make identifiable offer (aot invitation to treat), showing intention to be bound

  • Ads, estimates, brochures, price lists, enquiries / RRIs, LoIs/ HoTs/MoUs; anything marked ‘subject to contract’ NOT usually offers

  • Offer can be ended by rejection, counter-offer, lapse of time, death or revocation

  • Other party must accept terms unconditionally or counter-offer

  • Terms of acceptance must be ‘mirror image’ of offer / counter-offer

  • Must be supported by consideration; may be small but cannot be past performance of existing duty
Contractual Certainty

  • Parties must be specific about terms; if fails to address key area (price), will be void for uncertainty

  • Courts may fix badly drafted contract if clause severable or parties’ intention clear

  • Courts will not enforce ‘agreement to agree’

  • ‘Lock-out’ agreements enforceable; ‘lock-in’ agreements not
Terms and Representations

  • Three types of pre-contractual statement: terms, representations and ‘mere advertising puff’

  • Last will have no effect on contract

  • Terms will form part of contract; breach may entitle party to terminate contract and sue for damages

  • Representation is statement of fact which induces contract; false statement is misrepresentation

  • 3 types: innocent, negligent, fraudulent; primary remedy is rescission but damages possible under Misrepresentation Act 1967, s. 2(1); test is whether maker honestly believed statement was true and had rble grounds for belief
Battle of the Forms

  • Occurs when both parties are attempting to impose their standard terms on the other

  • Courts apply ‘last shot wins’ doctrine

  • Traditional offer / acceptance model, not relationship / conduct of parties (Tekdata Interconnections)
Standard terms and conditions

  • Use of standard terms ensures contract suits needs of whichever party has been able to insist on use

  • Buyer will want to ensure that:

  1. The goods to be delivered are on time, preferably to own premises; and

  2. S to be liable for any defects.

  • The seller will want to ensure that:

  1. They have flexibility for late delivery if it is to be let down by its own suppliers;

  2. B preferably collects the goods from its factory; and

  3. They are not liable for every trivial problem (will usually accept some liability for defects).

Advantages of standard terms Disadvantages of standard terms

  • Contract on favourable terms to client;

  • Standardised procedures;

  • Commercial certainty;

  • Cheaper;

  • Starting point for negotiation

  • Lack of flexibility;

  • Effective training and procedures essential;

  • Incorporation difficulties/ ‘battle of the forms’.

  • Need for regular review;

  • Legal constraints (e.g. UCTA 1977).
Drafting and content of commercial contracts
Key factors in drafting commercial agreement Basic checklist for commercial agreement

  1. Analysis of client’s instructions;

  2. Establishing client’s objectives;

  3. Not losing sight of C’s commercial aims;

  4. Adapting precedents to fit C’s instructions (not other way around).

  1. Commencement and date;

  2. Parties to contract;

  3. Recitals (if any);

  4. Definitions and interpretation;

  5. Conditions precedent (if any);

  6. Agreements;

  7. Representations/warranties; Operative part

  8. Indemnities;

  9. Limitations and exclusions;

  10. ‘Boiler plate’ clauses;

  11. Execution clause and signature;

  12. Schedules.
Recitals

  • Recitals useful to help put contract in context or explain reason for a contract being entered into

  • Alternatively, may set out factual background to an exclusion clause by explaining decision of parties to impose risk of loss on one rather than the other
Definitions clause

Basic rules:

  1. Should give no more than give a clear meaning to defined terms;

  2. All defined terms should start with a capital letter;

  3. Defined terms should be listed alphabetically for ease of reference;

  4. Should be used only where they are recurrent in body of agreement (or where danger of ambiguity);

  5. All defined terms should be defined in the definitions section;

  6. Definitions must meet the requirements of the agreement;

  7. Care should be taken in defining things which might be subject to change during the contract.
Interpretation clause

  • Covers the basics of interpretation by providing that the headings do not form part of the agreement

  • Principles of European Contract Law:

  1. Contract interpreted according to common intention of parties even if not literal meaning

  2. If one party intended contract to have particular meaning, and at time of contract’s conclusion other party could not have been unaware of first P’s intention, contract is to be interpreted in way intended by first party

  3. If intention cannot be established, contract interpreted according to meaning that could reasonably be understood by peers of parties in same circumstances
‘The operative part’
Conditions precedent

  • Conditions that must be satisfied before agreement can come into effect

  • E.g. contract conditional on B obtaining letter of credit
Agreements

  • Define rights and obligations of parties

  • E.g. in sale of goods contract, S promised to sell + deliver goods of certain description + quality
Representations and warranties

  • Statements of factual / legal matters which one party requires be made in legally binding way

  • Warranties are promises that given statement of fact is true
Indemnities

  • One parties promises to make good another’s loss

  • If A incurs loss as a result of occurrence of particular event, B will indemnify A
Limitation & exclusion of liability

  • See notes on limitation / exclusion of liability

  • Is clause liable to come within the scope and effect of UCTA 1977?
‘Boiler-plate clauses’
What are they?

  • Standard clauses which are included as matter of course into all agreements of certain type

  • No precise definition

  • Typical ones as follows:

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