A COMMERCIAL CONTRACT

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Most international commercial contracts have the same or a very similar structure. This means that a lawyer working for an international law firm anywhere in the world who is working on a new contract will usually that contract in the familiar, accepted style.

The first section of a commercial contract gives the precise date of the agreement.

The next section of the contract states the names of the two (or more) contracting parties. It is usual for the contract to contain their names, their addresses and their legal status. This is so that everyone can be sure of exactly who the parties to the contract are. It is also in case of future problems. If one party does not fulfil its obligations under the contract, for example, it will be in of its obligations under the agreement. Most commercial contracts anticipate this situation and state that this will entitle the other party to a which may be damages, specific performance, or possibly an injunction. If one party therefore wanted to the other party for damages, the first step in that process would be to send notification to the correct address.

The next section of a commercial contract is usually the part that gives background information about the contract. Its purpose is to set out the reasons for the parties entering into the contract. This section is called “The ” or sometimes “The Preamble”. Very often each sentence in this section of the contract will begin with the very old-fashioned word, . This word basically means, “Taking the following facts into consideration”, or “As the following facts are true”. Many lawyers think that this part of a contract is not strictly necessary but, nevertheless, most commercial agreements continue to include it.

Next come what lawyers refer to as the “operative provisions". These are the key provisions of the contract. It is usual to begin this section of the contract with a terms section, the purpose of which is to set out very clearly what specific terms will mean when they are used in this particular agreement. Clauses about consideration and the goods, services, shares, etc., that will be provided by the other party in for that consideration will follow.

At the end of the operative clauses it is usual to find a clause. This clause sets out the conditions in which the parties may bring the agreement to an end before the agreed term. It is usual to be able to end the contract, for example, if one of the parties experiences serious financial difficulties. Sometimes a contract will state that a party can bring the contract to an end by giving in writing.

It is also necessary in an international contract to state which country’s legal system will be used as the governing law in case of any serious between the parties that might result in litigation.