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Legal Study Notes

LAW10013 Week 4: Week 4 Collab Notes

Week 4 – International Sales Contracts (Part 2): The UNIDROIT Principles

Section titled “Week 4 – International Sales Contracts (Part 2): The UNIDROIT Principles”

Subject: LAW10013 – Commercial Law Lecturer: Nick Nicolopoulos Date: TP2 2025 Materials: Transcript only

Overview

Section titled “Overview”

Topic Summary This week introduced the UNIDROIT Principles of International Commercial Contracts (‘UPICC’) and their use in interpreting, supplementing, or even governing international commercial agreements, especially where the CISG (Vienna Convention) does not apply or is silent. The UPICC are non-legislative, soft law instruments developed by the International Institute for the Unification of Private Law (UNIDROIT), providing a harmonised set of rules for cross-border commercial contracts. The class focused on the function of the UPICC as lex mercatoria, their non-binding nature unless agreed to, and the Rechtbank Amsterdam case study regarding COVID-19 and contract enforcement.

Section titled “Key Concepts and Legal Doctrines”

1. UNIDROIT Principles – Purpose and Nature

Section titled “1. UNIDROIT Principles – Purpose and Nature”

Application

  • Supplement the CISG where it is silent
  • Used when parties choose “general principles of international commercial law”
  • Applicable where parties opt out of national laws but do not specify a substitute legal regime

Legal Character

  • Soft law (not binding unless expressly adopted)
  • Can be referred to in arbitration, mediation, or litigation
  • Sometimes invoked as lex mercatoria (the ‘law of merchants’)

2. Functions and Key Principles

Section titled “2. Functions and Key Principles”

Core Values

  • Good faith and fair dealing
  • Cooperation in performance
  • Uniform application of contract terms
  • Recognition of trade usages and commercial practices
  • Authority of agents and their ability to bind principals

Scope of Coverage

  • Agency
  • Remedies (including force majeure, hardship)
  • Contract interpretation
  • Supply chains and third-party involvement
  • Arbitration/litigation where forum law is uncertain
Section titled “3. Legal Framework and Dispute Resolution”

Agency Rules

  • Recognise that agents can bind principals by express or implied authority
  • Useful where companies operate via local distributors rather than direct personnel

Arbitration vs Mediation

  • Arbitration is binding, often selected under UPICC as preferred resolution mechanism
  • Mediation is consensual and non-binding

UPICC and Private International Law

  • Often used where parties wish to avoid choosing a national law
  • Provide a default framework under ‘general principles of international commercial law’

Lex Mercatoria

  • A broader term under which UPICC may fall
  • Allows parties to agree on transnational legal norms instead of national systems

IRAC Case Summaries

Section titled “IRAC Case Summaries”

Case: Rechtbank Amsterdam (30 April 2020)

Section titled “Case: Rechtbank Amsterdam (30 April 2020)”
ElementDetail
IssueWhether a letter of intent was enforceable as a binding contract during COVID-19
RuleParties can opt out of national law and adopt UPICC; enforceability depends on intent and external circumstances
ApplicationDutch company failed to follow through on acquiring 50% stake in US company. Letter of intent included a €30M penalty clause. COVID-19 cited as an external impediment
ConclusionCourt found no enforceable contract. No obligation to proceed or pay the penalty clause
RatioUPICC used to interpret parties’ intentions and assess fairness during unprecedented events; pandemic was not foreseeable and impacted performance capacity oai_citation:2‡LAW20009 Collab Transcript Week 4.txt
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Worked Examples

Section titled “Worked Examples”

Problem: COVID-19 Supply Chain Disruption

Section titled “Problem: COVID-19 Supply Chain Disruption”

Facts A seller in Country A agrees to deliver cars to a buyer in Country B. Transit is delayed indefinitely due to a blockade (e.g. Suez Canal). Buyer sues for breach.

Issue(s)

  • Is the non-performance excused by a force majeure clause or hardship principles under UPICC?
  • Can buyer seek damages or termination?

Lecturer’s Reasoning

  • Such blockades may fall under force majeure/hardship provisions
  • If beyond seller’s control and unforeseeable, performance may be excused
  • Remedies may depend on how the parties drafted their agreement

Answer Summary ✓ Delay likely excused under UPICC hardship/force majeure principles ✓ Buyer must consider third-party performance limitations ✓ Remedy may include suspension or renegotiation, not necessarily termination oai_citation:3‡LAW20009 Collab Transcript Week 4.txt

Practical Exam and Study Tips

Section titled “Practical Exam and Study Tips”

Memory Aids / Mnemonics

  • FAIR: Fair dealing, Agency, International principles, Remedies
  • GHOST: Good faith, Hardship, Obligations, Soft law, Third parties

Supplementary Reading and References

Section titled “Supplementary Reading and References”

Cases Mentioned (AGLC4 format)

  • Rechtbank Amsterdam (Netherlands), 30 April 2020 – Letter of Intent dispute over pandemic-delayed merger
  • Unilex International Case Law Database – Cases applying UPICC to international disputes

Legislation / Instruments

  • UNIDROIT Principles of International Commercial Contracts (most recent edition)
  • CISG – Vienna Convention
  • Lex Mercatoria (customary international commercial law)

Other Sources

Open Questions or Clarifications

Section titled “Open Questions or Clarifications”
  • When does a hardship clause under UPICC apply vs. force majeure?
  • How should parties distinguish between a binding contract and a non-binding letter of intent?
  • Can UPICC be used alongside the CISG in hybrid models?