UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
UNIDROIT (The International Institute for the Unification of Private Law)
was founded in 1926, when French was the dominant international
language.
It is the acronym of its French designation, “Institut international pour
l'unification du droit privé.“
UNIDRIOT is an intergovernmental organisation with the objective to
harmonise international private law through uniform rules,
conventions, model laws etc.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
PREAMBLE
These Principles set forth general rules for international commercial contracts.
They shall be applied when the parties have agreed that their contract be governed by
them.
They may be applied when the parties have agreed that their contracts be governed by
general principles of law, the lex mercatoria or the like.
They may provide a solution to an issue raised when it proves impossible to establish
the relevant rule of applicable law.
They may be used to interpret or supplement international uniform law instruments.
They may serve as a model for national and international legislators.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
SCOPE OF THE PRINCIPLES
1. Limited to International Contracts only
2. Principles restricted to Commercial Contracts only
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
Comparing CISG and Principles
Principles are a more comprehensive instrument than the CISG
• Principles enacted to overcome problems/gaps in the CISG.
• Principles not aimed at becoming a binding instrument.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
CISG
Article 7
(1) In the interpretation of this Convention, regard is to be had to its
international character and to the need to promote uniformity in its
application and the observance of good faith in international trade.
(2) Questions concerning matters governed by this Convention which
are not expressly settled in it are to be settled in conformity with
the general principles on which it is based or, in the absence of such
principles, in conformity with the law applicable by virtue of the
rules of private international
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
Article 7(2) requires a two step process:
First
(a) Identification of questions concerning matters governed by this
Convention.
(b) Finding the ‘general principles of law’ on which it (the Convention)
is based.
Second
Apply conflict of law rules of forum to determine the applicable law.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
General Principles on which the Convention is based
1. Article 6: The parties may exclude the application of this Convention
or, vary the effect of any of its provisions.(Party Autonomy)
2. Article 7: Observance of good faith in international trade
3. Article 11: A contract of sale need not be concluded in or evidenced
by writing and is not subject to any other requirement as to form. It
may be proved by any means, including witnesses.
4. Burden of proof rule
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
CONTENTS COMPARED
CISG v. Principles
Article 3
A party may avoid the contract when it has been led to conclude the
contract by the other party’s fraudulent representation….or fraudulent
non – disclosure of circumstances, which according to reasonable
commercial standards of fair play, the latter party should have
disclosed.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
CONTENTS COMPARED
CISG v. Principles
Article 25 CISG
A breach of contract committed by one of the parties is fundamental if
it results in such detriment to the other party as substantially to
deprive him of what he is entitled to expect under the contract, unless
the party in breach did not foresee and a reasonable person in the
same circumstances would not have foreseen such a result.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
CONTENTS COMPARED
CISG v. Principles
Article 7.3 Principles
In determining whether a failure to perform an obligation amounts to a fundamental non-
performance regard shall be had, in particular, to whether
(a) the non-performance substantially deprives the aggrieved party of what it was entitled to
expect under the contract unless the other party did not foresee and could not reasonably have
foreseen such result;
(b) strict compliance with the obligation which has not been performed is of essence under the
contract;
(c) the non-performance is intentional or reckless;
(d) the non-performance gives the aggrieved party reason to believe that it cannot rely on the
other party's future performance;
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
CONTENTS COMPARED
CISG v. Principles
Hardship and Force Majeure
•Article 6 defines hardship as a situation where the occurrence of events fundamentally alters
the equilibrium of the contract. The existence of hardship gives the disadvantaged party a
right to request that the parties renegotiate the contract. Upon failure to reach an agreement,
the disadvantaged party can request the court or arbitral tribunal to either terminate or adapt
the contract
•Article 7 incorporates the provision of force majeure and says if there is an "impediment
beyond the party's control" and the party "could not reasonably be expected to have taken
the impediment into account at the time of the conclusion of the contract or to have avoided
or overcome it or its consequences.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS CONTENTS COMPARED
CISG v. Principles
Article 78 (CISG)
If a party fails to pay the price or any other sum that is in arrears, the other party is
entitled to interest on it.
Article 7.4 (Principles)
(1) If a party does not pay a sum of money when it falls due the aggrieved party is
entitled to interest upon that sum from the time when payment is due to the time of
payment.
(2) The rate of interest shall be the bank lending rate to prime borrowers prevailing for
the currency of payment at the place for payment
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
TERMS OF CO – EXISTENCE
1. Sales Contract
2. Contracts other than Sales Contracts
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
Choice of Law Clause
This contract shall be governed by the CISG, and with respect to
matters not covered by the Convention, by the general principles of
law.
UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL
CONTRACTS
Choice of Law Clause
This contract shall be governed by the CISG, and with respect to
matters not covered by the Convention, by the UNIDROIT Principles of
International Commercial Contracts.
