Legal Aspects of Import Contracts

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In Germany, contracts with foreigners are governed primarily by the general civil law provisions of the Civil Code and the Commercial Code, assuming the law of the Federal Republic of Germany is applicable at all. There is no special code of law that deals specifically with contracts with foreigners.

Both under German and foreign law, there are no general requirements as to the form that import contracts must take. However, it is always better for them to be made in writing so that if any dispute should arise, it is possible to provide tangible evidence on what was actually agreed.

Orders are legally valid even if placed by telephone. They may also be confirmed by letter, for example from the German importer, specifying the agreed terms of delivery ( price, date, etc. ) and warranty, and also stipulating that the contract is to be governed by German law. In the absence of any such agreement, then, according to international private law, the law in force at the place of domicile of the seller applies.

The details for import transactions must be negotiated between the parties involved. In the case of deals of a regularly recurring type, it may make sense to use standard contract forms. Such contracts can then usually be adjusted by making minor modifications in the case of specific transactions, without having to change the fundamental agreement as a whole. It is however, necessary to ensure that any additions or amendments relating to a specific transaction are not in contradiction with the fundamental contract clauses or any mandatory legal provisions in the country of either party.

In the case of long-term business relations with repeat deliveries of the same kind, a framework agreement can be made. Unlike a standard contract, this only lays down the main points of the agreement between the parties. The concrete terms ( delivery, date, quantity, quality, price ect. ) must then be specified individually for each particular delivery.

For import contracts between German and foreign partners, it is possible to agree that the UN Convention on Contracts for the International Sale of Goods shall apply ( also known as UNCITRAL ). This provides a legal framework specifically designed for the needs of the international sale and purchase of goods. The text of UNCITRAL sales law can be obtained from the

Federal Office of Foreign Trade Information

Agrippastr. 87-93

50676 Köln

Mailing Address: P.O.Box 10 05 22 , 50445 Köln

Tel: 0221-20570

Fax: 0221-2057 212,262,275

Internet: http://www.bfai.com

e-mail: bfai@geod.geonet.de

in a three-language version ( German, English, French ).

In force in Germany since January 1, 1991 UNCITRAL is so far valid in over 30 countries. Unless the applicability of UNCITRAL is unequivocally ruled out by the parties, it is valid for all cross-border sale and purchase contracts between parties in the signatory states. The application of UNCITRAL can also be agreed with business partners in countries which have not yet ratified the convention.

To ensure uniform interpretation of certain delivery clauses which are customary in international trade, foreign trade contracts should make reference to the Incoterms . The

Incoterms regulate the precise delivery and acceptance obligations of the parties, the transfer of risk, the attribution of costs, transport and insurance matters, and the procurement of the documents and certificates of origin.

The incoterms only relate to sale and purchase contracts and not to any other contracts connected with delivery ( e.g. forwarding contracts ). Nor do they regulate the terms of payment, the legal venue in the case of disputes, the transfer or title, or notices of defects. The latest version of the Incoterms can be obtained from the International Chamber of Commerce ( ICC ). The ICC has a branch in Germany at the following address.

ICC Deutschland Internationale Handelskammer

P:O:Box 10 08 26

50448 Köln

Tel: 0221-2575 571

Fax: 0221-2575 593

Internet: http://www.iccwbo.org

e-mail: icc@icc-deutschland.de

In the case of foreign orders, a German importer will, as a rule, insist on a legal venue in Germany for the settlement of disputes. However, the parties should also consider whether it may not be better to submit to the jurisdiction of a court of arbitration in the event of disputes, instead of an ordinary court of law. In this case, an institutional court of arbitration or one formed ad hoc can be agreed. However, disputes can only be submitted to, a court of arbitration for settlement if a clause to this effect has been agreed in the contract.

Questions on courts of arbitration should be sent to any of the following:

Deutsche Institution für

Schiedsgerichtsbarkeit e.V. ( DIS )

( German Institution for Arbitral Jurisdiction )

Schedestrasse 13

53113 Bonn

Tel: 0228-210 023 , 210 024

Fax: 0228-212 275

e-mail: dis@dis-arb.de

DIS Geschäftsstelle Berlin

( DIS Berlin Office )

Fasanenstr. 85

10623 Berlin

Tel: 030-315 105 89

Fax: 030-315 101 20

DIS Geschäftsstelle München

( DIS Munich Office )

Max-Josef Str. 2

80333 München

Tel: 089-5116 258

Fax: 089-5116 8258

The DIS - the German Institution for Arbitral Jurisdiction - is able to rule in contractual and other disputes ( arising from contracts for the supply of goods and services, joint ventures, sales agencies, etc. ), provided a clause to this effect has been agreed between the parties.

In certain cases, it may also be preferable to agree on arbitration in a third country.

SOURCE: GERMANY INFO