International Agreement in Contract Law

International Agreement in Contract Law: A Comprehensive Guide

In the world of business, contracts play a vital role in ensuring smooth transactions between parties. However, with the increasing globalization of business, contracting across borders has become more common, making it necessary for international agreement in contract law. As a professional, I will provide a comprehensive guide on international agreement in contract law.


International agreement in contract law refers to the set of legal principles that govern contractual relationships between parties from different countries. It encompasses the rules and regulations that control the formation, validity, interpretation, and enforcement of international contracts. These principles are designed to provide a level playing field for businesses in different countries and to avoid conflicts that may arise due to differences in legal systems.

Sources of International Agreement in Contract Law

There are various sources of international agreement in contract law, which include:

1. International Conventions: These are agreements that have been signed by multiple countries and aim to create uniformity in international contract law. Examples of international conventions include the United Nations Convention on Contracts for the International Sale of Goods (CISG), the Hague Convention on the Law Applicable to Contractual Obligations (Hague Convention), and the International Institute for the Unification of Private Law (UNIDROIT) Principles of International Commercial Contracts.

2. National Laws: International contracts are also subject to the laws of the countries in which they are formed. For instance, if a contract is formed in Japan, Japanese law will govern that contract. However, national laws may conflict in some instances, leading to legal uncertainties.

3. Customary International Law: This refers to the general practices and principles that are accepted by the international community and apply to international contracts. Customary international law may be used to fill gaps in international conventions or national laws.

Key Principles of International Agreement in Contract Law

The following are some of the key principles that govern international agreement in contract law:

1. Freedom of Contract: This principle allows parties to enter into contracts voluntarily without coercion, undue influence, or fraud. Parties are free to negotiate the terms of the contract, subject to the requirements of national laws and international conventions.

2. Validity of Contracts: International contracts must meet the requirements of validity in the countries in which they are formed. These include capacity to contract, consent, consideration, and legality of the object.

3. Interpretation of Contracts: The language used in international contracts may be different from the parties` native languages, leading to ambiguity and misunderstandings. Therefore, interpretation rules are necessary to ensure that the parties` intentions are clear.

4. Performance of Contracts: International contracts must be performed in good faith and according to the agreed-upon terms. Non-performance, delay, or breach of contract may result in legal action.

Enforcement of International Contracts

Enforcement of international contracts is often challenging due to differences in legal systems, language, and culture. However, the following mechanisms are available for enforcing international contracts:

1. Alternative Dispute Resolution (ADR): This includes mediation, arbitration, and conciliation, which are aimed at resolving disputes without going to court.

2. National Courts: Parties may seek legal redress in the national courts of the country in which the contract was formed or breached.

3. International Courts and Tribunals: These include the International Court of Justice (ICJ), the International Chamber of Commerce (ICC), and the International Court of Arbitration (ICA), which provide a forum for resolving disputes arising from international contracts.


International agreement in contract law is essential in the global business landscape. It provides a framework for creating and enforcing international contracts, ensuring that parties can work together despite differences in legal systems. However, parties must understand the key principles of international agreement in contract law and the available mechanisms for enforcement to avoid legal and commercial risks.