CONTRACTS

UNIDROIT WORK AND INSTRUMENTS IN THE AREA OF CONTRACT LAW

UNIDROIT’s work on contract law is extensive, aiming to offer harmonised rules to respond to the evolving needs of modern transactions. Its work includes the UNIDROIT Principles of International Commercial Contracts, Conventions on International Financial Leasing and International Factoring, the Model Franchise Disclosure Law and the Model Law on Leasing, the Guide to International Master Franchise Arrangements. Currently work on the preparation of principles for other specific contracts is underway (e.g. reinsurance contracts). UNIDROIT has also published a Legal Guide on Contract Farming (together with FAO and IFAD) and a Legal Guide on Agricultural Land Investment Contracts (together with IFAD). On these latter instruments see the Agriculture and Private Law page please.

LATEST NEWS

UNIDROIT and School of Law, National University of Mongolia sign Memorandum of Understanding

On 12 March 2024, UNIDROIT Deputy Secretary-General Anna Veneziano and…

Read More

Bank Insolvency – 6th Working Group session held in Rome

Between 4 to 6 March 2024, the Working Group on…

Read More

UNIDROIT and OTIF announce Entry into Force of Luxembourg Rail Protocol

On 8 March 2024, at a special intergovernmental meeting at…

Read More

The UNIDROIT Principles of International Commercial Contracts (UPICC) constitute a non-binding codification or “restatement” of the general part of international contract law. They provide a balanced set of rules adapted to the special requirements of modern international commercial practice and are designed for use throughout the world irrespective of the legal traditions and the economic and political conditions of the countries in which they are to be applied.

The latest edition of the UNIDROIT Principles (2016) consists of 211 Articles in 11 Chapters, covering: General Provisions, Formation and Authority of Agents, Validity, Interpretation, Content, Third Party Rights and Conditions, Performance, Non-performance, Assignment of Rights, Transfer of Obligations, Assignment of Contracts, Limitation Periods, Plurality of Obligors and of Obligees. The black-letter rules of the Principles are accompanied by a commentary and examples to illustrate how the rules operate in practice.

Welcomed from their first appearance as “a significant step towards the globalisation of legal thinking”, over the years the UNIDROIT Principles have been well received not only by academics, but also in practice, as demonstrated by the numerous court decisions and arbitral awards rendered world-wide that refer in one way or another to the UNIDROIT Principles (see the UNILEX database). They have also served as a model for many domestic legal reforms and other law-harmonisation initiatives.

Access the UNIDROIT Principles of International Commercial Contracts (2016) Webpage

Full text of the UNIDROIT Principles (2016) (pdf)

Cases

Conferences and Seminars

The Model Clauses are an instrument accompanying the UNIDROIT Principles of International Commercial Contracts: they provide guidance to parties intending to indicate in their contract more precisely in what way they wish to see the UNIDROIT Principles used during the performance of the contract or applied by judges and arbitrators when a dispute arises.

The Model Clauses are divided into four categories according to whether their purpose is

(i) to choose the UNIDROIT Principles as the rules of law governing the contract;

(ii) to incorporate the UNIDROIT Principles as terms of the contract;

(iii) to refer to the UNIDROIT Principles to interpret and supplement the CISG when the latter is chosen by the parties, or

(iv) to refer to the UNIDROIT Principles to interpret and supplement the applicable domestic law, including any international uniform law instrument incorporated into that law.

Where appropriate, for each Model Clause two versions are proposed, one for inclusion in the contract (“pre-dispute use”) and one for use after a dispute has arisen (“post-dispute use”).

Access the UNIDROIT Model Clauses Webpage

UNIDROIT is associated with the preparation of “Principles of Reinsurance Contract Law (PRICL)” conducted by a Group of scholars and practicing lawyers from the global insurance and reinsurance markets, led by Professor Anton K. Schnyder and Professor Helmut Heiss (University of Zurich, as “Lead Agency”), Professor Martin Schauer (University of Vienna) and Professor Manfred Wandt (University of Frankfurt).

The purpose of the project is to formulate a “restatement” of existing global reinsurance law, which is largely embedded in international custom and usage, but is seldom the object of legislation. The project leaders expressed the view that the proposed principles presupposed the existence of adequate rules of general contract law. Rather than attempting to re-create such rules, the proposed new principles should refer to the UNIDROIT Principles of International Commercial Contracts as the general part of contract law. Following the Governing Council’s recommendation, the topic was included by the General Assembly in the UNIDROIT Work Programme for the triennium 2017-2019.

At the first workshop of the Project Group (Zürich, 27-30 January 2016) the participants agreed that specific principles and comments should be drafted on the following topics: choice-of-law, non-disclosure, errors and omissions, conditions precedent, event/accumulation/aggregation, late notice, back-to-back cover, “follow the fortunes” and “follow the settlement” principles, cooperation, time bar rule, termination and recapture, extra contractual obligations of the reinsured. The Group completed the formulation of the first part of PRICL in 2019. Work on a second part of Principles started in 2020 and is expected to cover Backto-Back-Cover; Non-contractual Liability Clauses; Termination and Recapture; and Limitation Periods. UDue to the connections between a number of these topics and the UNIDROIT Principles of International Commercial Contracts, the PRICL Working Group asked UNIDROIT to continue its involvement under the same conditions as before (i.e., in-kind contribution through participation of a representative in the biannual Working Group meetings). This proposal was approved by the UNIDROIT Governing Council at its 98th session and recommended for adoption by the General Assembly. The General Assembly endorsed the continuation of the project for the 2020–2022 Work Programme at its 2019 session.

See the Working Group webpage at Zurich University

For an overview of the project see the UNIDROIT PRICL webpage 

The UNIDROIT Guide to International Master Franchise Arrangements was first published in September 1998, a second edition in English following in 2007. The purpose of the Guide is to spread knowledge with a view to providing all those who deal with franchising, whether they be franchise operators, lawyers, judges, arbitrators or scholars, with a tool for the better understanding of the possibilities franchising, master franchising in particular, offers. In particular it aims to assist parties in negotiating and drawing up international master franchise agreements by identifying the legal issues involved in those agreements, discussing possible approaches to the issues and, where appropriate, suggesting solutions which the parties may wish to consider.

Access the UNIDROIT Master Franchise Guide Webpage

Guide to International Master Franchise Arrangements (2nd ed.) Full Text

The Model Franchise Disclosure Law: building upon the work of preparation of the Guide to International Master Franchise Arrangements, the Model Franchise Disclosure Law was drafted to provide guidance to domestic legislators willing to address the imbalance in relationships between the franchisor and its franchisees or the sub-franchisor, and the risks of sharp or abusive practices occurring on the part of the franchisor regarding the information prospective investors are required to disclose prior to entering into the agreement.

The Governing Council of UNIDROIT adopted the Model Franchise Disclosure Law finalised by a Committee of Governmental Experts, together with the Explanatory Report thereto, on 25 September 2002.

Model Franchise Disclosure Law Full Text

UNIDROIT prepared international instruments on leasing and factoring, two trade financing mechanisms of increasing importance both at international and domestic levels.

The UNIDROIT Convention on International Financial Leasing and the UNIDROIT Convention on International Factoring were prepared in parallel and were both adopted in Ottawa on 28 may 1988. They intend to provide harmonised rules for transactions which are regulated under different legal regimes in domestic law, thus facilitating the cross-border financing of equipment (financial leasing) and the mobilisation of receivables (factoring) based on an international contract for the supply of goods or services.

Access the UNIDROIT Convention on International Financial Leasing Webpage

Access the UNIDROIT Convention on International Factoring Webpage

The UNIDROIT Model Law on Leasing: Building upon the work of preparation of the UNIDROIT Convention on International Financial Leasing, the UNIDROIT Model Law on Leasing intends to present for consideration by national legislators a harmonised legal regulation of leasing on a global basis in order to facilitate trade in capital goods,. The Model Law focusses on the private law aspects of leasing, covering an extended range of assets used in commercial transactions, including both financial leases and non-financial leases.

The Model Law was adopted at a Joint Session of the UNIDROIT General Assembly and the UNIDROIT Committee of governmental experts for the finalisation and adoption of a draft model law on leasing (Rome, 10-13 November 2008)

Access the UNIDROIT Model Law on Leasing Webpage

See also

Contracts in relation with the taking of security over high-value mobile (see the Secured Transactions Portal), transactions over securities (see the Capital Markets Portal), contract farming arrangements and agricultural land investments contracts (see the Agriculture Portal).