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International contracts in the XXI century: harmonization of rules or standardization of clauses?

WUSTL

This Saturday I will be presenting a paper at the Third Annual Workshop on International and Comparative Law, at the Center on Law, Innovation and Economic Growth of Washington University School of Law, in St. Louis, Missouri.

The paper is entitled: International contracts in the XXI century: harmonization of rules or standardization of clauses?

Here is the abstract:

In international trade the differences relating to the applicable legal rules, namely costs related with the difficulty in finding out about the provisions of an applicable foreign Contract Law, obtaining legal advice and negotiating the applicable Law have the effect of a ‘tax’. Hence, the reduction of costs related to Contract Law in cross-border transactions is one of the main purposes of several entities that pursue the harmonization and standardization of Contract Law. A good example of this is the recent Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law. Despite its good intentions, the Proposal is unlikely to significantly reduce any of the costs at which it is directed, and might even result in the rise of some of them. The real-world relevance of some of the proposed measures is unclear. In our opinion, the effects of reduction of transaction costs resulting from the harmonization or standardization will be limited. On the other hand, the European Commission’s argument that transaction costs will be reduced if the Proposal comes into force must be confronted with the costs associated with the creation of an optional legal regime. Finally, the existence of different contractual regimes, as such, might not create significant barriers to crossborder trade, taking into account the role played by the standardization of contracts.

In our paper we aim to discuss the role of harmonization and standardization of Contract Law as a measure to promote trade and economic development. We will also analyse how traders have been dealing with the diversity of legal regimes through other mechanisms such as the development of standardized contracts, essentially self-sufficient, which render the divergence between the default rules of the different national to become basically irrelevant.


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