8. Settling commercial disputes

A Contract defines rights and obligations of the parties involved. In case of breach of the Contract the sufferer makes a claim on the party which fails to meet its contractual obligations. It is more often the case that when the Buyer makes a claim on the Seller.

Most often the Buyer makes quality and quantity claims on the Seller. The cause for complaints may be poor quality, breakage, damage, short weight, leakage, etc.

In case of short-weight it is recompensed by a load sent separately or at the time of follow -up shipments. In case of damage or faults, the goods at the Buyer's option can be repaired all at the Seller's expense.

If the goods are missing, the Seller must necessarily locate them. The Seller in his turn is entitled to make a claim on his counterpart if the Buyer fails to meet his contractual obligations. The Seller may inflict penalties on the Buyer if there is a default in payment.

9. The arbitration clause.

The Arbitration Clause is an obligatory clause of every contract in international business transactions, ft includes-the terms of settling commercial disputes, which may arise out of making the Contract.

The Arbitration Clause is drawn up most frequently in the following way: «Should the Sellers or the Buyers fail to settle in an amicable way any dispute or difference, which may arise out of or in connection with the present Contract the same shall be referred, without recourse to law courts, to arbitration in Stockholm». That may be the Seller or the Buyer's country; the parties may also apply to arbitration in third countries. The choice depends on the amount of the arbitration expenses. The arbitration tribunal shall consist of two arbitrators and an umpire.

The arbitration award shall be adopted in accordance with the conditions of the present contract by a majority of votes within 3 months of the date, of the appointment of the umpire. The award should be made out in written form, state its reasons, the distribution of arbitration costs and be signed by all the members of the arbitration tribunal.

The arbitration award shall be final and binding upon both parties and without appeal. The parties undertake to fulfill the award in time and without enforcement.

10. Force majeure

Force majeure is a force against which you cannot act. Every contract has a force majeure clause. It usually includes natural disasters such as an earthquake, flood. fire. etc. It can also list such contingencies as war. embargo, and sanctions. Along with this there are some other circumstances beyond the Seller's control. The Seller may find himself in a situation when he can't fulfill his obligation under the Contract. It may happen if there is a general strike in the country, a strike of coal-miners, transport workers, etc. Production may be suspended if there is a shortage of the energy supply. When negotiating a Contract a list of contingencies must be agreed on and put into the Contract.

When a manager makes up a contract he must not think only of his one-sided interest. He must think in terms of common interest with his counterpart. A force majeure must be a proven fact. The Seller is to submit to the Buyer a written confirmation issued by the Chamber of Commerce to this effect. The duration of a force majeure is as a rule. 4 or 6 months. After that the Buyer has the light to cancel the Contract.