HSLU International Business Law (Contract Law) PDF

International Business Law Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU Ein Bild, das Hemd enthält. Automatisch generierte Beschreibung linkedin.com/in/ueli-grueter digilaw.ch - The digital world and its legal hotspots intla.ch - Inter...

International Business Law Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU Ein Bild, das Hemd enthält. Automatisch generierte Beschreibung linkedin.com/in/ueli-grueter digilaw.ch - The digital world and its legal hotspots intla.ch - International Business Law juristenfutter.ch - The Blog advolab.ai - Laboratory for Artificial Intelligence and Law Illustration: Benjamin Hermann International Business Law Contract Law - Have you already concluded a contract today? - Conclusion of a contract - CO 1: mutual expression of intent by the parties - explicit or implicid (implied behaviour → good faith) - Parties must agree on rights and obligations «Nothing is agreed, until everything is agreed» - Offer and Acceptance Mismatch Match - Offer of a good or service to concluding a contract - Acceptance of the respective offer - An open-ended offer is valid for as long as, in accordance with the principle of good faith, it can be assumed that the other party needs time to evaluate the offer and respond to it. - Recommendation of a time limit for an offer; with reservation of revocation (!; see https://wp.me/p8RKnD-qs) Slide 107, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - «Consideration» in the Anglo-American legal area - Consideration makes a concluded contract effectively enforceable - Consideration is the agreement of an effective exchange of performance and counter performance (→ consideration; does not have to be equal) - Example: purchase contract → needed is purchase object and price - In my opinion, Consideration is not so important in legal practice - Use of terms «contract», «agreement» - synonyms - «contract» rather formal - intergovernmental agreements: Treaty, Convention (e.g. ILO) - Title of a contract - not really legally relevant - it is not important what is written on a contract, but what is written in a contract. - Parties cannot determine type of contract by title → example: service contract / work contract Slide 108, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Contracting Parties - exact individualisation of the contracting parties, especially for companies - example «Novartis» → zefix.ch - search and use the exact firm (name of a company in CH) in the Central Business Name Index zefix.ch (ger.: Zentraler Firmenindex) - Signature authority - especially important when representing companies of great relevance - a contract is void if signed by an unauthorised employee and not subsequently approved by the company (!; CO 38) → possible liability of the non-authorised employee (!; CO 39) - signatory powers published in the commercial register - single signature - joint signature - procura (CH term for agent; single agent signature, joint agent signature, CO 458 ff. ) - example Galliker Transport AG in zefix.ch Slide 109, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Special signature authority according to CO 462 not published in the commercial register - apparent authority based on principle of good faith (CC 2) - example car purchase, cashier Migros - Form of contracts - Contracts are generally valid informally - CO 11: contracts only require a special form if the law requires one - legal forms: - simple written form - qualified written form - notarisation (entry in register is not a contractual form!) - if the contract form is not observed, the contract is - under Swiss law - generally void (!) - contractual reservation of a form, in particular for contract amendments Slide 110, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Written form is always highly recommended! → proof → fewer misunderstandings → less legal or even judicial disputes! - Contract by implied conduct (ger.: konkludentes Verhalten) - Principle of good faith (CC 2) - example: buying a newspaper from a kiosk - Qualified digital signature (CO 14 IIbis) - a qualified electronic signature associated with a qualified time stamp in accordance with the Federal Act on Electronic Signatures (ZertES) is equivalent to a handwritten signature, if Swiss law is applied to the respective contract. - certified provider escrow infrastructure (e.g. [still] post office) Slide 111, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Termination of contracts - Pacta sunt servanda –> lat.: contracts must be fulfilled - termination only by agreement or law (termination clauses) - Swiss Federal Supreme Court: there are no perpetual contracts (BGE 114 II 159, «beer supply contract») - important: always include a termination clause in long-term contracts! - «Money-Back Guarantee» only according to general terms - EU Consumer Rights Directive: general 14-day right of withdrawal for digitally concluded contracts in the B2C sector → does not apply to Switzerland! - contracts for a definite/indefinite period - contracts for a definite period → termination on expiry - contracts for an indefinite period → termination by notice Slide 112, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - contract clause for an indefinite period of time with minimum contract duration: This agreement is concluded for an indefinite period. It may be terminated by giving notice of [number of days or months] at [date], for the first time at [date at the end of the minimum period provided for]. Slide 113, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Drafting of contracts - the be-all and end-all: text clear and understandable for all! - contract must above all be geared to the worst case → «Anything that can go wrong will go wrong» - regulate topics that belong together in the same clauses and/or titles - Change management – Escalation procedure → dispute resolution and law enforcement - Model contracts - e.g. Swico, WEKA, IT model contracts of the federal government → intla.ch - drafting by chatbots, e.g. ChatGPT (OpenAI), Gemini (Google) - inspiring basis - no exclusive copy and paste! - they always must be adapted to a specific project/business! Slide 114, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Often used contract clauses - each contract is basically unique → structure → content - contractual clauses which appear in similar form in different contracts - non-exhaustive list! - Introduction (Preamble) - «Preamble»: latin for introduction → in my opinion outdated - like introduction in a book - making it easier for readers, especially those who were not present when contracts were negotiated and concluded - presentation of contracting parties (neutral, no advertising!) - motivation of contracting parties for conclusion of the contract - very summary description of the contractual object (→ following) Slide 115, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Object of the contract - as detailed description of the contractual object as possible - the most important reference when it comes to verifying the correct and complete fulfilment of the contract - partial shift to annex in the case of complex contractual objects, in particular technology, IT, design → clarity - Warranties and Guarantees - guarantee ≠ warranty - warranty: liability for any defect in the contractual object - warranty: implicit - guarantee: additional assurance of a non-implicit characteristic - guarantee: also e.g. for bank guarantee - material warranty: physical or functional defects - legal warranty: legal defects (especially ownership) - exclusion generally possible → restrictions in B2C in Switzerland partly not possible → intla.ch Slide 116, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Place and time of performance of a contract, other conditions of performance - dispositive rules in the Swiss Law about place of performance → intla.ch - dispositive rule in the Swiss law about time of fulfilment → intla.ch → without agreement immediately → payment deadline is therefore legal deferment of payment - recommendation (!): always explicitly agree on the place and time of fulfilment → especially important in international contracts → also applies to further conditions concerning the fulfilment of the contract - Transfer of benefit and risk - purchase: upon conclusion of the contract (CO 185 1) - illustration of the problem by example of buying a racehorse - possible separation of goods and benefit and risk - explicit agreement that benefit and risk shall in any case pass to the buyer upon handover of the goods Slide 117, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Price and payment methods - price is an essential element of the contract - linked to this are payment arrangements → regulation under the same title - which price for which service - in Swiss law in B2C the price includes, among other things, public charges, copyright fees, disposal fees → intla.ch → no corresponding rules in B2B - recommendation: always agree which taxes, especially VAT, are or are not included in the price - Attention: VAT in international contracts → risk of self-induced double taxation - agreement bearing of delivery costs or costs in connection with the delivery Slide 118, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Types of prices - Unit price - real time and expenses (CH: Regie) - fixed price - maximum price → agreement about controlling - Default interest - legal (dispositive): 5 % p.a. (CO 104) - can be freely agreed but maximum interest rate in B2C in CH (KKG 14) Slide 119, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Confidentiality - contracting parties undertake not to disclose to third parties any information that they receive from the other contracting party within the scope of the contractual relationship and which is not generally known. - in some cases also statutory confidentiality obligation (e.g. employee's confidentiality obligation, CO 321a IV) - recommendation to additionally agree on a contractual obligation of confidentiality also in cases of legal obligation of confidentiality - reference to contractual penalty (→ following) - reference to Letter of Intent, Non-Disclosure Agreement and Non-Use- Agreement (→ following) - sample confidentiality clause → intla.ch Slide 120, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Intellectual property rights (IPR) - trademark, patent, copyright, design → s. following slides and chapter 10 Intellectual Property Law on intla.ch - Who owns IPR created prior to the conclusion of the contract and which play a certain role in the execution of the contract - Who owns IPR arising during the contractual relationship in relation to the contract - Who owns further developments of IPR that have arisen during the contractual relationship in relation to the contract - licences and compensation for these IPR Slide 121, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Liability, exclusion of liability and insurance - liability law → s. chapter 07 Liability Law on intla.ch - liability of the parties to each other - exemption clause → process entry → compensation for costs incurred in legal proceedings by third parties - exclusion of liability only partially or not at all possible → contractual exclusion of liability according to the principle «if it does not help, it does not harm», because it may not be possible to enforce it later or only partially → chapter 07.09 Exclusion of liability on intla.ch - liability insurance → contract-related risks → loss amount → s. chapter 07.11 Liability insurance and 09.12 Legal protection insurance on intla.ch Slide 122, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Termination of the contract - see above and intla.ch Chapter 03.05 Termination of contracts - Force majeure - french/english «Force Majeure» - event affecting the contract from outside - outside the sphere of influence of the parties - e.g. storms, wars, strikes, epidemics/pandemics - possible regulation of temporary/final suspension of the contract → parties no longer have to do anything, can no longer demand anything - as a rule, contracts are reversed in this case - example: travel prevention through pandemic - in Swiss law dispositive application of CO 119 regarding objective impossibility of performance Slide 123, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Transfer of the contract to third parties - based on Swiss law debtor is only obliged to fulfil personally if personality is important for performance (CO 68) - involvement of freelancers and outsourcing partners only if (alternative) - it does not depend on the skills or people in the company - explicit agreement of possibility of subcontracting (→ recommendation!) Slide 124, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Guarantees to ensure the fulfilment of the contract - Pacta sunt servanda - latin for contracts must be fulfilled - ideal case, which often does not occur... - Guarantee as a way of «encouraging» the performance of contracts - real security → there is a liability in property/money - security deposit or real property lien - personnel security → it is a person liable → question of solvency! - guarantee (ger. «Bürgschaft»), also bank guarantee - detention/penalty - contractual penalty (Swiss law: CO 160 ff. ) → high enough to «motivate», but not excessive/disproportionate → possible reduction by judges based on Swiss law (CO 163) → agreement of additional possibility of debt enforcement → agreement of additional compensation for damage exceeding the penalty Slide 125, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Entire Agreement - the present contract comprises all agreements between the parties relating to the subject matter of the contract - replaces all unwanted partial or side agreements - replaces all previous agreements - Change management and escalation procedures - important in long-term relationships - agreement on how the parties will proceed if the situation changes and the contract needs to be adapted (change management) - escalation procedure that helps parties to find their way back to each other in case of disagreements and/or to get themselves out of disputes (escalation) → prevention of going to state courts (expensive, lengthy!) → below and chapter 05 International Litigation and Alternative Dispute Resolutions on intla.ch Slide 126, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Applicable law and Court of jurisdiction - agreement applicable law - not necessary in the relationship CH-CH - but important in the relationship CH-foreign countries - applicable law should always correspond to the court of jurisdiction - agreement court of jurisdiction - always important - always at your own seat or residence Slide 127, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Coordination of contracts - contracts for the same contractual objects (see above) or the same areas may not contain any contradictions and must be synchronised, especially with regard to their termination - examples: - Individual contract - GTC - Software development contract - Software maintenance contract - Software Development/Licensing Agreement - Cloud Contract - company/organisation-wide contract coordination with AI Slide 128, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Letter of Intent, Non-Disclosure und Non-Use-Agreement - Letter of Intent (LoI) - usually concluded with a view to the conclusion of a main contract - e.g. conditions for contract negotiations, in particular who bears the costs, in particular if the main contract is not concluded - Typically does not oblige to conclude the main contract! - Non-Disclosure Agreement (NDA) - promis not to disclose to third parties information that is not known to them - important: connection with contractual penalty (CO 160 ff.)! - NDA without penalty is like a «tiger without teeth» - penalties must be high enough to comply with the NDA, but can be reduced by the judge if disproportionate Slide 129, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Non-Use Agreement (NUA) - NDA is usually not enough! - prohibits obligated parties not only from disclosing classified information to third parties (NDA), but also from using such information themselves and unauthorised by the owner, or from assisting third parties in using it - also important for NUA: combination with contractual penalty (CO 160 ff.)! Slide 130, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - General Terms and Conditions (GTC) - revival of general terms and conditions in the digital world! → mass business - contractual clauses formulated by a party and applied generally to all its business relations or at least to a specific business sector - functions: - rationalisation - checklist - contract dominance → «Getting to Yes» (Havard Negotiation Method) - Acceptance of GTC - the other contracting party must be able to take note of the general terms and conditions - proof (→ record ) - GTC best presented with an offer! Slide 131, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Ambiguity rule - principle of good faith (Swiss Civil Code, CC 2) - unclear clauses in general terms and conditions are interpreted in favour of the party who must accept them and to the disadvantage of the party who applies them (latin: in dubio contra stipulatorem) - rule of unusualness - provisions in the GTC are non-binding for the obligated contractual partner if this contractual partner did not have to expect a provision that is unusual for the respective transaction - example: «Chicken House Case» (Swiss Supreme Court BGE 109 II 452) Art. 154 and 155 SIA* Standard 118 gave the site management the authority to approve the final accounts for the client. according to the Supreme Courte, Art. 154 and 155 of SIA Standard 118 were unusual for a «one-time» client from outside the industry and were therefore not binding *Swiss Society of Engineers and Architects Slide 132, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - «Battle of the Forms» - two or more general terms and conditions apply to the same legal transaction at the same time - risk of contradictions between the GTCs! - never apply more than one GTC to a legal transaction! - adaptation to the wishes of the other parties in the individual contract Slide 133, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law Case «The Yacht Sale» - intla.ch 03.D Contract Law - Cases Slide 134, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law Licence agreement - Definition - Contract on the use of intellectual property rights (trademark, patent, copyright, design), possibly also know-how (licence agreement in the non- property sense) - «licere» → latin a.o. for «to allow someone to do something» - CH: innominate contract: type of contract not regulated by the legislator - CH: no formal requirement, but written form recommended → clarity, provability - Intangible assets can be divided in terms of object, time and geography - Most frequent contract in digital world - Due to downloadable content (music, film, books, apps) possibly the most frequent contract today - I have 160 apps on my mobile phone and therefore at least 160 licence agreements! Slide 135, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Difference licence agreement - purchase agreement - Scope of the transfer of rights - Licence agreement → rights of use - Purchase agreement → property - Parties - Licensor - Licensee - Benefits for licensors and licensees - Benefit for licensors - Multiple recycling (only single recycling in case of sale) - «Economic miracle Bill Gates»! - Benefit for licensees - Technology and/or know-how transfer - Cost savings in development and/or marketing - Sharing in the good reputation of the licensor Slide 136, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Types of licences - Simple licence - Licensor reserves the right to use the right itself and to license the right to a further, open number of interested parties - Sole licence - Licensor reserves the right to use the right itself, but undertakes not to license the right to any other third parties - Exclusive licence - Licensor grants licence only to a single licensee and also refrains from using the right itself - Risk for licensor if licensee does not succeed! -> minimum fee - Right to sublicense - Only given if licensor explicitly grants the right Slide 137, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Checklist licence agreement - Introduction - Definitions - Contract object - Intellectual property rights and/or know-how - Documentation - Clear (also for third parties!) and detailed description as possible - Scope of the licence - factual, temporal, geographical - if nothing has been agreed transfer of purpose theory for copyright → - Exclusivity → types of licences - Further services of the licensor Slide 138, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Royalties - No legal provisions at all - Parameters for determining a licence fee - Development/production costs - Alternative offers from competitors - Benefit of the licence for the licensee - Types of royalties - Flat Fee - Ongoing charges → unit charge, percentage charge - Minimum fee for exclusive licence  - Service fees - Important: clearly define what you are paying for! - Calculation and review - Reports, checks by independent trustees Slide 139, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Improvements/additions to the licence object - Ownership of new intellectual property rights - Obligation to license improvements/additions → price? - Obligation to adopt improvements/additions → price? - Right to register intellectual property rights → - Non-Disclosure/Non-Use Agreement  - Quality control Slide 140, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Legal guarantee - Obligation of the licensor to prosecute infringements by third parties - Possibly authorisation of the licensee to enforce his own rights - Mutual support obligation in the event of attacks by third parties → costs? - Material warranty - Quality of the licensed product - Defect is in particular missing or insufficient function - Liability → - Contractual security  - Duration, termination of the contract - Right to transfer the contract - Integrating components Slide 141, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law - Form of the amendment/supplement to the contract - Change Management - Escalation → - Applicable law and place of jurisdiction → Slide 142, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law Case «Waver» - intla.ch 03.D Contract Law - Cases Slide 143, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law Glossary agreement, contract the statement (oral or written) of an exchange of promises offer where a proposition is made by one party to another regarding a specific proposal in order to enter into an agreement with that other party counter-offer an offer made by someone who has rejected a prior offer acceptance behaviour or words signifying consent to the terms of an offer consideration a key element of contract formation, this represents the benefit for which an agreement is to be bargained for between the parties Slide 144, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law offeror the maker of the offer offeree the recipient of the offer mutual common to or shared by two or more parties; reciprocally acting or related congruent corresponding penalty (for non-performance) is to be paid if agreed and if the contract is broken VAT value-added tax nondisclosure agreement contract which binds one party to a promise not to disclose certain information as a trade secret to others, unless allowed to do so Slide 145, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern International Business Law Force Majeur confirmation that there shall be no breach of contract or liability if an event outside of the control («Force Majeure») of the parties occurs which causes the affected party or parties to be delayed or prevented from carrying out their obligations Slide 146, © 2008 - 2024 - Lucerne School of Business - Ueli Grüter, LL.M., Attorney at Law, Lecturer HSLU, CH-Luzern