International Terms and Conditions – Which Law

If you are a supplier who often deals with customers outside of the UK, you may have experienced customers insisting on their local law applying to your terms and conditions. Suppliers often agree to this request by simply removing “English law” from their terms and conditions and replacing it with, for example, “German law” unaware of the consequences this will have upon their legal rights.

Law and Jurisdiction

There is an important difference between applicable law and applicable jurisdiction. Applicable law specifies the country’s laws that will apply to your agreement if there is a dispute. Jurisdiction specifies which courts will have authority to deal with a dispute. Usually in the UK your terms and conditions will specify England and Wales as the applicable law and the courts of England as the jurisdiction.

If you agree to change the applicable law in your terms a conditions you should also consider changing the country in which the courts are located which will deal with a dispute.

Language

Do not forget to specify in your terms and conditions in which language disputes should be dealt with. If you do not speak or understand the local language of your customer, you should state that all disputes must be dealt with in English, particularly if you have agreed to your terms and conditions being translated into your customer’s local language. You should also state that the English version of the terms and conditions should prevail if there is a discrepancy between the two versions.

Limitation of Liability

By agreeing to a change of the law applicable to your terms and conditions you could automatically be invalidating many of the limitations on liability contained in your terms and conditions. For example, in France and Germany you cannot limit liability for gross negligence, wilful misconduct, breach of material obligations or some types of force majeure.

Damages Available

By agreeing to a change of the law applicable to your terms and conditions you may also become liable for types of damages that you claim to exclude in your terms and conditions, i.e. direct damages, indirect damages, typically foreseeable damages, punitive damages, as in some countries liability cannot be limited for these types of damages or the local understanding of what types of losses fall within these categories may differ from English law.

If you are a supplier who often deals with customers outside of the UK, you may have experienced customers insisting on their local law applying to your terms and conditions. Suppliers  often agree to this request by simply removing “English law” from their terms and conditions and replacing it with, for example, “German law” unaware of the consequences this will have upon their legal rights.

General

For the above reasons English law is often the law of choice for international terms and conditions as suppliers can more easily avoid “hidden” mandatory laws which can invalidate their carefully drafted terms. 

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