Governing law and arbitrationLesson 62 of 136

Governing law and arbitration

The United Nations Convention on Contracts for the International Sale of Goods (CISG) automatically applies to many international sales contracts unless the parties opt out, and it fills gaps a short contract may not address explicitly. Beyond that, a contract should state which country's law governs it and how disputes will be resolved: through the courts of a named country, or through arbitration, which is often faster and more practical for cross-border disputes because the resulting award is easier to enforce internationally than a foreign court judgment.

For a small or first order, formal arbitration clauses may be impractical to negotiate, but you should still know, in principle, what your recourse would be if a serious dispute arose, rather than discovering you have none only after a problem occurs.

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