General Provisions in International Transaction Agreements

General Provisions

When drafting an English-language contract, there are general provisions that apply regardless of the type of contract (of course, some contracts contain no such provisions, some contain simplified provisions, and some contain only certain provisions). Such provisions are called General Provisions (sometimes referred to as Miscellaneous provisions in the contract). General provisions include the following provisions.

Duration

The beginning and ending dates of the contract are specified. If the contract is automatically renewed after the expiration of the term, it will be so stated.

This Agreement shall be effective on the date of execution hereof, and shall remain in full force for a period of two (2) years from that date, unless sooner terminated in accordance with the terms hereof. Upon mutual agreement of the parties hereto, this Agreement shall be renewed or extended for successive two (2) years, pursuant to mutual agreed upon terms and conditions.

Termination

This section defines the grounds for termination of the contract in the middle of the contract. In the event of default, bankruptcy, or other breach of trust, the contract is terminated if the defect is not cured within a certain number of days after notice. In some cases, the contract is terminated due to the occurrence of certain events, and in other cases, the contract is terminated after a certain period of time has elapsed after a notice of termination has been sent.

Termination by Due to Non-Performance
In the event any of the events listed below occurs to either Party (hereinafter “Defaulting Party”), the other Party (hereinafter “Notifying Party”) shall notify the Defaulting Party of such circumstance, and if such breach is not cured within thirty (30) days after such notice to cure the breach, Notifying Party may terminate this Agreement without prejudice to its right to claim for damages against the Defaulting Party:
(a) Improper or unfair conduct in the performance of this Agreement;
(b) Breach of obligations under this Agreement;
(c) Breach of any agreement entered into hereunder between Seller and Purchaser in relation to the Product.

Termination without Notice
If either Party files a bankruptcy petition, commences corporate rehabilitation proceedings or civil rehabilitation proceedings, applies for or suffers the appointment of a receiver, custodian, trustee or liquidator for such Party or any of its property, makes assignments for the benefit of creditors, transfers a substantial portion of its business assets, becomes insolvent or is generally unable to pay its debts as they become due, or resolves to wind up its operations, then the other Party may forthwith terminate this Agreement without notice.

Assignment

This clause prohibits the transfer of contractual rights or contractual status. Assignment of rights refers to the transfer of individual rights arising under the contract, while transfer of contractual status refers to the comprehensive transfer of rights and obligations related to the contract to a third party. In most contracts, both the transfer of contractual rights and the transfer of contractual status are prohibited without the consent of the other party.

Parties may not assign their rights or obligations under this Agreement whether in whole or in part to any third party, without obtaining prior written consent of the other party.

Force Majeure

A force majeure is a situation in which a party is unable to perform its contractually stipulated obligations due to the occurrence of an event for which neither party is responsible. In such a case, the failure to perform the obligation is not considered a default. Examples of force majeure events include war and major earthquakes. Usually, force majeure is not an issue, but in cases such as the Great East Japan Earthquake that occurred this time, there are many cases in which a force majeure event is deemed to have occurred in the affected areas.

Neither party shall be liable for failure to perform its part of this Agreement if and to the extent such delay or failure in performance arises from any cause or causes beyond the reasonable control of the party affected (Force Majeure), including, but not limited to, act of God, acts of government or governmental authorities, compliance with law, regulation or orders, fire, storm, flood or earthquake, war, rebellion, revolution, or riots, strike or lock-out.

The failure of a Party to perform its obligations due to war, strikes, uprising, fire, flood, explosion, earthquake, government regulations, or other causes beyond control of a Party (“Force Majeure”), except for monetary liabilities, shall not constitute a breach of this Agreement, provided that all diligence is exercised to overcome such Force Majeure and resume performance, and the time for performance by such Party shall be extended by a period of any such delay. Labor disputes shall not be deemed as Force Majeure. In any event, the Party affected by Force Majeure shall notify the other Party of the occurrence of Force Majeure, the details of Force Majeure, the period the Force Majeure is anticipated to continue, and other information immediately after the occurrence of any Force Majeure.

Secrecy

This clause prohibits the disclosure to third parties of information that is disclosed to the other party in the performance of the contract. Since the parties to a contract are in a position to cooperate with each other for the completion of a certain transaction, confidential information is often disclosed to the other party. Without a confidentiality clause in such cases, a party’s confidential information may be disclosed to an unexpected third party, resulting in irreparable damage.

Confidentiality

The Party agrees that the technical information and business information disclosed by either party (“Confidential Information”) is valuable, confidential and proprietary in nature and that the disclosure of the Confidential Information would result in immediate and irreparable harm to the disclosing party, and agrees that, at all times during the term of this Agreement and for five (5) years thereafter, it will hold in confidence all of the Confidential Information, and that it will not disclose the Confidential Information to any third party, except to its authorized employees, without the prior written consent of the disclosing party.

Receiving party’s obligation under this Agreement with respect to Confidential Information shall not apply to information which i) is already in the possession of receiving party prior to disclosure by disclosing party and was not acquired by the receiving party directly or indirectly from disclosing party; ii) is part of the public domain at the time of disclosure by the disclosing party; or, thereafter becomes part of the public domain without fault on the part of receiving party; or iii) may be acquired hereafter by the receiving party from any third party without any obligation of secrecy.

Notice

There are various methods of notifying a foreign party, such as fax, mail, and e-mail. However, it is to be determined in advance by which method the notice is to be deemed to be a valid notice. Also, if the recipient of the notice is not specified, the other party may claim that it did not receive the notice even though it thought it had been notified to the other party. Therefore, it is often necessary to specify in advance the method of notice, the name of the person authorized to receive the notice, the address to which the notice document is to be sent, and the effective date of the notice.

Any notice, consent or other communication required or permitted under this Agreement shall be written in English or Japanese and shall be deemed given when (a) delivered personally; (b) sent by confirmed facsimile transmission; or (c) sent by commercial courier with written verification of receipt returned to the sender. Notice, consent or other communications (but not service of process) may also be given by e-mail. Rejection or other refusal to accept or the inability to deliver because of changed address or facsimile number of which no notice was given shall be deemed to constitute receipt of the notice, consent or communication sent.

Governing Law

In transactions between parties of different nationalities, it can be important to know which country’s laws will govern the interpretation of the contract. A contract provision that is valid in one country may be considered invalid in the other country. The governing law provision is a very general clause.

This Agreement shall be governed by, and construed in accordance with the laws of Japan, without regard to the conflicts of law rules thereof.

Jurisdiction

Jurisdiction is the rule that determines the court of competent jurisdiction for the resolution of disputes between the parties in the event of a dispute. If exclusive jurisdiction is established, only that court will have jurisdiction over the dispute regarding the contract in question, and no other court will have jurisdiction. Actions filed against other courts will be dismissed for lack of jurisdiction. If non-exclusive jurisdiction is provided, the competent court specified in the contract will have jurisdiction, but if other courts also have jurisdiction by law, the lawsuit may be filed in other courts.

Any and all disputes arising from this Agreement shall be amicably and promptly settled upon consultation between the parties hereto, but in case of failure, the matter shall be settled by arbitration in Tokyo, Japan in accordance with the rules of the Japan Commercial Arbitration Association and the award shall be final and binding upon the parties hereto.