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Cross-border contracts need to reflect awareness of and adhere to cross-cultural mandatory rules.
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Cross-border contracts should include severability provisions.
Mandatory rules:
Mandatory rules of national origin are those enacted by States autonomously (e.g. requiring a particular form for specific types of contracts; licensing requirements; environmental regulations; etc.), while mandatory rules of international or supranational origin are those derived from international conventions or general public international law (e.g. UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects; UN Universal Declaration of Human Rights, etc.) or adopted by supranational organisations (e.g. European Community competition law, etc.).
Neither the UNIDROIT Principles nor the individual contracts which are concluded in accordance with them can prevail over mandatory rules of domestic law, whether of national, international or supranational origin. Mandatory rules can include both specific statutory provisions and general principles of public policy.Severability:
The root cause of a contract provision being null or void typically relates to fundamental matters of competition law or regulations on safety, health or environment, i.e. mandatory rules. This may affect the pricing or other essentials of the contract, or even impact the entire contract. In such cases, the parties may want the ability to renegotiate or terminate their arrangement. “Severability,” is the ability to sever invalid or unenforceable provisions from valid or enforceable provisions of a contract. In drafting a contract, it may be important to try to avoid situations in which the entirety of a contract is affected when a contract clause appears to be null or “void.”
EXAMPLE: Severability clauses can also be useful in situations in which there are difficulties in executing the entire contract for reasons other than mandatory law. For instance, in cases when parts of a contract can be performed while others experience delays or problems, severability clauses can be useful in avoiding the contract’s full invalidation, and instead permitting it to go ahead in installments.
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