Model Clauses for Contracting in Asia

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When a business in one country (country A) contracts with a business in a second country (country B), a question arises: the laws of which country should govern any disputes between us about this contract? The laws of country A or country B? Or another country (country C)? The answer to this question is complicated by the heterogeneity of contract law across countries. Specifically, contract law, the source of contract law, legal labels and language all vary across countries.

Given these issues, the choice of law made by the parties will often result in one of the parties entering into a contract governed by the laws of a jurisdiction with which they are not familiar. Further, if the parties choose a third law (often called a neutral governing law) to govern their contract (e.g., the laws of country C), this may result in both parties being unfamiliar with the laws that govern their contract.

Unfamiliarity causes uncertainty and uncertainty increases the cost of doing business across borders.

The Model Clauses aim to ameliorate some of the above problems by providing (to the extent possible) parties entering into cross-border contracts, governed by the laws of select jurisdictions, with a framework that is neutral as to the governing law chosen as well as the subject matter of the contract. That is, each model clause is designed to ensure that it “works” (i.e., is enforceable) irrespective of which Jurisdiction is selected as the governing law and irrespective of the subject matter of the contract.

Jurisdictions considered by the Model Clauses are: 

• Civil law and hybrid jurisdictions: China, Indonesia, Japan, the Philippines, Thailand and Vietnam
• Common law: Australia, England and Wales, India, Malaysia, New York law, Singapore

This is a fully-cited, 113-page publication where contents are internally and externally hyperlinked to offer readers an easier navigation experience.

Table of content

Background

Understanding the Problem

Understanding the Model Contract Clauses

Limitations

Contract Laws of Asia

Acknowledgements

References

Governing law clause

Model clause

Specifying the jurisdiction whose laws govern Purpose

Specifying the laws of the selected jurisdiction that govern (and those that don’t)

Specifying what the specified laws of the selected jurisdiction govern

Variations

References

Third-party indemnity clause

Model clause

Purpose

The language of the obligation

Disentitling conduct

Machinery of the parties’ obligations

Variations

References

Limitation of liability clause

Model clause

Purpose

Breach-of-contract damages for which the parties are not liable under the law

Breach-of-contract damages for which the parties are liable under the law

Limiting liability for breach-of-contract damages

Exemptions from the limited liabilities

Variations

References

Appendices

Excluding the CISG

Model clause

Purpose

Application of the CISG

Excluding the CISG

References

Defining legal standards of conduct

Understanding legal standards of conduct

Understanding the problems

Defining legal standards of conduct

References