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Chapter1:TheRoleofContractsinInternationalCommerce Overview Contractsaresomuchapartoflivinginasocietythatyouareprobablyunawareofhowmanycontractsyoumakeeveryday.Inthebroadestsense,acontractissimplyanagreementthatdefinesarelationshipbetweenoneormoreparties.Twopeopleexchangingweddingvowsenterintoacontractofmarriage;apersonwhohasachildcontractstonurtureandsupportthatchild;shoppersselectingfoodinamarketcontracttopurchasethegoodsforastatedamount.Acommercialcontract,insimplestterms,ismerelyanagreementmadebytwoormorepartiesforthepurposeoftransactingbusiness. Anycontractmaybeoralorwritten.Writtentermsmayberecordedinasimplememorandum,certificate,orreceipt.Becauseacontractualrelationshipismadebetweentwoormorepartieswhohavepotentiallyadverseinterests,thecontracttermsareusuallysupplementedandrestrictedbylawsthatservetoprotectthepartiesandtodefinespecificrelationshipsbetweenthemintheeventthatprovisionsareindefinite,ambiguous,orevenmissing. Whenonepartyentersintoacommercialcontractwithanunfamiliaranddistantpartyacrossacountryborder,acontracttakesonaddedsignificance.Thecreationofaninternationalcontractisamorecomplexprocessthantheformationofacontractbetweenpartiesfromthesamecountryandculture.Inacross-bordertransaction,thepartiesusuallydonotmeetface-to-face,theyhavedifferentsocietalvaluesandpractices,andthelawstowhichtheyaresubjectareimposedbydifferentgovernmentswithdistinctlegalsystems.Thesefactorscaneasilyleadtomisunderstandings,andthereforethecontractingpartiesshoulddefinetheirmutualunderstandingincontractual,andpreferablywritten,terms.Theroleofacontractinaninternationalcommercialtransactionisofparticularimportancewithrespecttothefollowingaspects. BalanceofPower Theessenceofacontractisthemutualunderstandingreachedbytwopartieswhoholdadversepositionsagainsteachother.Inmostcontractualsituations,onepartywillhaveastrongerpositionthantheother.Forexample,alargecorporationthatoffersgoodsforsalemaybeabletoinsistoncontracttermsthatarehighlyfavorabletothecorporationwhilerestrictingtherightso