What do you need to bear in mind with cross-border contracts?

The law of a specific country always applies to a contract. You should therefore always check which law applies to the specific contract before concluding it. In most cases, there is a free choice of law. This means that you and your contractual partner can choose which law should apply to your contract. The following choice is usually made:

• In most cases, the parties choose the law of the country in which the contract is concluded.

• The parties choose the law of the country that one of the contracting parties is based in.

Attention: As the regulations on contract law can vary greatly from country to country, you should familiarise yourself with the basic contract law regulations of the respective country and seek legal advice before making your choice of law.

In certain cases, the law of a particular country may be mandatory for a specific contract due to international agreements or European Union regulations, and a choice of law may therefore be rendered invalid. Contracts between traders and consumers or employees and employers are governed by European Union and European Economic Area regulations, which are intended to guarantee consumer protection: any choice of law must not result in consumers or employees being deprived of the fundamental legal protection of their place of residence. 

The place of jurisdiction is the court before which you and your contractual partner would be brought in the event of a legal dispute. This is based on the civil procedure regulations of the legal system applicable to your contract. 

Instead, however, you can stipulate which courts will hear any future legal disputes in your contract. This is called a jurisdiction agreement. In many cases, you can freely agree which court should have jurisdiction. 

Attention: Please note that there may be restrictions on your choice of jurisdiction. Depending on which national law is applicable to your contract, you must check the admissibility of jurisdiction agreements. For example, under the law of the member states of the European Union/European Economic Area, jurisdiction agreements between traders and consumers or employers and employees are only permitted to a limited extent. 

If the contract is not written in your native language or your contractual partner's native language, you should have the contract translated before you sign it so that you are sure you and your partner understand everything. This translation should be carried out by a professional individual or organisation to avoid misunderstandings. Contracts can and should also stipulate which language version is binding for interpretation and which language version is for informational purposes only.

In the case of cross-border contracts, cultural differences should also be taken into account. It can be helpful to find out about the cultural customs of your contractual partner or the country whose legal system is going to govern the contract.

If you and your contractual partner agree in your contract that a sum of money will be paid, you should consider to the currency in which it is owed and make a corresponding agreement. You should also take the exchange rate as well as possible exchange rate fluctuations into account and make clear arrangements regarding the terms of payment. Always clarify whether the amounts are to be understood as gross or net (if in doubt, they are usually stipulated as gross amounts, which means that there may be deductions for you). 

 

If goods (e.g. a work of art) are imported into another country by you or your partner, you may have to declare these goods and pay customs duties. You should therefore inform yourself about the customs regulations of the country the goods are being transported to.

Info: The import of goods from one EU member state to another is duty-free.

If you receive remuneration from cross-border activity, you should find out how and in which country you have to pay tax on this income. See the chapter on tax law.

If you are working in a country that is not your country of residence (e.g. for music or theatre performances), you should check where you are covered by social security. Your social security obligations may vary depending on the country and type of contract concluded. See the chapter on social security law.