1. The story of a US–French business partnership gone wrong
It started with promise: a New York-based tech firm and a Paris-based consulting company launched a joint venture to provide top-edge technical advice to European and North African markets. the value of the deal? over $1,500,000.
Excitement was high, contracts were signed, and business was set in motion. but within months, the project collapsed into legal chaos. why? because the contract lacked properly drafted legal clauses, particularly with regards to applicable law and dispute resolution.
Without those provisions, each side invoked its own legal system. the u.s. firm claimed breach of contract and demanded termination without liability. The french company, in turn, sued for damages in Paris. This lack of legal clarity led to parallel proceedings, rising legal fees, and ultimately, a broken commercial relationship.
2. What went wrong?
2.1. Standard clauses, serious consequences
“We just adapted a contract template using chatgpt”, the US and French CEO later admitted. hoping to save time (and attorney fees), both parties signed a contract that included vague formulations such as:
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governing law: “international law”
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jurisdiction: “competent court
on the surface, these phrases might seem harmless. In practice, they triggered tens of thousands of dollars in litigation costs.
2.2. Legal uncertainty led to a cross-border conflict
After disagreements over performance and delivery timelines, the French company filed a claim for €400,000 in damages. The american firm, insisting it had grounds to terminate the agreement, filed a motion for declaratory relief in New York.
Which court had jurisdiction? Which law should apply? The contract offered no answer. Each party invoked its own national rules. French counsel pointed to the french civil code, while US attorneys relied on New York contract law.
The result: conflicting procedures, legal uncertainty, and a stalled agreement that neither party could enforce.
3. Why are choice of law and jurisdiction clauses so critical in international agreements?
3.1. Ambiguity can affect the contract’s validity
In civil law jurisdictions such as France, a contract must have clearly defined terms to be enforceable (article 1128, french civil code). A similar principle exists in many jurisdictions: unclear or incomplete contracts may be ruled invalid or unenforceable. When a contract governs transactions worth hundreds of thousands of dollars, such ambiguity can render the entire deal worthless.
3.2. Vague clauses = guaranteed conflict of laws
Unclear provisions on applicable law and competent courts almost always lead to disputes. in the u.s.–france example, several legal hurdles emerged:
3.2.1. European legal frameworks don’t apply
The Rome 1 Regulation (ec no. 593/2008), which governs conflict of law in civil and commercial matters across the eu, does not apply to contracts involving non-eu parties like the US partner.
3.2.2. Arbitration isn’t automatic
The 1958 New York convention on the recognition and enforcement of foreign arbitral awards applies only if the contract includes an explicit arbitration clause. without it, courts are not bound to refer the matter to arbitration—even if the parties later prefer it.
3.2.3. The UN convention on contracts for the international sale of goods may not apply
The 1980 UN convention on contracts for the international sale of goods (CISG) only applies when:
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both parties are based in signatory states
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the contract involves the sale of goods
In our case, the contract was for a commercial partnership pertaining to technical advice, not the sale of tangible products—the CISG was inapplicable.
3.2.4. UNIDROIT and lex mercatoria do not solve evething
The unidroit principles are often cited by academics and arbitrators, but they do not constitute a binding legal system, as confirmed by the French Court of Cassation (cass. com., 16 nov. 2022, no. 21-17.338).
Lex mercatoria—a set of commercial customs and norms—remains open to interpretation unless explicitly accepted by both parties.
3.2.5. Bilateral treaties don’t always fill the gaps
While france and the US have multiple bilateral agreements on judicial cooperation, none govern the applicable law in commercial contracts. These treaties typically address recognition of judgments or mutual legal assistance, not substantive contract rules.
4. The hidden cost of legal ambiguity
In our case, both parties initiated proceedings in their respective countries. In Paris, the court applied french law. In New York, the firm argued for US law.
The outcome? conflicting rulings, procedural delays, frozen payments, and two years of unresolved litigation. The contract’s vague legal structure crippled enforcement, destroyed trust, and led to substantial financial loss.
5. Civil law vs. Common law: what US businesses need to know
Understanding the differences between legal systems is essential:
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common law (as in the US or the UK): case law plays a central role, and contracts tend to be extensively detailed, relying less on codified rules
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civil law (as in France or Germany): statutes and legal codes govern obligations; contracts are often shorter, but subject to strict interpretation under the relevant cod
For US companies, working with a civil law partner requires adapting your drafting strategy and ensuring the contract meets local legal standards—especially regarding object, price, and duration
6. How to secure your international contract: a legal checklist
Purpose and scope of the contract
Clearly define the objective of the agreement and what each party is expected to do
Example: “this agreement concerns the exclusive distribution of x-brand smart devices by company b in france”
Price and payment terms
Avoid misunderstandings by spelling out payment methods, timelines, and currency
Example: “total price: $150,000. payable in three equal installments according to schedule a”
Price indexation and currency clause
Protect both parties from inflation or currency fluctuation risks
example: “the agreed price is denominated in usd. it shall be adjusted annually based on the u.s. consumer price index. in the event of payments in euros, the exchange rate will be the ecb rate as of invoice date. should exchange rates fluctuate by more than 10% within three months, both parties agree to renegotiate payment terms in good faith”
Governing law
Choose a national legal system applicable to the contract
Example: “this agreement shall be governed by the laws of the state of New York”
Jurisdiction clause
Designate a specific court to avoid parallel litigation
Example: “the courts of new york county shall have exclusive jurisdiction over any disputes arising out of this agreement”
Arbitration clause (optional)
Example: “any dispute arising from or relating to this agreement shall be resolved by arbitration in accordance with the swiss rules of international arbitration. the seat of arbitration shall be geneva. the language shall be english. the number of arbitrators shall be one”
Contract language
Define the authoritative version of the contract to prevent translation issues
Example: “this contract is drafted in english, which shall be the binding version”
Termination clause
Allow early exit for material breach
Example: “this agreement may be terminated with immediate effect in the event of a serious contractual breach not remedied within 30 days of written notice”
Pre-litigation mediation clause
Encourage negotiation before going to court
Example: “parties shall attempt to resolve any dispute amicably through good-faith negotiation before initiating legal proceedings”
7. Why templates and AI-generated contracts are never enough
Every cross-border deal is unique: industry, country, currency, payment method, and risk profile all matter. using generic templates—or ai tools without legal expertise—can result in unenforceable agreements.
International contracts require legal precision, jurisdictional insight, and professional judgment. no algorithm can replace that.
8. Don’t let judges decide for you
At SLASH AVOCATS, we help international businesses—especially US and UK companies investing in France—draft solid, enforceable cross-border contracts. We’ve seen many partnerships fail not because of bad faith, but due to overlooked clauses and legal misunderstandings.
An international contract isn’t just a business deal. Tt’s a legal structure designed to resolve disputes transparently, efficiently, and predictably, without draining resources.
By investing in a legally sound contract, you avoid costly litigation, reduce legal risk, and protect your international strategy.