Danish vs. International Contract: Differences You Need to Know
Danish vs. International Contract: Differences You Need to Know
When your customer or supplier is in another country, the contract suddenly becomes more complex. Which country's laws apply? What happens in a dispute? And why does the other party insist on terms you've never seen before?
International contracts require extra attention. Here are the key differences you need to know.
Choice of Law: Which Country's Rules Apply?
In a Danish contract between Danish parties, Danish law applies automatically. In international agreements, this isn't given.
The choice of law clause determines which country's legislation governs the agreement. Without such a clause, it may end up being decided by courts – often with unpredictable results.
What should you consider?
Danish law is often advantageous for Danish companies since you know the rules. But the other party will typically prefer their own legislation. Compromises like Swiss law or English law are often used in agreements between parties from different jurisdictions.
Jurisdiction: Where Are Disputes Resolved?
The jurisdiction clause determines where any dispute will be handled. This can be Danish courts, the other party's courts, or a neutral location.
In international agreements, arbitration is often preferred. Arbitration awards can be enforced internationally through the New York Convention, making them more practical than national judgments that must be recognised in each country.
Popular arbitration institutions include ICC (International Chamber of Commerce), the Danish Institute of Arbitration, and Stockholm Chamber of Commerce.
Language: More Than Just Translation
Danish contracts are written in Danish. International agreements require a common language – usually English.
But language is about more than translation. Legal concepts don't always translate directly. "Funktionær" (a Danish employment category) has no precise English equivalent. "Consideration" in common law systems has no Danish counterpart.
Best practice
For bilingual contracts, you should specify which language version takes precedence in case of discrepancies. Otherwise, you risk disputes over interpretation.
Contract Traditions: Civil Law vs. Common Law
Denmark uses civil law, where legislation is the primary source of law. The USA and UK use common law, where court practice plays a greater role.
The difference affects contract drafting:
Common law contracts are often long and detailed. Everything must be in the contract because courts typically don't fill gaps.
Civil law contracts can be shorter because legislation fills what the contract doesn't mention.
When negotiating with a common law party, expect longer contracts with more definitions and more detailed clauses.
Clauses You'll Encounter in International Agreements
Certain clauses are standard in international contracts but rare in Danish ones:
Entire Agreement
The agreement constitutes the entire understanding between the parties. Previous negotiations and verbal agreements don't apply. Common in common law but foreign to Danish law where negotiation history can have significance.
Force Majeure
Detailed provisions about unforeseen events. Danish contracts often rely on legislation, while international agreements typically specify exactly which events are covered.
Limitation of Liability
Liability limitations are often more detailed in international agreements with caps on damages and exclusion of certain loss types.
Indemnification
Indemnity clauses where one party undertakes to cover the other's losses in certain situations. More widespread in common law jurisdictions.
Practical Challenges
Time Zones and Communication
Negotiations take longer when parties are in different time zones. Plan extra time for the process.
Signatures
MitID only works in Denmark. For international agreements, you can use SMS verification, advanced electronic signatures, or other methods accepted in the other party's jurisdiction.
Currency and Payment
State currency, exchange rate mechanism, and payment method clearly. International bank transfers have different fees and timeframes than Danish ones.
When Should You Seek Help?
For major international agreements, you should involve legal advice with expertise in the relevant jurisdiction. The expense is minimal compared to the risk of a flawed contract.
The Bottom Line
International contracts require more than just translating your Danish templates. Choice of law, jurisdiction, contract traditions, and practical matters must all be considered.
With ePact, you can send international contracts for digital signature with methods that work across borders. But the content requires thought – because in international agreements, the details are everything.
