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International contracts with foreign companies: the clauses to check before signing

Sale or distribution contract with a foreign company: applicable law, Vienna Convention, Incoterms, forum or arbitration, payment and agency.

In 30 seconds

  • In a contract with a foreign company, choose in writing the applicable law and the forum (or arbitration): if you do not, European or international rules decide and the result may surprise you.
  • The Vienna Convention (CISG) applies to the international sale of goods between businesses of States that are parties, unless the contract excludes it.
  • Incoterms establish who pays for transport and insurance and when the risk passes, but not the transfer of ownership or payment.
  • For an agent or distributor abroad, the law of the contract does not cancel the mandatory protections, such as the end-of-relationship indemnity.

Updated on October 14, 2026.

Selling abroad, buying from a foreign supplier or entrusting distribution to a local partner means signing contracts that involve several legal systems. The clauses that seem routine, such as applicable law, forum and payment terms, are often the ones that decide who wins in a dispute. This guide goes through them one by one.

1. Law applicable to the contract

In the European Union the law governing the contract is determined by EC Regulation 593/2008 (Rome I). The parties are free to choose the applicable law (Art. 3). If they do not, for the sale of goods the law of the country where the seller has his habitual residence normally applies, and for services that of the country of the service provider (Art. 4). Choosing Italian law, when the counterparty accepts it, simplifies the management of the contract and the work of the advisers.

2. Vienna Convention on the international sale of goods (CISG)

The 1980 Vienna Convention applies to contracts for the sale of goods between parties whose places of business are in different States that are parties to the Convention, and it is in force in Italy. If you do not want it to apply, you must expressly exclude it in the contract (Art. 6). If it applies, it contains its own rules on formation of the contract, delivery, breach and damages. For defects, for example, the buyer must give notice of them within a reasonable time and in any case within two years from delivery (Art. 39).

3. Incoterms: transport, costs and risk

Incoterms (International Commercial Terms), published by the International Chamber of Commerce (2020 edition), are acronyms such as EXW, FOB, CIF or DAP that indicate who organises and pays for transport, insurance and customs formalities and when the risk for the goods passes from the seller to the buyer. Always write the acronym with the place and the edition, for example “DAP Naples, Incoterms 2020”. Incoterms do not govern the transfer of ownership, payment of the price or the consequences of a breach.

4. Competent forum or arbitration

A clause choosing the competent court, valid if in writing, determines where the lawsuit is brought (EU Reg. 1215/2012, Art. 25). Alternatively you can provide for arbitration before an arbitration chamber, with the seat and language indicated. Awards are recognised and enforced in more than 170 countries thanks to the 1958 New York Convention, while the judgments of national courts circulate less easily outside the European Union. Choose carefully: a forum far from the debtor, or from his assets, can make the lawsuit useless. If the general conditions are prepared by one party only, remember that forum and arbitration clauses are among the clauses that require specific written approval (Art. 1341 of the Civil Code, c.c., see the related guide).

5. Price, payment and guarantees

State the currency, payment terms, default interest and the consequences of delay. For significant supplies consider instruments that reduce the risk: advance payment or payment with a deposit, documentary letter of credit, first-demand bank guarantee, credit insurance. If the buyer is an Italian business or Italian law governs the contract, Legislative Decree 231/2002 (d.lgs. 231/2002) on late payments applies to commercial transactions.

6. Agency and distribution abroad

If you entrust the sale of your products to an agent or a distributor, indicate territory, exclusivity, duration, targets, trademarks and customers, and what happens at the end of the relationship. For an agent operating in the European Union, Directive 86/653/EEC, implemented in Italy by Art. 1751 c.c., recognises an end-of-relationship indemnity, and according to the Court of Justice of the European Union these rules as a rule remain applicable even if the contract chooses a foreign law. The distribution contract has no unified regulation: the wording matters a great deal.

7. The other clauses not to be overlooked

  • Language of the contract: state which version prevails if translations exist.
  • Confidentiality and intellectual property: who owns trademarks, patents and know-how and for which uses.
  • Warranty and liability: duration, limits on damages, penalties.
  • Force majeure and sanctions: events that suspend obligations and effects of embargoes or export restrictions.
  • Termination and withdrawal: notice, express termination clause, effects on stock and on pending orders.

Checklist before signing

  1. Check who the counterparty is, its seat and its solvency.
  2. Choose the applicable law and forum or arbitration and write them down.
  3. Decide whether to exclude the CISG.
  4. State Incoterms, price, currency, payment terms and guarantees.
  5. Have the text checked before signing, especially if it is in a language other than yours.

The route that usually works best

The possible routes

  • Choose Italian law and the Italian forum, if the counterparty accepts.
  • Choose a neutral law and forum, or arbitration, when the counterparty does not accept Italian law.
  • Say nothing on the choice and let the European or international rules decide.

Which usually works best and why

It depends on the case. It usually works best to write down the choice of law and forum (or arbitration) before signing: saying nothing leaves the outcome to rules you may not know. For counterparties outside the EU, arbitration often makes enforcement easier; within the EU judgments circulate more easily, but where the debtor’s assets are matters.

What to do right away

  1. Check who the counterparty is, where it is based and whether it is solvent.
  2. Decide the applicable law, forum or arbitration, and whether to exclude the CISG.
  3. Have the text checked by a lawyer before signing.

Each situation must be assessed on the documents of the specific case: this indication is not a promise of outcome.

How Attorney Fiorentino can assist you

  • Always write the Incoterms acronym with place and edition.
  • Have the text translated or checked if it is in a language you do not master.
  • Keep the signed versions and the correspondence on the negotiations.

The firm of Attorney Renato Giuseppe Fiorentino assists businesses in drafting and checking international contracts, with documents sent online and a written quote before the engagement. Offices in Naples, Rome and Bari by appointment.

Contact usMessage us on WhatsAppCall us 347 5264190

Frequently asked questions

Which law applies to a contract with a foreign company?

The one chosen by the parties in the contract; if no choice is made, in the European Union the criteria of EC Reg. 593/2008 (Rome I) apply, for example the seller’s law for the sale of goods.

What is the Vienna Convention on international sales?

It is a 1980 treaty governing sales of goods between businesses of States that are parties. It applies automatically, unless the contract expressly excludes it.

What are Incoterms?

They are standard clauses of the International Chamber of Commerce that establish who bears the costs and risks of transport and delivery of the goods. They do not govern ownership of the goods or payment.

Court or arbitration in international contracts?

It depends on the counterparty’s country and its assets: arbitration makes enforcement easier outside the European Union thanks to the New York Convention, while in the EU judgments circulate without recognition procedures.

Is an agent abroad entitled to an end-of-relationship indemnity?

If he operates in the European Union, as a rule yes: Directive 86/653/EEC provides protections that the parties as a rule cannot exclude by choosing a foreign law.

Sources: EC Reg. 593/2008, Arts. 3 and 4; Vienna Convention 1980, Arts. 6 and 39; EU Reg. 1215/2012, Art. 25; New York Convention 1958; Directive 86/653/EEC and Art. 1751 c.c.; Legislative Decree 231/2002; ICC, Incoterms 2020. Author: Attorney Renato Giuseppe Fiorentino, Naples Bar. Informational text, not a substitute for an opinion on your case.

Read also

Translated from the Italian original; updated on October 18, 2026.

(Read also): Legal guides from Studio Legale Fiorentino · Debt recovery abroad: how to get paid by a foreign customer · European payment order: recovering a debt from a customer in another EU country

Do you have a similar issue?

Every situation depends on the documents of the specific case. You can contact the firm from anywhere, remotely.

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