In the 21st century, international trade has become an important and indispensable part of the global economy. This not only requires the presence of international rules and agreements but also depends strongly on the role of practices in forming and regulating these rules. Practices play an inescapable role in determining how trade takes place, creating business opportunities, and influencing the development of nations, etc.

We often hear that in addition to “law”, there are also “rules”, and the practices used in business relationships are called commercial practices.

“Law” used in business relationships is a contract, an agreement between the parties. However, contracts cannot always predict situations that may arise. Therefore, commercial practice is set to supplement the contract.

1. Conditions for application

In international trade relations, practices can be applied if the following conditions are met:

  • First, the parties to the contract have a use agreement.
  • Second, the national law chosen by the parties to the contract does not exist or exists but is inadequate to resolve the arising problem.
  • Third, the relevant international treaty does not regulate the issue that occurs.

2. The role of practices in international trade

Practices in international trade refer to the commercial practices, rules, and habits that businesses and countries generally follow when engaging in international transactions. The role of practices in international trade is extremely important and diverse, as  they can affect many aspects of the trade process. Here are some important points about the crucial aspects of practices in international trade:

  • Practices can influence the way a business conducts international transactions, from how it approaches clients to how it builds and maintains relationships with trading partners.
  • Practices can define principles and rules of commercial conduct, such as dispute resolution, price negotiation, and risk management.
  • Practices can dictate acceptable product and service standards in international markets. This can affect the production, packaging, and quality of goods and services.
  • Practices can encourage innovation in business and production to adapt to the international trade environment.
  • Practices can demonstrate corporate culture and contribute to building an organization’s reputation and credibility in international markets.

Not only does it supplement contracts, but practices can also stand independently as a source of law, along with other sources of law (national law, international treaties or even case law) to solve disputes arising during contract implementation. Because it is difficult for one source of law to independently solve a problem, combining different sources of law complements each other and strictly solves all problems.

3. Note when applying

Although this role is important, parties in international trade relations also need to consider carefully when choosing a set of practices to resolve disputes that arise during contract implementation.  Because they are developed from a wealth of sources, these practices can sometimes simply lead to confusion, or to the application of contradictory rules. Choosing to refer to international practices in contractual relationships therefore means being vigilant.

In addition to unwritten practices such as the principle of respecting national sovereignty and respecting ethnic equality, there are currently several written practices widely used in Vietnam’s international trade activities. countries such as delivery practices (Incoterms), and payment practices (UCP 500), in addition to practices in international transportation of goods, and insurance.

In short, practices in international trade are not just habits and rules, but they are also important factors shaping the game of trade around the world. Smart understanding and interaction with practices can help businesses and countries promote international trade effectively and sustainably.

The article is based on laws applicable at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable laws and the specific cases that the reader may wish to apply may have changed. Therefore, the article is for referencing only.


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