Question: What are forms of resolution of commercial disputes relating to contracts?
Answer: Forms of resolution of commercial disputes relating to commercial contracts are regulated as follows:
Law on Conmmerce 2005
About forms of resolution disputes, Article 317 regulates the following forms:
1. Negotiations between the parties.
2. Conciliation between the parties by a body, organization or individual selected by the parties to act as the conciliation mediator.
3. Resolution by the Arbitration or the Court.
Thus, ways to resolve are:
Way 1: Negotiation, mediation
Should go in this way, because the way of sue takes a lot of expenses (the seller incurs storage expenses) and takes a lot of time.
Way 2: Initiating a lawsuit
If no negotiation and mediation are possible, it is possible to initiate a lawsuit.
Party B violates contractual obligations. Specifically:
Violation of contractual obligations (for the provisions of the contract stipulating unilateral termination of the contract ahead of time: one of the basic terms of the contract):
“7.2. If a party wants to terminate the Contract ahead of time, it must notify the other party in advance and the two parties must have a written confirmation …….
7.3. If a party unilaterally rescinds the Contract causing damages for other party’s economic interests, that party must be fully responsible for compensating the other party for damage. “
Violating obligations of the buyer in accordance with Article 6 of the Contract.
Thus, if initiating a lawsuit, the case that the seller incurs penalties possibly and absolutly happens according to Law on Commerce 2005:
Firstly, specific performance of contracts
Article 297. Specific performance of contracts
1. Specific performance of a contract means a remedy whereby the aggrieved party requests the breaching party to properly perform the contract or apply other measures to cause the contract to be performed and the breaching party shall have to bear any costs incurred.
So, the buyer must take the goods according to the contract.
Fine base: Article 301: Fine level
The fine level for a breach of a contractual obligation or the aggregate fine level for more than one breach shall be agreed upon in the contract by the parties but must not exceed 8% of the value of the breached contractual obligation portion.
Damages base: Article 302 Law on Commcerce 2005
Thus, the seller needs to prove losses (storage expenses) according to Article 304: “The party claiming damages shall bear the burden of proof of the loss, the extent of the loss caused by the act of breach, and direct profit amount which the aggrieved party would have earned if the breach had not been committed”. The proving of the damages of the Purchaser must fully has the following elements:
- Breach of the contract;
- Material loss;
- Act of breaching the contract is the direct cause of the loss.
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