Contents1.0 Introduction21.1 The business environment is full of agreements between businesses and individuals.31.2 Limit Obligations31.3 Non-Compete Agreements41.4 Expert Insight41.5 Global Contract Practices:42.0 International contract in Arab world72.1 AUTONOMOUS APPLICATION OF THE CISG82.1.1 Internationality of the sale of goods contract82.1.2 Two Contracting States92.1.3 Article 1/1-a CISG as applied in practice in the Arab World102.2 NDIRECT APPLICATION OF THE CISG122.2.1 Conditions for indirect application of the CISG122.3 THE SYSTEMS APPROACH OF LAW WITH MANAGEMENT13Conclusion16References:17

1.0 Introduction Business deals are nowadays often realized within large international networks which are challenging to manage. Business contracting is agreeing upon the cooperation, its scope, duties, responsibilities, and working methods. Ideal contracting is a search for a dynamic balance between binding rules and flexibility. Mastering this is a central contracting skill. Skills do not consist of the strict interpreting of norms and rules or the applying of models, methods, and theories, nor of the persistent reaching for precise goals. All of these may provide a basis and a framework for skills, but skills themselves are more a balancing act in a particular context. (Cragg, 2002: 126).Contracting parties, for example, on the one hand, must be able to identify situations in which written documentation is needed for clarity or evidence, and on the other, situations where documenting means mainly extra work and bureaucracy. For future disagreements a richer documentation is often helpful to indicate to what extent the parties have intended to either the early development of English contract law was marked by the significant influence of the market economy on the ideas of contract. Perhaps the most significant impact of the market economy perception of contract was the dominant and central place of the notion of freedom of contract in English law. Indeed the notion was so firmly embedded in the minds of English lawyers that Sir George Jessel, MR was prompted to observe.A business contract states the terms and conditions of any business transaction, including product sales and delivery of services. This helps the parties involved to avoid any type of misunderstanding that may arise in the absence of a written contract. (Preston & Post, 2012; Bagley, 2006).If you are collaborating with a friend on your new business, then it is all the more important to create a written contract. This will help you avoid any misunderstandings - and consequently will save you from the rifts that might end your friendship.If you have an oral agreement, you might forget some points that you have agreed on verbally with the passage of time. But with a written agreement, all the terms and conditions are crystal clear at any point in time. And you can always amend the agreement with the consent of both the parties.

1.1 The business environment is full of agreements between businesses and individuals. While oral agreements can be used, most businesses use formal written contracts when engaging in operations. Written contracts provide individuals and businesses with a legal document stating the expectations of both parties and how negative situations will be resolved. Contracts are also legally enforceable in a court of law. Contracts often represent a tool that companies use to safeguard their resources.Business contracts typically include a negotiation process in which various terms to which each party must abide are stipulated. The negotiation process may take days, weeks or months, depending on the contract and the contractual responsibility of each party. Contracts also can include a process for making changes or addendums to the agreement. Businesses frequently use contracts to ensure that a certain level of service is maintained or that competing companies do not have access to specific economic resources. (Cragg, 2002: 126).A common use of business contracts is the creation of an agreement or company that agrees to sell economic resources to another at a fixed cost. These contracts ensure manufacturing or production businesses can obtain economic resources at a specific price for a defined time period. Businesses also use these contracts to hedge against the potential cost increase of economic resources. Fixed cost contracts may backfire on companies if a decrease in economic resources occurs in the future.1.2 Limit ObligationsService contracts outline the specific duties a company will perform in a contractual agreement. These contracts typically are used when companies contract with other businesses to perform services such as maintenance, technical support or call-center operations. Service contracts usually include information relating to prices for each service and the frequency at which the company will perform the services. Businesses use these contracts to ensure that they do not complete work without being compensated.1.3 Non-Compete AgreementsBusinesses often use contracts to enforce non-compete agreements. Non-compete agreements prohibit individuals or other businesses from offering goods or services in the economic marketplace. These contracts create strategic relationships between two companies and allow them to provide unique goods or services to consumers. Companies also can use non-compete agreements to limit the type of services offered by former employees who have specific knowledge about the companys specialized business services. (Preston & Post, 1975; Bagley, 2005).1.4 Expert InsightLegal advice should be sought before entering into any binding contract. Small businesses may be susceptible to larger businesses taking advantage of the entrepreneurs willingness to complete business functions. Contracts often include difficult legal terms that many business owners fail to understand. Attorneys can provide clear information on the benefits of business contracts and whether small businesses should agree to specific contractual terms. (Cragg, 2002: 126) 1.5 Global Contract Practices: Agreements must be kept. People around the world agree on this legal principle, which goes back all the way to the Roman Empire. Unfortunately, while everybody may agree in principle, interpretations of the meaning of agreement vary greatly across countries and cultures. At the individual level, this easily leads to misunderstandings and mutual disappointment. In the business world, different expectations and interpretations may also have severe consequences. Role and Importance of Contracts in Different Countries Lets look at a few examples that illustrate such differences. The following compares relative perspectives and expectations (categorized as Low, Medium, or High) of local business people in four countries: the United States, Japan, China and Russia. USA, Japan, China, Russia Importance of business contracts H L-M L-M L Level of detail in business contracts H H M H L - M The likelihood of legal action if a business contract is breached H L L L M Dependability of legal system for business contract enforcement H H M L - M More so than anywhere else, contracts in the United States serve multiple purposes. They confirm the exact nature and scope of the agreement, document resulting rights and obligations, often including provisions for many eventualities, and serve as the primary enforcement tool. Accordingly, Americans consider business contracts important and prefer them to be highly detailed. The countrys legal system recognizes contracts as the valid representation of the agreement between the parties involved. Breaches of contract can quickly trigger threats of legal action, which is deemed acceptable once other attempts to resolve the issues have failed. The fact that one company is suing a- other does not necessarily mean that they will cease to do business with each other. The importance that Americans attribute to them is in stark contrast with how Japanese businesspeople view contracts. In Japan, contracts primarily document the underlying agreement and resulting actions. Given the Japanese inclination to avoid uncertainty, contracts tend to be very detailed. They dont need to be signed, though. While the countrys legal system dependably supports the enforcement of contracts, Japanese companies almost never see each other. Instead, they rely on the strength of mutual business relationships to resolve disagreements. If they cannot resolve the issues, the Japanese look for mutually respected arbitrators to achieve out-of-court resolution. Chinese practices are similar to those in Japan. Contracts serve for clarification purposes. They do not exist to enforce the underlying agreements. While all relevant info- motion should be included, Chinese contracts are usually not as detailed as those in Japan or in the U.S. The Chinese legal system has made significant progress in the last 10-15 years and the legal enforcement of contracts now seems possible, at least technically. Nevertheless, Chinese expectations remain unchanged: since contractual terms & conditions arent etched in stone, business partners should work together to re- solve differences and remain flexible as required to accommodate changes affecting the execution of the agreement. The realities of the business climate and legal system in Russia let the enforcement of contracts through legal action seem a lofty proposition. Most Russian businesspeople pay limited attention to contracts, keeping them high-level and documenting only the essentials of the underlying agreement. Should disagreements arise, pointing to a contract rarely changes behaviors. Instead, the parties may initially try to resolve their issues in a collaborative fashion. If that fails, they might resort to building political or economic pressure on the other side as a way to enforce the agreement. Implications for Global Companies Different attitudes towards the role and importance of contracts raise the question of how global companies should deal with others expectations: how best to get a foreign base- ness partner to keep an agreement? How to make a foreign business partner feel that agreements are being kept? No single strategy is universally successful. Those insisting that foreign partners must abide by the same standards as domestic ones are rarely effective. Several American companies had to find that taking a Chinese partner to court burned many bridges, not only with that partner and by local or national government representatives, but also with other industry players, making it much harder to do business in the country. In Russia, some foreign companies paid dearly for trying to enforce contractual rights in court when local judges sided with Russian contract partners and issued highly unfavorable rulings. Successful global companies recognize local realities and adjust their strategies accordingly. They strive to understand their partners expectations, emphasize business relationships, and remain flexible when disagreements arise. After all, when it comes to closing and executing contracts in foreign countries, it is helpful to remember the old adage: When in Rome, do as the Romans do. Luther Katz is an International Business Advisor and the author of Negotiating International Business the Negotiators Reference Guide to 50 Countries around the World. He has a wealth of experience in achieving productive cooperation across cultures and driving business success on a global scale. A seasoned former executive of Texas Instruments, a Fortune 500 company, Luther regularly interacted with employees, customers, outsourcing partners, and third parties in more than 25 countries around the world. He teaches International Project and Risk Management at the University of Texas at Dallas School of Man- agreement and is a Business Leadership Center Instructor at the Southern Methodist Universitys Cox School of Business. Importance of contract management Organizations in both the public and private sectors are facing increasing pressure to reduce costs and improve financial and operational performance. New regulatory requirements, globalization, increases in contract volumes and complexity have resulted in an increasing recognition of the importance and benefits of effective contract management. The growing recognition of the need to automate and improve contractual processes and satisfy increasing compliance and analytical needs has also led to an increase in the adoption of more formal and structured contract management procedures and an increase in the availability of software applications designed to address these needs. It is worthwhile noting that contract management is successful if: The arrangements for service delivery continue to be satisfactory to both parties, and the expected business benefits and value for money are being realized The expected business benefits and value for money are being achieved The supplier is co-operative and responsive The organization understands its obligations under the contract There are no disputes There are no surprises A Professional and objective debate over changes and issues arising can be had Efficiencies are being realized.2.0 International contract in Arab worldThe United Nations Convention on Contracts for the International Sale of Goods (hereinafter: the Convention, on CISG) was signed in Vienna in 1980 and became effective on 1 January 1988. The CISG applies to contracts for the international sale of goods [footnoteRef:1] and aims at providing a neutral, uniform, harmonized sales law around the world (L. SPAGNOLO, 2009) to promote international commerce by removing legal barriers in sale of goods transactions between international traders.[footnoteRef:2]To date, 77 States have acceded, accepted, approved, ratified, or succeeded to the CISG,[footnoteRef:3] among them five Arab countries (Egypt on 1 January 1988, Syria on 1 January 1988, Iraq on 1 April 1991, Mauritania on 1 September 2000, and Lebanon on 1 December 2009). [1: Available at .] [2: According to the Conventions Preamble, the States Parties to the CISG.] [3: See United Nations Commission on International Trade Law (UNCITRAL), at .]

With regard to disputes arising from international commercial contracts, national courts usually apply their conflict-of-laws rules in order to define the applicable law. In disputes arising from contracts for the international sale of goods, however, According to (K. BELL,1996) the court not only in Contracting States but also in non-Contracting[footnoteRef:4] States must first of all determine whether the conditions for application of the CISG (stipulated in Article 1 CISG) have been met or not, independently from the conflict-of-laws rules of the forum ( F. FERRAR,1995) .If the CISG is applicable, it supersedes the otherwise applicable national law (A. ROSETT,1984). The CISG is a lex specialis that exclusively and comprehensively governs contracts for the international sale of goods;[footnoteRef:5] to say otherwise would undermine the main goal of the CISG, i.e., the unification of the law of the sale of goods. But if the conditions stipulated by the CISG for its application are not met, then the court has no choice but to apply the law referred to by its conflict-of-laws rules (R. LOEWE, 1998). [4: UNCITRAL Digest, supra note 1, 6: Although the Convention does not bind non Contracting States, it has been applied in courts of non-Contracting States where the forums rules of private international law led to the law of a Contracting State.] [5: Decision of 29.12.1999 of the Tribunale di Pavia (Italy) (Clout case No. 380), available at http://daccess-dds-ny.un.org/doc/UNDOC/GEN/V01/847/23/PDF/V0184723.pdf?OpenElement.]

This would also be the case if the contracting parties opted out of the CISG application.[footnoteRef:6] [6: According to Art. 6 CISG, [t]he parties may exclude the application of this Convention.]

The aim of this article is to define the conditions that have to be met in order to apply the CISG in Arab (Contracting and non-Contracting) countries, whether in the case of autonomous (direct) application by virtue of Article 1(1) (a) CISG or in the case of indirect application, i.e., according to the conflict-of-laws rules of the forum, pursuant to Article 1(1) (b) CISG. Besides, this article will discuss the possibility of applying the CISG in Arab countries as being a source of the lex mercatoria, i.e., the law of merchants.

2.1 AUTONOMOUS APPLICATION OF THE CISG In order to apply the Convention autonomously, Article 1(1) (a) CISG lays down two main conditions. First, the contract for the sale of goods must be international in nature, i.e., the places of business of the contracting parties must be located in different States. Second, these two States must be Contracting States 4. In addition to these conditions, we will explain the Conventions autonomous application in practice in the Arab world pursuant to Article 1(1) (a) CISG. 2.1.1 Internationality of the sale of goods contractThe CISG intends to apply only to international contracts for the sale of goods. Though the word international does not appear in the provisions that define the geographical sphere of application of the CISG, the title of the document itself says that it is a Convention on Contracts for the International Sale of Goods( ROSETT, supra note 8, 274).[footnoteRef:7] Pursuant to Article 1 CISG, this obviously means that the places of business[footnoteRef:8] of seller and buyer themselves must, at the time of conclusion of the contract[footnoteRef:9] ,( SIEHR, supra,1987), be in different States;[footnoteRef:10] it does not therefore suffice that the places of business of their agents are in different States [footnoteRef:11]. Thus, [Article 1 CISG] contains the basic jurisdictional statement of the Convention, laying down a single criterion of internationality: the seller and buyer must have their places of business in different States.[footnoteRef:12] (P. SCHLECHTRIEM, 2005). Once this subjective criterion[footnoteRef:13] has been established, it does not matter whether or not either party has a connection to the State where the other party has its place of business[footnoteRef:14], or whether the essential factors of the sale of goods contract are connected to a Contracting or a non-Contracting State[footnoteRef:15] .By contrast, the international character is not established when the parties have their places of business in one and the same State[footnoteRef:16] .In such a case, it does not matter whether the parties have different nationalities[footnoteRef:17], or whether either party has another place of business in another State with which the contract has no strong connection[footnoteRef:18] .Moreover, it does not suffice in this regard that the contract was concluded in one State to be performed in another State[footnoteRef:19] .At all events, the fact that the places of business of both parties are in different States must be known or at least may not be unknown to the parties at any time before or at the conclusion of the contract. This means that, in order to exclude the CISG, it suffices that only one party to the contract proves its having been unaware at the time of conclusion of the contract that the other partys place of business was located abroad[footnoteRef:20] .On the other hand, it also follows that, though the contracting parties might not be aware of the applicability or even of the existence of the CISG, the internationality of their sale of goods contract must be apparent to both of them[footnoteRef:21] .( FERRARI, supra note 7, 31-32.) .Knowledge by the parties that their places of business are located in different States can be deduced from the contract itself or from any dealing between, or from information disclosed by, the parties. In any event, there must be an objective element that reflects the international character of the contract of sale of goods, such as the foreign language used by the other party, the temporary sojourn of one party in the State where the other has its place of business, or the agreement by both parties to deliver the goods sold in a State other than the sellers State[footnoteRef:22] (FERRARI, supra note 7, 31-32.). It is quite irrelevant here whether the parties know that the different States in which their places of business are located are Contracting or non-Contracting States[footnoteRef:23], (SIEHR, supra 1, 53-54; HERBER, supra 1, 57, 87) or whether they know that the CISG governs their contract or that it even exists[footnoteRef:24] (BORISOVA, supra note 13). Thus, the CISG safeguards the reliance by both parties on the fact that their contract for the sale of goods is national in nature[footnoteRef:25]; the party claiming otherwise has to prove the international character of the contract[footnoteRef:26] .The CISG will therefore only apply to contracts for the sale of goods which prove to be evidently international. [7: ROSETT, supra note 8, 274.] [8: Ibid.] [9: SIEHR, supra note 1, 48.] [10: Reference is to be made to its habitual residence pursuant to Art. 10/b CISG.] [11: SIEHR, supra note 1, 48. E. JAYME, in: C.M. Bianca / M.J. Bonell (Eds.), Commentary on the International Sales Law, Giuffr, Milan (1987).] [12: BELL, supra note 5, 244. See also: P. SCHLECHTRIEM, Requirements of Application and Sphere of Applicability of the CISG, Victoria University of Wellington Law Review (2005/4), 781- 794, at 782, also available at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem9.html.] [13: BORISOVA, supra note 13.] [14: Decision of the Cour de Cassation (France) of 4.1.1995, available athttp://www.unilex.info/case.cfm?id=106.] [15: HONNOLD, supra note 1, 35.] [16: Decision No. 2 U 23/91 of 27.11.1991 of the Oberlandesgericht Kln (Germany), available at . ] [17: Art. 1(3) CISG] [18: Decision No. 034305BLS of 28.2.2005 of the Superior Court of Massachusetts (Court of First Instance) (USA), available at http://www.unilex.info/case.cfm?id=1019.] [19: HERBER, supra note 1, 52; FERRARI, supra note 7, 24-25. Decision No. 2 U 23/91 of 27.11.1991 of the Oberlandesgericht Kln (Germany), available at http://www.unilex. info/case.cfm?id=128.] [20: SIEHR, supra note 1, 54; HERBER, supra note 1, 57.] [21: FERRARI, supra note 7, 31-32. ] [22: HERBER, supra note 1, 57.] [23: SIEHR, supra note 1, 53-54; HERBER, supra note 1, 57, 87.] [24: BORISOVA, supra note 13.] [25: ibid.] [26: BELL, supra note 5, 246.]

2.1.2 Two Contracting States The internationality of a sale of goods contract does not per se suffice to make the CISG applicable[footnoteRef:27]. In order to apply the CISG autonomously, the different States in which the places of business of both parties are located must also be Contracting States within the meaning stipulated by Articles 99 (entry into force of the Convention) and 100 (the Conventions temporal application)[footnoteRef:28]of the CISG.[footnoteRef:29]Thus, Article 1(1)(a) CISG creates an area of certainty[footnoteRef:30]: if the two different States in which the contracting parties have their relevant places of business are Contracting States, whether Arab (i.e., Egypt, Syria, Iraq, Mauritania, or Lebanon) or non-Arab States (e.g., Italy, Germany, USA , etc.), and the litigation is brought before a forum in a Contracting State, be it the State in which either contracting party has its place of business or another Contracting State, the Convention applies. [27: FERRARI, supra note 7, 24.] [28: ICC Court of Arbitration, Award No. 6281 of 1989 of 26.8.1981, available at http://cisgw3.law.pace.edu/cases/896281i1.html.] [29: Decision of the Cour dAppel de Rennes (France) of 27.5.2008, available at http://www.unilex.info/case.cfm?id=1354 .] [30: BELL, supra note 5, 246. SPAGNOLO, supra note 2, 143.]

Reservations made by the States under Articles 92 and 93 CISG should also be taken into consideration. Under Article 92(1) CISG, [a] Contracting State may declare at the time of signature, ratification, acceptance, approval or accession that it will not be bound by Part II of this Convention or that it will not be bound by Part III of this Convention. In such a case, the Declaring State is not to be considered a Contracting State within paragraph (1) of Article 1 of this Convention in respect of matters governed by the Part to which the declaration applies, Article 92(2) CISG. Accordingly, if a contract for the sale of goods is concluded between an Egyptian buyer and a Danish seller, according to Article 1(1)(a) CISG the CISG will not apply in full .The reserved part of the Convention (i.e., Part II on contract formation) may, however, be applied by virtue of Article 1(1)(b) CISG . Under Article 93(1) CISG, [i]f a Contracting State has two or more territorial units in which, according to its constitution, different systems of law are applicable in relation to the matters dealt with in this Convention, it may, at the time of signature, ratification, acceptance, approval or accession, declare that this Convention is to extend to all its territorial units or only to one or more of them, and may amend its declaration by submitting another declaration at any time. If, by virtue of a declaration under this Article, this Convention extends to one or more but not all of the territorial units of a Contracting State, and if the place of business of a party is located in that State, this place of business, for the purposes of this Convention, is considered not to be in a Contracting State, unless it is in a territorial unit to which the Convention extends, (Article 93(3) CISG). 2.1.3 Article 1/1-a CISG as applied in practice in the Arab World In its Decision No. 979 for judicial year 73 of 11.04.2006, the Egyptian Court of Cassation found that the Convention was applicable pursuant to Article 1(1)(a) CISG.The contract had been concluded between an Italian seller (plaintiff) and Egyptian buyer (defendant) for the sale of marble. Since the buyer refused to pay part of the price, the seller brought a case before the first instance court seeking payment of the outstanding amount. Despite the CISG being applicable as Italy and Egypt are Contracting States, the first instance court applied Egyptian national law to the dispute without paying any attention to the CISG. As the court ruled in favour of the plaintiff, the defendant turned to the Court of Appeals, arguing that the plaintiff had failed to prove that the defendant had taken delivery of the goods. The Appeals Court upheld the lower courts decision, likewise disregarding the CISG. The defendant challenged the decision before the Court of Cassation. The Court quoted, among others, Article 1 CISG and decided that when a sale of goods made between a seller in a State ratifying the CISG and a buyer in another State ratifying the CISG, the rules of the Convention shall govern the formation of the sale contract and the rights and duties arising therefrom. The Court of Cassation found that the Appeals Court erred in applying the Egyptian national law to the dispute and remanded the case for the Appeals Court to apply the CISG. In the view of these authors, the Court of Cassation came to the right conclusion. As both Italy and Egypt are Contracting States, the Convention applies pursuant to Article 1(1)(a) CISG. The Court should, however, have made it clear that the places of business of both parties, not the seller and buyer themselves, were in different Contracting States (i.e., Italy and Egypt). In its Award No. 50/1994 of 3 October 1995, the Cairo Regional Centre for International Commercial Arbitration (CRCICA) applied the CISG.41 A seller from an African country and a U.S. buyer concluded a contract for the sale of a certain number of apparatuses. Article 23(3) of the contract provided for all issues to be interpreted according to (1) the conditions of the contract; (2) the CISG; and (3) the law of the African State (Egypt). A dispute arose between the parties, concerning the lack of conformity of the goods and the extension of the bank guarantee of each unit released by the seller. Although the Convention was applicable to this contractual dispute by virtue of Article 1(1)(a) CISG, the sole arbitrator rejected the allegations made by the buyer regarding the lack of conformity of the goods without referring to the CISG. On the other hand, making express reference to Article 45 CISG, the arbitrator held that the seller had breached its contractual duties by refusing to extend the bank guarantee in favour of the buyer. The arbitrator also found that the CISG rules on remedies did not differ from the conditions of the contract and from the law of the African State (i.e., Egyptian law). To support his opinion, he even cited a decision rendered by the Egyptian Court of Cassation applying the Egyptian national law with regard to the contractual liability. The arbitrator accordingly awarded damages to the buyer, in accordance both with the applicable domestic law (Egyptian law) and the CISG (Article 74). To these authors, the sole arbitrator erred in applying the Egyptian national law to the dispute besides the CISG; the arbitrator should only have applied the CISG since it was clearly applicable to the contract in dispute pursuant to Article 1(1) (a) CISG.In its award of 18 September 2006, an ad hoc arbitration panel at the Egyptian National Committee for International Chambers of Commerce in Cairo did not apply the CISG even though it was apparently applicable to the contract in dispute .A seller from Austria (respondent) and an Egyptian buyer (claimant) concluded a contract for the sale of electronic scales and spare parts in January 2004. After taking delivery of the goods, the buyer found that they did not meet the technical specifications stipulated under the contract. Since the contract contained a dispute settlement clause that provided for arbitration in Cairo, the buyer initiated arbitration proceedings there. The panel applied the Egyptian civil law to the dispute. Since the places of business of both parties were located in Contracting States, i.e., Austria and Egypt, the Panel should have applied the CISG to the dispute ,( H.A. EL-SAGHIR,2008).

2.2 NDIRECT APPLICATION OF THE CISG In addition to autonomous (direct) application, the Convention may pursuant to Article 1(1)(b) CISG apply indirectly when the conflict-of-laws rules of the forum refer to the law of a Contracting State. Under Article 95 CISG, however, each State may declare that it will not be bound by Article 1(1)(b) CISG. Besides these two matters, we will explain the indirect application of the Convention as it is practised in the Arab world pursuant to Article 1(1)(b) CISG.

2.2.1 Conditions for indirect application of the CISG Once the international character of the sale of goods contract has been established, the CISG may also apply if the conflict-of-laws rules, applied by national courts or by arbitral tribunals(R. LOEWE), indicate the application of a Contracting States national law. In such a case, the CISG will be applied for the reason that the Convention is part of the domestic law of each country that has ratified it and also it is the lex specialis in connection with international sale of goods. (R. LOEWE,1998) It should, however, be noted that the CISG has to be applied in such situations as a uniform law of sale of goods, not as a foreign law. It follows, therefore, that the court itself must identify and apply the CISG provisions concerned[footnoteRef:31], while its decision can be challenged before the Court of Cassation. [31: - HERBER, supra note 1, 54-55. Decision No. 979 of 11.4.2006 of the Court of Cassation (Egypt) for judicial year 73, available (in Arabic) at http://cisgw3.law.pace.edu/cisg/text/060411e1arabic.pdf.]

It makes no difference in this regard whether the State in which the court or arbitral tribunal is located is a Contracting or non-Contracting State (K.S. QTAISHAT, 2010). Thus, courts in all Arab countries may be faced with a situation where the contracting parties have selected the law of a Contracting State as the lex contractus[footnoteRef:32], since this concept of party autonomy is universally recognized in domestic private international law codifications[footnoteRef:33]. Where the parties do not select the law applicable or where their choice is not valid, recourse must be had to the criteria set forth by the conflict-of-laws rules of the forum to determine whether the Convention is applicable by virtue of Article 1(1)(b) CISG.[footnoteRef:34]According to Article 19(1) of the Egyptian Civil Code[footnoteRef:35], in such a case recourse must be had to the law of the (Contracting) State in which both parties are domiciled, if any, and in the absence of such a law, to the law of the (Contracting) State in which the contract of sale of goods was concluded, i.e., the lex loci contractus.Under Article 62 of the Tunisian private international law code, in such a case recourse shall be had to the law of the (Contracting) State to which the contract is most closely connected. In such situations, Arab courts must apply theCISG if the law applicable according to the forums conflict-of-laws rule is the law of a Contracting State; otherwise, they would defeat the objective of achieving uniform application of this international sales law. [32: UNCITRAL Digest, supra note 1, 6: The Convention may be selected by the parties as the law applicable to the contract. Award of the Netherlands Arbitration Institute, No. 2319 of 15.10.2002.] [33: FERRARI, supra note 7, 40. See also Arts. 19(1), 20(1), 20(1), and 19(1) of the Civil Codes of Egypt, Jordan, Syria and the United Arab Emirates, respectively. ] [34: UNCITRAL Digest, supra note 1, 6. ] [35: In its Decision No. 67/1987 of 28.2.1988, see this decision (in Arabic) in Adaleh, at www.adaleh.com.]

When applying the Convention pursuant to Article 1(1)(b) CISG, i.e., by virtue of the so-called classical solution,( FERRARI, supra note 7, 38), it does not matter whether or not either partys or both parties place of business is located in a Contracting State.Likewise, it is of no importance whether the law applicable is the national law of an (Arab) Contracting State whose courts have to settle the dispute or the law of another (Arab or non-Arab) Contracting State(A, supra note 45, 366-367). Moreover, the courts in an Arab State must apply the CISG once its conflict-of-laws rules point to the law of a Contracting State, regardless of whether or not the CISG is also applicable according to the private international law rules of that Contracting State (SIEHR, supra note 1, 51).

2.3 THE SYSTEMS APPROACH OF LAW WITH MANAGEMENT The deep metaphors revealed by our research, coupled with the adverse effects of focusing on just self-interest (Preston & Post, & Bagley, 2005), confirm the need to better integrate the treatment of law, ethics, and business in business school curricula. Instead of relegating law to what Gorden & Howell (1959) and Baron (1995) call the nonmarket environment and of focusing on just its constraining aspects, the systems approach to law and management proposed by Bagley (2005) may provide a more complete and balanced picture of the role of law and ethics in business success. Law and business are part of the broader system of society (Preston & Post, 1975; Bagley, 2005). Failure to meet societys expectations of appropriate behavior or to treat stakeholders fairly (Jensen, 2001) can jeopardize a firms ability to compete effectively. Corporations are legal artifacts (Cragg, 2002: 126) that rely on legislative action for their very existence. Historically, corporations were granted charters and limited liability only when private funds were needed to finance quasi- public functions, such as bridges and banks (Bagley & Page, 1999). Notwithstanding the frequent incantation in the ethics literature that managers have a fiduciary duty to exercise their responsibility with the exclusive financial interests of the companys shareholders in mind (Cragg, 2002: 114), that is simply not how the courts have interpreted the law (see cases cited in Bagley). Directors owe a fiduciary duty to the corporation, and in deciding what is in the best interests of the corporation, directors may take into account the effect an action may have on the shareholders but also the interests of other constituencies, such as employees, customers, suppliers, and the community at large (Unocal, 1985). The role of the board shifts from protector of the corporate bastion to auctioneer seeking the highest immediately realizable value for shareholders only when a break-up of the corporation or a change of control has become inevitable (Revlon, 1986). For this purpose, change of control is very narrowly defined and excludes situations in which one disaggregated set of public shareholders transfers its shares to another disaggregated group. As a result, even though Time had agreed to a friendly merger with Warner Brothers, whereby 65% of the stock in the newly merged entity Time Warner would be owned by the former Warner shareholders, the Delaware Supreme Court ruled that there was no change of control (Paramount v. Time, 1990). Accordingly, the Time board did not violate its fiduciary duties when, in order to protect Times journalistic integrity, it rejected a higher Paramount cash offer for Time that a majority of the Time shareholders preferred to a merger with Warner. This decision reflected the fact that a corporation is not a private contract between the managers and shareholders. It is part of a community until its demise (by break- up or change of control) becomes imminent. The systems approach is a dynamic model. Law affects business firms, but firms also affect the law and society as a whole (Edelman & Suchman, 1997). Law is not just external force acting upon managers and their firms. It offers tools legally astute managers can use as part of their market strategy to manage the firm more effectively. Law helps shape the competitive environment and affects each of the five forces that Porter (1996) identified as determining the attractiveness of an industry: buyer power, supplier power, the competitive threat posed by current rivals, the availability of substitutes, and the threat of new entrants (Shell, 2004). Law also affects the internal context of the firm, that is, its resources (Barney, 1991) and capabilities (Teece, Pisano & Shuen, 1999), including the way the firm is organized. In particular, law affects. (1) The allocation of firm resources among stakeholders (e.g., by allocating power between the directors and shareholders in antitakeover and constituency statutes); (2) The environment in which resources are converted into products (e.g., by imposing strict product liability on each firm in the chain of distribution); (3) The marshaling of human resources (e.g., by permitting employment at-will while requiring the payment of damages for wrongful termination and banning employment discrimination); (4) the marshaling of physical capital (e.g., by offering limited liability to investors, giving entrepreneurs fresh starts under the bankruptcy laws, and promoting transparency in the capital markets under the federal and state securities laws); (5) The uniqueness of resources (e.g., by providing copyright, patent, trade secret protection and enforcing certain no compete agreements). Failure to comply with law can result in the loss of resources, such as cash paid out as fines and damages or lost business, and place the firm at a competitive disadvantage (Baucus & Baucus, 1997). Compliance is path dependent firms that violate the law once are more likely to violate it again (Baucus & Near, 1991). On the upside, effective use of the law can help firms protect and leverage the firms valuable resources (Bagley, 2005). Given the public law, the competitive environment of the industry, and the firms resources and capabilities, the legally astute manager can use a variety of legal tools to assess opportunities, to define the firms value proposition, and to select and perform the activities in the value chain. These range from patents to contracts to classes of preferred stock with detailed rights, preferences, and privileges. For example, venture capitalists often use stock options as equity incentives to align the incentives of the management team with those of the investors. Such arrangements can decrease the agency costs (Jensen & Meckling, 1976) arising out of the separation of ownership and control. Law is not static, however. Public laws will change in response to corporate lobbying, firm action (especially misconduct), and societal demands. The passage of the Sarbanes-Oxley Act of 2002, in response to widespread financial fraud, and the Foreign Corrupt Practices Act of 1978, in response to government bribes by multiple firms, are just two examples of this. As a result, anticipating, understanding, evaluating, and responding to public policy developments within the host environment is a critical managerial task (Preston & Post, 2012: 4). Moreover, law is rarely applied in a vacuum and legal inference is often ambiguous (Langevoort & Rasmussen, 1997). Especially in common law jurisdictions, such as the United States and England, the application of legal rules to a given set of facts is often not clear-cut. As U.S. Supreme Court Justice Oliver Wendell Holmes (1897) explained, legal advice is often just a prediction of what a judge or jury will do in as future case. Furthermore, the distinctions that certain scholars make between legalistic and normative approaches to preventing ethical abuses (Sama & Shoaf, 2005: 179) are not as crisp as they may appear on first glance. In fact, moral and ethical considerations impinge upon most legal questions and may decisively influence how the law will be applied.

Conclusion Our society depends upon free exchange in the marketplace at every stage. The interactions in the market all the times depend upon voluntary agreements between individuals or other legal persons. Such voluntary agreements can never become binding without a legal contract.The origin of the contract law can be traced from the development of common law and it is also alleged to be an offspring of tort law, as both contracts and torts give rise to obligations. The difference between them lies in the fact that the tort obligations are imposed by law; on the other hand contracts are a medium through which people willingly create commitment between themselves.The CISG is a lex specialis of the international sale of goods. In order for the Convention to be applied by the courts of Arab Contracting States (i.e., Egypt, Syria, Iraq, Mauritania and Lebanon), either the conditions set forth in Article 1(1)(a) (direct application) or those laid down in Article 1(1)(b) (indirect application) must be satisfied. In order for it to be applied by the courts of non-Contracting Arab States, the conflict-of-laws rules of the forum must point to the law of a Contracting State, whether a reserving State or not. In practice, the CISG has been applied by Egyptian tribunals to contracts for the sale of goods between parties having their places of business in different Contracting States (by virtue of Article 1(1)(a) CISG) and when the Egyptian private international law rules lead to the law of a Contracting State (pursuant to Article 1(1)(b) CISG). In other situations, Egyptian tribunals did not apply the CISG even though the conditions necessary for its application were satisfied. According to the reported cases, none of the Arab tribunals availed itself of the possibility of applying the CISG as part of the lex mercatoria, although the available legal texts allow them to do so. Clearly, then, raising the Arab legal communitys awareness of the CISG should be a priority. For a start, the universities in the Arab countries should offer courses on the CISG, at least at the higher level(s).

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