At its May 1994 meeting the Governing Council of the International Institute for the Unification of Private Law approved Principles for international commercial contracts. The Institute suggests that these Principles might be applied when the parties have agreed that their contract is to be governed by "general principles of law" or the "lex mercatoria."

A Restatement of Law

The Institute, commonly known by the acronym "Unidroit", gathered experienced advisers from many different legal systems. Over more than 20 years experts not only from Europe and North America, but also from Africa, China, Japan, and Latin America participated. Professor E. Allan Farnsworth, who was the reporter for the Restatement (Second) of Contract Law and author of a preeminent treatise, has been the adviser from the United States.

As a restatement of contractual rules, the Unidroit Principles are a virtual contracts code. They cover issues arising from formation of contracts, their validity, performance of contractual obligations, and remedies for breach of these obligations. They are built on fundamental premise of party autonomy. They also recognize the binding effect of trade usages and the obligation to act in good faith.

The Principles provide details not normally associated with the concept of lex mercatoria. Whether this will persuade parties to incorporate the Principles is yet to be seen.

At the October meeting of the International Bar Association in Melbourne there will be a half-day program exploring the practical implications of the Principles.

The Institute will publish an official text of the Principles in the summer of 1994. Further information may be obtained from UNIDROIT, Via Panisperna, 28, 00184 Rome, Italy (tel. 39-6-6994-1372; fax 39-6-6994-1394).