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transnational law transnational law (lex mercatoria or international business law) and "Fixing of price by third party" 2016-03-01 13:58:16

No. IV.6.3 - Fixing of price by one of the parties

If the contract provides that the price is to be fixed or determined by one of parties, and this determination is manifestly unreasonable, the other party may apply to a court or arbitral tribunal to have a reasonable price fixed, notwithstanding any agreements to the contrary.

1 This Principle is derived from the general principle of good faith and takes account of the fact that the parties may leave the determination of the price to one of them. If in such a scenario the price fixed by one party is manifestly unreasonable, the other party may apply to a court or arbitral tribunal to have a reasonable price fixed.

2 The party which fixes the price enjoys a certain discretion. The other party may only apply to the court or arbitral tribunal if the price fixed is "manifestly", i.e. obviously unreasonable.

3 The parties may not derogate from that provision which is intended to protect the party which does not possess the right to fix the price.

Please cite as: "Commentary to Trans-Lex Principle , "
International Legislation
Principles / Restatements
Contract Clauses
1. Fixing the Price at the Discretion of One Party
Sales & Purchase Contract
Framework for Drafting Distribution Agreement (Pricing)

Prices in effect as of the date of this agreement and as set forth in the confidential price list supplied to the Distributor by the Company. Company shall, however, have the unrestricted right to change the price of any Products at any time, which changes in price shall be effective upon {X} days' notice to Distributor; provided, however that any orders accepted and acknowledged by Company and entered by Company into its distribution system at the previously announced price shall not be subject to such price change - (International Contracting: Law and Practice - Larry A. DiMatteo - 9.02 - S. 320).

Fixed Price Protection

If the parties enter into a Transaction with a Contract Price that is a fixed price, as opposed to a Contract Price that floats based on industry postings, reference publications, or other external market factors or indices, for a specified quantity of Crude Oil to be delivered at a specified Delivery Point for the relevant period, such Fixed Price shall not be subject to change and shall be deemed to be the first Crude Oil purchased during the applicable Month. If more than one Fixed Price for different quantities of Crude Oil has been established in a particular Month, then the first Crude Oil purchased during said Month shall be the first quantities for which a Fixed Price was established, followed by any additional quantities in the order they were established (...)

Services Contract
The Products and Exhibits

Except as further set forth in an exhibit to this Agreement, X in its sole discretion will determine the pricing of the Product to Customers. Any change or addition to a Product must be agreed by the parties in writing and in accordance with the applicable provisions of the applicable exhibit to this Agreement.

Cost Allocation

X will calculate Fees and costs charged to Y using a cost allocation methodology that accurately and fairly reflects X's reasonable, good faith forecasts of its actual costs associated with providing the Services and with a reasonable allocation to Y based on the provision of Services to Y and the costs therefore as a proportion of total services and costs X provides for itself, for Y and for any other division or Affiliate of X. X agrees that the target of the Fees and costs charged to Y will be X's actual costs in performing the Services. X shall set the Fees each year as part of the Annual Budget Process at such reasonable, good faith projection of actual costs (and any overhead costs allocated according to the principle set forth in the first sentence of this Section) plus five percent (5%) of X's costs.

Services Management

On or prior to the first day of each fiscal quarter, each Party will provide the other with a written estimate of the expected Service Costs, set forth in reasonable detail and by month, to be charged to the other Party for Services to be provided that quarter (...) in the event that a Party becomes aware that the actual Service Cost being, or to be, incurred by a Party is materially different from that set forth in the Quarterly Service Cost, such Party will provide the other with a written estimate of the expected change and the Parties will negotiate in good faith to have the Quarterly Service Cost modified to reflect the actual cost (...)

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