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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Lotus Agro Ltd and Malwa Traders agreed in their contract to arbitration. There is a well-established trade usage in the grain market of the place regarding the quality tolerance on delivery, and the contract has an express clause on price. While making the award, what must the tribunal do about the contract terms and the trade usage?

The tribunal must take into account both the contract terms and the applicable trade usages in all cases. The duty is not limited to international arbitrations and does not need a request from the parties, so ignoring the grain-market usage would be wrong.

  1. AConsider only the contract terms and ignore trade usage as it is not written
  2. BConsider trade usage only if both parties request it in writing
  3. CTake into account both the terms of the contract and the trade usages applicable to the transactionCorrect
  4. DTake into account trade usages only in international commercial arbitration

Explanation

While deciding and making an award, the tribunal shall in all cases take into account the terms of the contract and trade usages applicable to the transaction. This applies to every arbitration, domestic or international, and does not depend on a request by the parties.

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