The Legal Foundation of Service Agreements
An international service agreement, viewed through Georgian law, rests on the general concept of obligation: by virtue of an obligation the creditor is entitled to demand from the debtor the performance of an action, and performance may also consist in the omission of an action. Moreover, by its content and character an obligation may impose on each party special good faith towards the rights and property of the other — a general foundation that embraces service contracts as well.
The principle of freedom of contract is decisive for international services too: subjects of private law may, within the limits of the law, freely conclude contracts and determine their content, including contracts not envisaged by law but not contrary to it. At the same time, a party holding a dominant position on the market bears an obligation to conclude contracts and may not unjustifiably offer a counterparty unequal terms — a limit that protects the weaker side of cross-border service relationships.
Essential Terms and the Form of the Contract
A contract is considered concluded where the parties have agreed on all its essential terms in the form provided for that purpose. Terms are essential where agreement on them must be reached at the request of one of the parties, or where they are deemed such by law. For international services this means that the description of the services, quality criteria and the measurement of results must be defined in advance — otherwise the contract's very existence may be contested.
A contract may also give rise to an obligation to conclude a future contract — a preliminary contract to which the form provided for the main contract extends. This instrument allows complex projects to be structured in stages: first the framework of cooperation, then the full contract. For cross-border engagements, the preliminary stage is where the parties test commercial terms without yet assuming the full scope of obligations.
Standard Terms in International Services
International service agreements frequently contain standard terms — clauses pre-formulated for repeated use, which one party imposes on the other and through which rules differing from or supplementing the law are established. Under the law, terms defined in detail by the parties themselves are no longer regarded as standard, and terms individually negotiated by the parties take precedence over standard ones — a rule protecting the client from useless points imposed through forms.
Standard terms become an integral part of the contract only where the offeror makes a clearly visible inscription at the place of conclusion and indicates the terms, and the other party has the opportunity to familiarise itself with their content and, if it agrees, to accept them. Towards an entrepreneur counterparty it is sufficient that the terms were to be considered upon showing the necessary diligence — a business partner is expected to pay closer attention. Knowing these rules helps to challenge unfair clauses in time.
The Mandate Contract and Remuneration
One widespread form of international service is the mandate contract: the mandatary is obliged to perform for the mandator one or more acts in the name and at the expense of the mandator. This model is convenient for representative functions abroad — concluding contracts, receiving documents, participating in negotiations — where local presence is required but a full branch is not.
As to remuneration the law establishes a balanced regime: the mandator must pay the mandatary remuneration only in the cases provided for by the contract or by law. Remuneration is deemed to be tacitly agreed where, according to the circumstances, the performance of the act is expected only for remuneration; where the amount is not determined, tariff-based or customary remuneration applies. The amount should therefore be settled in advance — disputed obligations later rest on these default rules.
Information and Confidentiality
The mandatary must give the mandator necessary information, and at the latter's request — provide reports on the progress of performance, and after completion — submit a report. An agreement limiting or excluding these duties in the future requires written form — an oral arrangement has no effect here. These duties keep the principal informed and form the basis for settling accounts at the end of the engagement.
The duty of confidentiality is equally fundamental: the mandatary must not disclose facts that became known in the course of its activity and whose confidentiality the mandator is legitimately interested in, unless a duty of disclosure exists on the basis of law or the mandator permits disclosure. This duty survives the termination of the contractual relationship — in international services it is often the most valuable guarantee the client holds.
Frequently Asked Questions
How is a contract concluded?
When the parties agree on all essential terms in the prescribed form; a preliminary contract obliging the parties to conclude a future contract is also possible.
What are standard terms?
Clauses pre-formulated for repeated use and imposed by one party on the other; individually negotiated terms take precedence over them.
When is remuneration payable?
In the cases provided for by the contract or by law, or where the circumstances show that performance is expected only for remuneration — then tariff-based or customary remuneration applies.
Where is written form mandatory?
An agreement limiting or excluding the duties to inform and to report requires written form; without it, the agreement does not operate.
How We Help on Legal.ge
An international service agreement demands precise terms and careful control of standard forms. The specialists of Legal.ge assist in drafting contracts, reviewing standard terms and organising relationships under mandate contracts. Contact us — we will review your situation and help build a reliable legal framework.