Tasmanian Exporters’ Contracts and the New World Order

Recent developments in the Global environment for finance and trade have implications for Tasmanian Exporters and their contracts. The purpose of this article is to explore drafting issues which arise in assisting Exporters to protect themselves with some of these issues in their contracts.

Payment Clauses
Payment mechanisms in export contracts tend to sit on a spectrum of risk, from advance payment and letters of credit through to open account and consignment arrangements. Payment in Advance has always been understandably very rare. In stable times, Letters of Credit coupled with appropriate clauses covering currency, exchange rates and compliance issues was the workhorse mechanism for most cross-border trade transactions and worked smoothly and well, albeit with some delays with bank bureaucracies and of course additional banking fees.

The ever-increasing search for speed and simplicity in business, and perhaps in part the desire to be seen as hip, modern, and fashionable, has seen the rise in requests for cross-border transactions to jump on the crypto-currency band wagon. Inherent in using cryptocurrency is greater risk, and whilst we may be a nation of gamblers, in most cases the level of risk may not be appropriate for exporting primary producers. The use of Stablecoin currencies can mitigate much of the volatility risk, avoid fees and provide fast action. But they require a stable and politically acceptable asset to be the reserve peg.

The US dollar, a common peg may not be a popular choice with typical importers in Asia of Tasmanian products, especially China. Also, the value of gold, another typical peg, has shown a degree of instability in the new Global environment. Gold has fallen 20% from a record US$5,592 earlier in the year to around US$4,500 now – a 20% drop (www.abc.net.au/news/2026-05-29). Stablecoin issuers will have suggestions to make as to appropriate pegs for your client’s transactions including algorithms. With cryptocurrencies generally your clients will need to ensure they have secure access to the “wallets” through which the payments will be made.

If your client does wish to include crypto currencies in the buyer’s payment choices, you will need to double-check the regulatory environment at both ends of the transaction for relevant rules. You will also need to include representations and warranties from the party making the payments that the funds involved were legitimately sourced and not the proceeds of crime, money laundering or terrorism funding. The wording will need to track the wording of relevant legislation in the payer’s country and will vary accordingly for Europe, the USA and Asian jurisdictions.

Force Majeure
Force majeure clauses are now a standard feature of most cross-border contracts. But beware. The deities of the New World Order do not quietly retire to Mount Olympus. We live in a world where the big and the powerful can claim that a four year-long invasion of a sovereign neighbor is not a “war”. We are also in a world where treaties may be interpreted using the negative plain meaning. The ink on the UN Charter was barely dry when the historical prerequisite to the use of self-defense, recognized in Article 51 “if an armed attack occurs”, was being read as “even if an armed attack has not occurred”. We also live in a world where the great and the powerful are not marching toward freer global trade. These times warrant more specific drafting of the events which might constitute force majeure.

In contemporary drafting, it is prudent to deal expressly with risks such as sanctions, asset seizures, embargoes, and disruptions to transport or trade routes.

In Australia and other common law systems, a party relying on force majeure will usually need to show that the relevant event was outside its control, not realistically avoidable, and not something the parties should reasonably have planned for. In the modern world it can be argued that 100% tariffs are not unforeseeable and that storms, flooding and pestilence are becoming the norm. For farmers in the Forth Valley, it is at least arguable that seasonal flooding now sits somewhere between risk and inevitability.

Australian authorities also leave uncertainty around the extent to which known risks at the time of contracting can later be relied upon. Furthermore, it has been judicially recognized, including by Spigelman CJ, that a contract becoming commercially unattractive will not, of itself, place performance beyond a party’s control (Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235).

Accordingly, careful drafting should focus on capturing categories of risk that may arise in practice, rather than attempting to predict only those events that can presently be foreseen, especially those which could affect the logistics of on-time delivery or even the yield of crops.

Price Adjustment Triggers
Material Adverse Change clauses, long familiar in securities transactions, offer a useful reference point. Modern trade contracts could equally benefit from such a clause which are designed to capture developments that materially alter the commercial balance of a transaction and provide for the impact those events might have if they meet the quantitative or qualitative thresholds in the clause, including with respect to pricing, delivery times and quantities.

Even in securities law judicial interpretation of these clauses has been limited so in the trade context they will represent something of a leap in the dark, but they may provide a useful tool for dealing with tariff wars and blockades of ocean straits. Including a price adjustment clause to reflect tariff changes will rarely be in the best interests of Tasmanian exporters but may be expected to be demanded by their customers in some jurisdictions. Happily the drafting of such clauses is not particularly challenging.

Dispute Resolution
We live in a world where in some countries Departments of Justice pursue the political enemies (and their legal counsel) of those in power, rather than focusing on wrongdoers, and other jurisdictions where experienced local practitioners can recommend precise local courts where the home team will enjoy the best chance of success, and even quote a price range for a favourable judgment from a friendly judge. As a result, we are seeing more frequent attempts to give exclusive dispute resolution jurisdiction to arbitral bodies. Once upon a time, it was usual to nominate European locations for arbitrations, but it is cheaper for Australians to stay closer to home and in Singapore we have not only a highly skilled arbitration community but one which is expert in modern challenges like cryptocurrencies and is familiar with Australian precedents and practices. SIAC should be given serious consideration as the choice for dispute resolution in Australian export contracts.

Conclusion
Happily, the export of methamphetamines is not a Tasmanian pastime, so we do not have to draft for the possibility of air-launched missiles sinking our clients’ shipments. We do, however, need to take care in drafting export contracts to ensure that the boilerplate reflects the realities of the New World Order.

Gregory Terry
Lawyer

 

29 July 2026