What must a contract contain under Norwegian law?

Under Norwegian law, a contract should at a minimum state who the parties are, what is to be delivered, the price and payment terms, the duration and how the agreement can be terminated, the consequences of breach, and how disputes will be resolved. How much detail each clause needs depends on the nature of the contractual relationship and the risks involved.

Are you doing business in Norway and drawing up a contract, but unsure where to start or what it actually needs to include? A sound contract is more than legal wording. It is a practical tool that prevents conflict and gives both parties predictability. In this article, we explain what a contract governed by Norwegian law must contain and how to structure it. The guide is written for foreign companies and international businesses entering into agreements in Norway.

How does Norwegian background law affect your contract?

A contract governed by Norwegian law is always supplemented by what is known as background law (bakgrunnsretten). Background law consists of two elements:

• Norwegian statutory law relevant to the type of agreement, such as the Sale of Goods Act or the Craftsman Services Act

• Unwritten principles developed through Norwegian contract law tradition

This means a Norwegian contract does not need to regulate every single aspect of the relationship. This is an important difference from many common law jurisdictions, where contracts are often drafted to be exhaustive. However, the parties should still set out the key terms specific to their agreement. If they wish to depart from the rules of background law, they must state this expressly in the contract, as far as the law permits such departures.

What should you clarify before drafting the contract?

Before you start drafting, be clear about three things: what the agreement is meant to govern, who the parties are, and what the purpose of the relationship is. The better you understand the underlying commercial relationship, the easier it is to draft provisions that fit the situation, rather than relying on generic clauses copied from a template.

What must a Norwegian contract contain, and how should it be structured?

A well-structured contract under Norwegian law normally covers the following main elements:

• Introduction and background – who the parties are and what the agreement covers

• Definitions – key terms used throughout the agreement

• The parties’ obligations – what each party is to deliver or perform, and when, where and how

• Price and payment – how the price is calculated and when payment is due

• Duration and termination – how long the agreement applies and how it can be terminated

• Breach and remedies – what happens if a party fails to perform

• Limitation of liability – any caps or exclusions on liability for damages

• Governing law and dispute resolution – which law applies and how disputes are handled
  
  

This structure makes the contract easier to read and reduces the risk of important points being overlooked. Below, we look more closely at the clauses that most often determine whether a contract works in practice. Breach, limitation of liability, notice requirements and force majeure are covered in our article on common pitfalls in contract drafting.

Also see: Pitfalls in contract drafting – the most common mistakes

How precisely should the contract describe each party’s obligations?

As precisely as possible. Vague wording such as ‘best efforts’ or ‘within a reasonable time’ leaves room for differing interpretations and weakens your position if a dispute arises. State exactly what is to be delivered, when, and the expected quantity, quality or standard.

What should the contract say about price and payment terms?

State clearly:

• what the price is

• whether it includes or excludes Norwegian VAT (MVA)

• whether it is fixed or subject to adjustment

• when payment falls due

You should also regulate what happens if payment is late, for example that late payment interest will accrue under the Norwegian Late Payment Interest Act. Consider as well whether the price can be adjusted if circumstances change, such as currency fluctuations or changes in public taxes and duties.
How should the contract regulate duration and termination?

For an ongoing agreement, state clearly how long it will remain in force, whether it renews automatically, and what notice period applies. You should also specify whether either party may terminate early, for example in the event of material breach or other specified circumstances, and whether the buyer has a right to cancel the delivery.

Why should the contract specify governing law and jurisdiction?

If the parties are based in different countries, the contract should always state which country’s law applies and where any dispute will be resolved. Without such a clause, you risk uncertainty and costly proceedings just to establish which courts and which legislation govern the case. For foreign companies doing business in Norway, this is one of the most important clauses to get right. If you want Norwegian law and Norwegian courts to apply, say so expressly in the contract.

Should you use a standard contract or draft your own?

A recognized template or standard contract is a good starting point, particularly in industries where established standards exist. In the Norwegian construction industry, for example, the Norwegian Standard (NS) contracts are widely used. The right choice depends on how common the type of agreement is and how much is at stake. Whatever your starting point, the content must be tailored to the specific relationship. Read more about what can go wrong when a template is used without adjustment in our article on pitfalls in contract drafting.

Also see: Construction contract types overview

How do you make sure the contract is clear to both parties?

Use clear, precise language and avoid unnecessarily complex legal jargon. A contract that both parties actually understand reduces the risk of misunderstandings and is easier to enforce if a dispute arises later. This is especially important when the parties have different native languages or come from different legal traditions. If the contract is drawn up in both Norwegian and English, state which language version prevails in the event of any discrepancy.

What must a contract contain in Norway? Summary

A well-drafted contract is one of the most effective tools for preventing conflict in a business relationship in Norway. If you structure the agreement clearly, describe the obligations precisely, and settle the price, duration and dispute resolution from the outset, you lay the foundation for a secure and predictable working relationship.

Doing business in Norway and need help drafting a contract under Norwegian law? Contact our business lawyers today.