international productions; contracts and payment workflow for low budget

What is included in a contract and by which country law it is bound to? (any links to example contracts?)

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Depends on the contract. Most contracts specify the jurisdiction.

How is the payment done? since the two companies live in different countries with different laws, should the "company A" pays the whole budget to "company B" before the shooting?

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It depends on the payment schedule, usually specified in the contract. It can be 50% before primary photography, 50% on delivery, though other contracts can have 10% on execution of contract, 20% on beginning of pre production, 20% at the start of principal photography, 20% on start of post production, 30% on delivery of final product. It depends on what you negotiate.

If the payment is to be made in steps (3 parts; one before shooting, one during the shooting and the last after finishing) How "company B" secures and can be sure that they will get payed afterwards.. Knowing also that international bank transfers takes some weeks depending on countries..

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There are financial services that can hold funds in escrow. So both parties know they're protected. They're also often used in recoupment.

A bit off topic but good to know; In similar situations is it enough for "company B" to have a UPM or there should be a line producer to be the link between "company A" producer (or person in charge of the project) and "company B"?

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The lines between a UPM and Line Producer gets blurred depending on the size of a production. It's more important to be clear on the duties required to be done (by which company), rather than worrying about which person specifically is required to do those specific duties.

It sounds like you need a producer with experience in foreign co-productions in the particular country you're going to be dealing with. International contracts are often difficult to enforce, so it's important to know who to avoid getting involved with, especially when there are decently large amounts of money involved.

There don't seem to be a lot of producers on this forum, so you may be better off asking for a second opinion elsewhere.

Thanks Sweetie for you detailed reply; I posted the same question on some producers group on linkedin. Hoping to get more info about this issue.

You are going to need to ask a lawyer for specifics but here are some things to look out for:

Territory:
This contract and the contract between either company and anyone traveling between them needs to state that the territory covers both countries or is 'worldwide'.

Enforceability:
You need to make sure the contract you set up is enforceable in other parties country, this may require that contracts or clauses are written in a certain way it may also require that the courts of the other persons country be given jurisdiction.

Choice of Law/ Choice of Venue:
The rule of thumb for US domestic contracts is you want the venue and law of your state. In International contracts it is often preferable to have it in the other parties locality to ensure it is enforceable upon them. Just make sure your Prevailing Party clause includes a stipulation for travel and related costs.

Either way it is best for both companies to retain an international law firm with ties to firms in both localities to work out the details.