国际商法CHAPTER 10

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Pearson Education, Inc publishing as Prentice Hall 2009,CHAPTER 10,SALES,10-1,CHAPTER 10,SALES,Topics for this chapter:,UN Convention on Contracts for the International Sale of Goods (CISG),Transactions Covered in CISG,Contractual Issues Excluded from Coverage of CISG,Interpreting CISG,Interpreting Sales Contracts,Formation of the Contract,General Standards for Performance,Sellers Obligations,The Passing of Risk,Remedies,Excuses for Nonperformance,10-2,UN Convention on Contracts for the International Sale of Goods,The CISG, adopted in 1980, incorporates rules from all the major legal systems.,It provides accepted substantive rules on which contracting parties, courts, and arbitrators may rely.,It has been ratified by 72 countries, but has not been ratified by Brazil, Japan, India, and the UK. Japan is expected to ratify it in 2008.,10-3,Transactions Covered in CISG,CISG applies to contracts for international sale of goods.,The buyer and seller must have their place of business in different states. Either:,Both of the states must be contracting parties to the convention, or,The rules of private international law must lead to the application of the law of a contracting state.,A ratifying state may declare that it will apply CISG only when the buyer and seller are both from contracting states.,10-4,Opting In and Out,Parties to a contract may exclude or modify CISGs application by a choice-of-law clause.,A,choice-of-law clause,is a contractual provision that identifies the law to be applied in the event of a dispute over the terms or the performance of the contract.,10-5,Case 10-1: Asante Technologies, Inc. v. PMC-Sierra, Inc.,Issue: Does the U.S. federal court have jurisdiction and does CISG apply to this contract?,The court determined the parties were from different states and CISG applies to contracts between such parties.,The parties did not opt out of the CISG and it was the controlling law.,10-6,Sales Defined,A,sale,is the exchange of goods for an amount of money or its equivalent.,The CISG does not define sales, but various sections present the same definition as many domestic laws, such as the U.S. UCC, which defines a sale as the “passing of title from the seller to the buyer for a price.”,The goods processed through the Port of Vancouver, B.C. are likely being shipped under contracts controlled by the CISG.,Photo: Public domain http:/commons.wikimedia.org/wiki/ Image:PortOVan.jpg,10-7,Goods Defined,A,good,is a moveable, tangible object. For the purposes of the CISG, goods do not include things bought for personal use or at an auction or foreclosure sale, nor may they be ocean-going vessels or aircrafts.,These candles may or may not be a good under CISG depending upon whether they are sold to individual consumers or sold in bulk to a retailer for resale.,Photo: Used with permission of the author from personal archive.,10-8,Mixed Sales,Seller of goods often furnishes services when delivering a product.,CISG looks upon,mixed sales,and service contracts as sales of goods, unless the preponderant part of the obligation” of the seller “consists in the supply of labor or other services.”,10-9,Contractual Issues Excluded From the Coverage of CISG,CISG only deals with:,The formation of the contract, and,The remedies available to the buyer and seller.,CISG excludes questions about:,the legality of the contract,the competency of the parties,the rights of third parties, and,liability for death or personal injury.,10-10,Preemption,If CISG applies to a particular contractual issue, domestic law is,preempted,. Remedies provided in CISG are the only remedies available.,Preemption helps to fulfill the goal of the convention to establish uniform rules for international sales contracts.,The only permissible remedy for a defective saw is the one provided by CISG when there is an international sale.,Photo: public domain Source: http:/,www.osha.gov/SLTC/etools/woodworking/radial.html,10-11,Interpreting CISG,To interpret CISG, a court is to consider:,the international character of the convention,the need to promote uniformity in the conventions application, and,the observance of good faith.,The CISG implies that a court may only use the,plain meaning,of the language of the convention.,Courts may also look the,travaux preparatories,or legislative history to determine intent.,10-12,Interpreting CISG: General Principles,CISG calls for courts to look to the,general principles,on which the convention is based when interpreting its provisions.,Two of the suggested principles are:,A party to a contract has the duty to communicate information needed by the other party, and,Parties have the obligation to mitigate damages resulting from a breach.,10-13,Interpreting Sales Contracts,A contract is said to be formed only when the parties have a meeting of the minds. This,subjective intent approach,says that contracts should be interpreted according to the actual intent and understanding of the parties at the time they made their agreement.,CISG says courts are to use subjective intent only if the other party knew or could not have been unaware of the speakers intent.,If intent is unclear, courts use,objective intent,.,10-14,Negotiations,When a court is to determine intent, CISG directs that due consideration be given to all relevant circumstances, including:,the negotiations leading up to the contract,the practices that the parties have established between themselves, and,the parties conduct after they agree to the contract.,CISG does not apply the technical rules that domestic courts use to interpret contracts, such as the,parole evidence rule,.,10-15,Practices and Usages,Parties are bound by any,practices,which they have established between themselves.,A court is allowed to consider any,usages,that the parties agreed to. A usage is the customary method of performing or acting that is followed by a particular group of people, such as people within a particular trade.,CISG lets a court consider “a usage of which the parties knew or ought to have known which in international trade is widely known to, and regularly observed by parties to contracts of the type involved in the particular trade concerned.”,10-16,Case 10-2: Treibacher Industrie, A.G. v. Allegheny Technologies, Inc.,Defendant TDY entered into consignment contracts with Treibacher, then refused shipment when it found a cheaper supplier.,Court had to interpret, under the CISG, the word,consignment,. Issue turned on whether that word should be interpreted according to its meaning based on the “course of dealings” or “customary usage in trade.” Court applied course of dealings and awarded $5,327,042.,10-17,Form,The CISG states that a contract for sale need not be concluded in or evidenced by writing and is not subject to any other requirements as to form. It may be proved by any means, including witnesses.,However, CISG authorizes a contracting state whose legislation requires contracts of sale to be concluded in or evidenced by writing to make a declaration at the time of ratification the CISG provision does not apply where any party has his or her place of business in that state.,10-18,Formation of the Contract:The Offer,A contract is formed when an offer to buy or sell a good is accepted.,An offer is a proposal by one person to another indicating an intention to enter into a contract under specific terms.,To be a valid offer, the offeror must communicate an intention to be bound.,A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and price.,10-19,Effectiveness of an Offer,An offer becomes effective only after it reaches the offeree, a specific person addressed in the offer.,Offers can be withdrawn before they reach the offeree.,Offers can be,revoked,any time before the offeree dispatches an acceptance.,A,firm offer,is an offer that the offeror promises to keep open for a fixed period of time.,10-20,Acceptance,A contract comes into existence at the time the offer is accepted.,An,acceptance,is a statement of conduct by the offeree indicating assent that is communicated to the offeror.,Silence does not constitute acceptance.,Acceptance must be received within the time period specified in the offer. If no time period is given, acceptance must be received within a reasonable time.,Acceptance is effective when received by offeror.,10-21,Case 10-3: United Technologies International, Inc. v. Magyar Legi Kozlekedesi Vallalat,Plaintiff offered to sell aircraft engines to defendant at specified prices in a quantity to be selected by the defendant depending upon how many planes they purchased.,Defendants sent acceptance.,Term requiring government approval was not a condition precedent. An enforceable contract was formed.,10-22,Assent by Performance of an Act, Withdrawal, and Rejection,If the offeror asks for performance of an act rather than the indication of acceptance, the acceptance is effective when the act is performed.,An offeree may,withdraw,his/her acceptance any time before or simultaneous with its receipt.,A,rejection,becomes effective when it reaches the offeror. If the offeree sends both an acceptance and a rejection, the one that reached the offeror first would be given effect.,10-23,Acceptance With Modifications,If the acceptance modifies some of the terms of the offer, there is a counteroffer instead of an acceptance if these inconsistencies are “material.”,Under the CISG, additional terms or different terms relating, among other things, to the price, payment, quality of the goods, place, and time of delivery, extent of one partys liability to the other, or the settlement of disputes are considered to alter the terms of the offer materially.,10-24,Case 10-4: Filanto, SPA v. Chilewich International Corp.,Chilewich was supplying boots to a Russian company that were being made by Filanto.,Chilewich made reference to an arbitration clause in the Russian Contract with Chilewich.,Filanto failed to object to the incorporation by reference of the Russian Contract in a timely fashion. The arbitration clause become part of the contract, requiring arbitration in Moscow.,10-25,Fundamental Breach,When one party breaches, the other party may avoid the contract or make a demand for specific performance.,A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him or her of what he or she is entitled to expect under the contract.,The injured party may use the remedy of avoidance by notifying the other party and returning any goods already received.,Invoice used in Taiwan,Photo: CC-BY http:/commons.wikimedia.org/wiki/Image:Invoice_TW_front.JPG,10-26,Requests for Specific Performance,An injured party may be able to request specific performance if the other party is in breach.,Specific performance,is a court order directing a party to carry out the obligations he or she had contractually promised to do.,In some civil law countries, a party is entitled to require performance.,In the US, specific performance is granted if the goods are unique and cannot be obtained elsewhere.,10-27,Sellers Obligations,A seller is required to:,deliver the goods,hand over any documents relating to them,ensure that the goods conform to the contract.,The place for delivery is the place agreed to in the contract. Otherwise, it is:,the first carriers place of business, or,the place where the parties knew the goods were located or were to be manufactured.,10-28,Time for Delivery andTurning Over Documents,Seller is to deliver goods on the date fixed in the contract.,If no fixed date, within a reasonable time after the conclusion of the contract.,At time and place of delivery, seller must turn over any documents relating to the goods that the contract requires.,If documents are delivered early, seller has the right to cure any defect in the documents.,10-29,Conformity of Goods,Seller must deliver goods which are of the quantity, quality, and description required by the contract and are packaged in the manner required.,Goods do not conform unless they:,are fit for the purpose of which goods of the same description would ordinarily be used;,are fit for any particular purpose expressly or impliedly made known to the seller;,possess the qualities of goods which the seller has held out for the buyer as a sample;,are packaged in the same manner usual for such goods.,10-30,Third-Party Claims, Waiver, Time for Examining Goods, and Curing Defects,Goods are nonconforming if they are subject to third-party claims such as ownership and rights in intellectual property.,The parties may waive the conformity requirement.,Buy has an obligation to examine the goods for defects within as short a period as is practicable after delivery.,Buyer is obligated to inform the seller of any discovered defect within a reasonable time.,If a seller delivers early, he or she may cure any defect up to the agreed upon date for delivery.,10-31,Buyers Obligations,A buyer is required to (1) pay the price and (2) take delivery of the goods.,Unless a different time is specified, the buyer must pay when the goods or the documents controlling their disposition are delivered.,If place of delivery is specified, payment is also made there. If no place of delivery is specified, then buyer must pay at the sellers place of business.,10-32,Case 10-5The Natural Gas Case,The plaintiff, a Germany company, negotiated to buy natural gas from an Austrian partnership. The defendant was to ship the propane from the US to the plaintiff in Belgium. The plaintiff was to obtain a letter of credit once the defendant told it where the propane was to be loaded.,Issue,: Had the defendant breached the contract by failing to deliver the propane or was its duty to perform excused by the plaintiff not obtaining a letter of credit?,9-33,Case 10-5The Natural Gas Case,Held,: The buyer was excused from opening a letter of credit because the defendant never provided the necessary information for the letter. The breach was due to the sellers failure to make proper arrangements to ship the gas.,10-34,Passage of Risk,The legal concept of passage or risk is the point in time when the buyer becomes responsible for losses to the goods.,Once the risk passes, the buyer must pay for the goods. Even if they are damaged or destroyed.,CISG allows the parties to allocate risk and specify when risk will pass. The parties usually show passage of risk through the usage of trade terms, such as Free on Board (FOB) or Cost, Insurance, and Freight (CIF).,Sinking ship in the Strait of Gibraltar.,Photo Lic: CC-BY,http:/commons .,wikimedia.org,/ wiki/Image:MV_New_Flame_salvage.jpg,10-35,Means of Delivery,Goods may be delivered by a carrier or by the seller.,In shipment, transshipment, in-transit, and destination contracts, the risk of loss will not pass until the goods are clearly identified to the contract by markings on the goods, shipping documents, or notice given to the buyer.,In a shipment contract where the seller is to deliver the goods to a carrier and does not require that the seller deliver to a particular place, the risk passes when the goods are handed over to the first carrier.,10-36,Means of Delivery,If the goods are to be delivered “Free Alongside Ship” (FAS),Big Ocean,New York City, NY, the seller bears the risk until the goods are delivered to NY alongside the,Big Ocean,.,When a contract requires the seller to arrange transportation to a specific destination, the risk of loss does not pass to the buyer until the goods are handed over or placed at his/her disposal at that place. When a seller in China agrees to a contract containing a “Delivered Duty Paid (DDP) Los Angeles, California, the seller bears the risk of transporting the goods to LA.,10-37,Buyers Remedies,The buyers remedies are cumulative, meaning they are able to be joined or taken together.,The remedies unique to the buyer are:,to compel specific performance,to avoid the contract,to reduce the price,to refuse early delivery, and,to refuse excess quantities.,10-38,Buyers Remedies,The buyer may avoid a contract if either,The seller commits a fundamental breach or,The buyer gives the seller a,Nachfrist,notice and the seller rejects it or does not perform within the period it specifies.,A buyers,Nachfrist,notice is the fixing of an additional period of time of reasonable length for performance by the seller of his or her obligations.,During the,Nachfrist,period, the seller is entitled to correct or cure the nonconformity at his or her own expense.,10-39,Case 10-6The Shoe Sellers Case,Plaintiff, an Italian business, contracted to sell shoes to the defendant, a German businesswoman.,The shoes were delivered late and the defendant contended they were nonconforming.,Defendant did not give a Nachfrist notice or attempt to use other remedies such as price reduction.,Court found no fundamental breach by the plaintiff.,10-40,Reduction in Price,If a buyer is not entitled to damages when a seller delivers nonconforming goods, the buyer will be entitled to a reduction in price.,The buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of delivery bears to the value that conforming goods would have had at that time. The formula is:,10-41,Sellers Remedies,The sellers remedies mirror those of the buyer.,The sellers remedies are both cumulative and immediate.,The remedies unique to the seller are:,To compel specific performance,To avoid the contract for a fundamental breach or failure to cure a defect, and,To obtain missing specifications.,10-42,Remedies Available to Both Buyers and Sellers,Remedies available to both are:,Suspension of performance,Avoidance in anticipation of a fundamental breach,A remedy available to either party when it becomes clear that the other party will commit a fundamental breach.,Avoidance of an installment contract, and,Damages.,A breaching party is liable only for those damages that he/she foresaw or ought to have foreseen.,10-43,Excuses for Nonperformance,Force majeure a party is not liable for any damages resulting from his/her failure to perform if the party can show:,the failure was due to an impediment beyond his/her control,that the impediment was not something he/she could have reasonably taken into account at the time of contracting, and,that he/she remains unable to overcome the impediment.,Examples: disasters, war, strikes,10-44,Case 10-7: Nuova Fucinati, SPA v. Fondmetall International, AB,Plaintiff was to deliver 1,000 metric tons of chromite to the defendant in Sweden.,The price of chromite rose 43% before delivery.,Since Sweden had not ratified the CISG, its excuse for nonperformance based on an impediment beyond the partys control did not apply.,10-45,Case 10-7: Nuova Fucinati, SPA v. Fondmetall International, AB,Held,: Though the doctrine of commercial impracticability applied, a 43% rise in price was not sufficient to excuse performance.,10-46,All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.,