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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:/,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 the
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