INTERNATIONAL SALES LAW

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INTERNATIONAL SALES
LAW
• United Nations Convention on the International
Sales of Goods
– Convention adopted by 59 nations to harmonize
international sales law in the global community
• Ratified and became a part of national law in the United States
in 1998.
– Modeled after Article 2 of the Uniform Commercial Code
» Reflects application of lex mercatoria (law of merchants)
– When dispute arises between merchants of different countries
involving tangible moveable goods, US courts will apply
convention to resolve disputes between said merchants.
INTERNATIONAL SALES
LAW
• Topics to be discussed in Chapter on International
Sales Law
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Jurisdiction
Goods Defined
Proof Standards and Parol Evidence
Duty to Inspect and Notice
Cure
Anticipatory Breach and Adequate Assurance
Damages
Excuses to Performance
Warranty
JURISDICTION
• Article 1 of CISG states that unless there is an
express choice of law, CISG will be the law of
dispute in two situations
– If the two parties have there place of business in
countries that have ratified CISG
– If parties have more than two places of business, the
place of business which has the closest relationship to
the transaction
– A third source is where an arbitral panel or court
applies trade usage to clarify ambiguous term in the
contract
COMMERCIAL SALE OF
GOOD
• CISG applies to transactions involving tangible
moveable goods.
– Goods purchased at auctions, electricity, securities,
ships, vessels, consumer sales and aircraft excluded.
– Mixed goods and service transaction, CISG will apply
if goods are the predominant aspect of the transaction.
• Computer hardware and software transaction
• Review the “moveability” of the good.
PROOF AND PAROL
EVIDENCE
• CISG does not require the contract to be in
writing.
– Parties may “opt out” of the no writing
requirement.
• Parol Evidence Rule-if a contract is in
writing and is intended to be the complete
understanding of the parties, then no prior
or contemporaneous parol evidence is
admissible to vary or contradict the writing.
PROOF AND PAROL
EVIDENCE
• Parol Evidence-continued
– If the contract has ambiguous terms, then the final
agreement can be supplemented or explained
• Plain Meaning-examine words. Four Corners Test
• Prior dealings-prior contracts and performances under prior
contracts between the parties. Totality of Circumstances
• Course of Performance-premised on the fact that parties
conduct in performing under the contract is a good indication
of what the parties intended. Totality of Circumstances
• Trade Usage-customs and practices regularly observed in the
the given trade or business. Reasonable Person Standard
FORMATION
• Offer-very similar to Article 2 of UCC
– Firm Offer-once offer made, irrevocable for time
specified
• Acceptance
– No Mail Box Rule, acceptance effective by placing it
into a reasonable means of transmission.
– Additional Terms and Battle of the Forms
• No Mirror Image Rule
• Additional Terms in boiler plate forms does vary the offer
unless a material alteration such as changes in price, quantity,
performance, insurance provisions, arbitration provisions.
Represents and surprise to offeror.
INSPECTION AND NOTICE
• Duty to Inspect
– Buyer has duty to inspect goods within reasonable time
– Buyer must inform seller of non-conformity
– Buy must notify of the specific non-conformity
• Proper Notice
– Nachfrist Notice-allows buyer or seller to fix an
additional time for performance beyond that which is
specified in the contract
• Additional Time must be granted if no material injury to nonrequesting party
• Automatic Extension if no response.
CURE AND ANTICIPATORY
BREACH
• Cure
– Seller will be allowed to cure after contract date for
delivery unless such late delivery would cause
unreasonable inconvenience or uncertainty
• Anticipatory Breach-allows a party to suspend
performance and demand assurance.
– Other party has become seriously deficient in its ability to
perform or creditworthiness
– Party’s lack of preparation or insufficiency of performance
• Adequate Assurance-non-breaching party can require adequate
assurance of performance by breaching party before
suspension is lifted.
DAMAGES
• Remedies Available to Non-Breaching Party
– Damages
• Damages must be foreseeable (consequential)
• Damages must be calculated with reasonable
certainty (benefit of bargain)
• Party’s obligated to mitigate damages
– Seller’s obligation to resell goods and sue buyer for
difference
– Buyer’s obligation to cover-find substitute goods
WARRANTY PROVISIONS
• Implied Warranty of Merchantability—
implied that goods fit for the ordinary
purposes for which it was intended.
• Implied Warranty for a Particular Purposeentails the conveying of specific
requirements from the seller to buyer.
• CISG provides no provisions for
disclaimers of warranties.
CONTRACTUAL EXCUSES
• Doctrine of Impossibility
– Force Majeure Clause specifically lists those future
events that excuse performance
– CISG in absence of force majeure clause, impediments
that are beyond control of the breaching party and was
foreseeable at the time of formation
• Must give prompt notice of impediment
• Objectively unforeseeable
• Doctrine of Frustration-due to change
circumstance
• Change in law
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