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 • • • • • • • • • 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