International Sales Lectures: Section 5

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INTERNATIONAL SALES LAW - seminar 2004
ISL
ISL objectives, functions and structure
I
Management of information on ISL
II
Contractual Risk Management in Transnational
Sales Transactions
III
Management of risk of contractual disputes
IV
Management of risk of contract breach
V
Management of risk of loss of or damage to the
goods
VI
Management of risk of changed circumstances
VII
Case study
VIII
Case studies
IX
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Management of risk of loss of or damage to the
goods
ISL
Default distribution of the risk in sales law
I
CISG art. 67 (1) If the contract of sale
involves carriage of the goods and the seller is
not bound to hand them over at a particular
place, the risk passes to the buyer when the
goods are handed over to the first carrier for
transmission to the buyer in accordance with the
contract of sale. If the seller bound to hand the
goods over to a carrier at a particular place,
the risk does not pass to the buyer until the
goods are handed over to the carrier at that
place. The fact that the seller is authorized to
retain the documents controlling the disposition
of the goods does not affect the passage of the
risk. (2) Nevertheless, the risk does not pass to
the buyer until the goods are clearly identified
to the contract, whether by markings on the
goods, by shipping documents, by notice given to
the buyer or otherwise.
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III
CISG art. 68 The risk in respect of goods sold
in transit passes to the buyer from the time of
the conclusions of the of the contract. However,
if the circum-stances so indicate, the risk is
assumed by the buyer from the time the goods were
handed over to the carrier who issued the
documents embodying the contract of carriage.
Nevertheless, if at the time of the conclusion of
the contract of sale the seller knew or ought
have known that the goods had been lost or
damaged and did not disclose this to the buyer,
the loss or damage is at the risk of the seller.
IV
V
VI
VII

• CISG art. 66-70, 79

VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
Default distribution of the risk in contract law
I
CENTRAL TCL database No. IV.4.6. Rights and
Duties of the partied under FOB, FAS, CIF
and CF If the parties have agreed on a sale
"FOB", "FAS", "CIF" or "CF", the respective
rights and duties of the parties under the
contract are to be determined according to the
latest version of the International Commercial
Terms (INCOTERMS) issued by the International
Chamber of Commerce (ICC) unless the parties have
indicated that a different meaning is to be
attributed to the term used.
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III
IV
V
VI

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice
I
II
III
IV
V
VI

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
A Brief Overview on Transfer of
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Goods
II
Documents
III
IV
Property right
S
B
V
VI
Payment
VII
Risk of loss of or damage to the goods
VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice
I
II
III
IV
V
VI

• - Incoterms Combiterms
• Institute Cargo Clauses
• Exemption-clauses
• Force majeure -clauses
• Hardship-clauses

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice
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II
III
TRADE TERMS CONCERNING CARRIAGE OF
GOODS INCOTERMS 2000
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V
VI
VII
VIII
IX
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F-clauses
EXW
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D-clauses
C-clauses
F-clauses
FCA
EXW
F
B
S
c
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D-clauses
C-clauses
FOB
FAS
FCA
EXW
F
B
S
c
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D-clauses
C-clauses
FOB
FAS
FCA
EXW
F
B
S
c
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D-clauses
CIF
CFR
FOB
FAS
FCA
EXW
F
B
S
c
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D-clauses
CIP
CIF
CFR
FOB
FAS
FCA
EXW
F
B
S
c
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D-clauses
CIP
CIF
CFR
FOB
FAS
FCA
EXW
F
B
S
c
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DEQ
DES
CIP
CIF
CFR
FOB
FAS
FCA
EXW
F
B
S
c
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DDP
DDU
DAF
DEQ
DES
CIP
CIF
CFR
FOB
FAS
FCA
EXW
F
B
S
c
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DDP
DDU
DAF
DEQ
DES
CIP
CIF
CFR
FOB
FAS
FCA
EXW
F
B
S
c
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D-clauses
F-clauses
EXW
F
B
S
c
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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice
The ICC Model International Sale Contract ICC
Publication No 556 B. GENERAL CONDITIONS Art.
8 Contractual term of delivery Unless otherwise
agreed, delivery shall be Ex Works (EXW).
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ORGALIME S 2000 GENERAL CONDITIONS for the
supply of mechanical, electrical and electronic
products DELIVERY. PASSING OF RISK Clause
9. Any agreed trade term shall be constructed
in accordance with the INCOTERMS in force at the
formation of the contract. If no trade term is
specifically agreed, the delivery shall be Ex
Works (EXW). If in the case of delivery Ex works,
the Supplier, at the request of the Purchaser,
undertakes to send the Product to its
destination, the risk will pass not later than
when the Product is handed over to the first
carrier. Partial shipments shall be permitted
unless otherwise agreed.
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IV
The ICC Model International Sale Contract ICC
Publication No 556 B. GENERAL CONDITIONS Art. 1
General Art. 1.3 Any referance made to trade
terms (such as EXW, FCA, etc.) is deemed to be
made to the relevant term of Incoterms published
by the International Chamber of Commerce.
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VI

• Combiterms
• Institute Cargo Clauses
• Exemption-clauses
• Force majeure -clauses
• Hardship-clauses

• Incoterms

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice
I
II
ORGALIME S 2000 GENERAL CONDITIONS for the
supply of mechanical, electrical and electronic
products Consequential Losses 43. Save as
elsewhere stated in these conditions there shall
be no liability for either party towards the
other party for loss of production, loss of
profit, loss of use, loss of contracts or for any
consequential or indirect loss whatsoever.
III
IV
V
VI

• Incoterms

• Combiterms
• Institute Cargo Clauses
• Exemption-clauses
• Force majeure -clauses
• Hardship-clauses

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice

• ICC
• FORCE MAJEURE Clause 2003
• Unless otherwise agreed in the contract between
  the parties expressly or impliedly, where a party
  to a contract fails to perform one or more of its
  contractual duties, the consequences set out in
  paragraphs 4 to 9 of this Clause will follow if
  and to the extent that that party proves...
• Where a contracting party fails to perform one or
  more of its contractual duties because of default
  by a third party whom it has engaged...
• 3.-6. ...
• A party invoking this Clause is under an
  obligation to take all reasonable means to limit
  the effect of the impediment or event invoked
  upon performance of its contractual duties...
• (on termination due to substansially deprived
  expectations, within a reasonable period)
• 9. ... where either contracting party has, by
  reason of anything done by another contracting
  party... derived a benifit before termination...
  duty to pay the other party... a sum...
  equivalent to the value of such benefit.

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ORGALIME S 2000 FORCE MAJEURE 39. Either party
shall be entitled to suspend performance of his
obligations under the contract to the extent that
such performance is impeded or made unreasonably
onerous by any of the following circumstances
industrial disputes and any other circumstance
beyond the control of the parties such as fire,
war, extensive military mobilization,
insurrection, requisition, seizure, embargo,
restrictions in the use of power and defects or
delays in deliveries by sub-contractors caused by
any such circumstance referred to in this
Clause. A circumstance referred to in this Clause
whether occurring prior to or after the formation
of the contract shall give a right to suspension
only if its effect on the performance of the
contract could not be foreseen at the time of the
formation of the contract.
Similarly NL 01 E Art. 36 Compare ICC Model
International Sale Contract B. General
conditions Art. 13 Force majeure
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III
IV
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VI

• Combiterms
• Institute Cargo Clauses
• Exemption-clauses
• Force majeure -clauses
• Hardship-clauses

• Incoterms

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

VIII
IX
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Management of risk of loss of or damage to the
goods
ISL
Contractual allocation of the risk in contracting
practice
I

• ICC
• HARDSHIP Clause 2003
• A party to a contract is bound to perform... even
  if... more onerous than could reasonably have
  been anticipated...
• Notwithstanding paragraph 1...
• a ... excessively onerous...beyond its
  reasonable control... could not reasonably have
  been expected to have taken into account...
  and...
• b ... could not reasonably have avoided or
  overcome the event of its consequences,
• the parties are bound, within reasonable time...
  to negotiate alternative contractual terms...
• 3. ... not agreed...the Party invoking this
  Clause is entitled to termination of the contract.

II
III
IV
V
VI

• Combiterms
• Institute Cargo Clauses
• Exemption-clauses
• Force majeure -clauses
• Hardship-clauses

• Incoterms

• PECL chapters 7 to 9
• UPICC chapters 6 and 7
• CENTRAL TLDB No. IV.4.6 and Ch. V to IX

VII

• CISG art. 66-70, 79

VIII
IX
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Go to section VII Management of risk of changed
circumstances