INTERNATIONAL SALES LAW

1
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.

2
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

3
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

4
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.

5
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.

6
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

7
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.

8
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 non-requesting party
• Automatic Extension if no response.

9
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
• Partys 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.

10
DAMAGES

• Remedies Available to Non-Breaching Party
• Damages
• Damages must be foreseeable (consequential)
• Damages must be calculated with reasonable
  certainty (benefit of bargain)
• Partys obligated to mitigate damages
• Sellers obligation to resell goods and sue
  buyer for difference
• Buyers obligation to cover-find substitute goods

11
WARRANTY PROVISIONS

• Implied Warranty of Merchantabilityimplied that
  goods fit for the ordinary purposes for which it
  was intended.
• Implied Warranty for a Particular Purpose-entails
  the conveying of specific requirements from the
  seller to buyer.
• CISG provides no provisions for disclaimers of
  warranties.

12
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