CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) CISG

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1 UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) CISG STRUCTURE OF THE CONVENTION Part I: Scope of application and general rules Arts Part II: Formation of the contract (Can be reserved) Arts Part III: Sale of goods (Can be reserved) Arts Part IV: Final clauses Arts

2 SCOPE OF APPLICATION 1. MATERIAL: Contract of sale of goods (art.1) 2. TEMPORAL: Contracts concluded after its enter into force (art. 100) 3. PERSONAL: Direct application: Contracting parties with place of business in different contracting States (Art a) Indirect application: Contracting parties with place of business in different States, when the Rules of PIL lead to the application of the Law of a contracting States (Art.1.1b) 4. TERRITORIAL: Territory of the contracting States ARTICLE 1. MATERIAL SCOPE This Convention applies to: contracts of sale of goods between parties whose places of business are in different States: (a)whenthe StatesareContractingare States; or (b) when the rules of private international law lead to the application of the law of a Contracting State. 2

3 ARTICLE 10. FOR THE PURPOSES OF THIS CONVENTION 1. If a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion ofthe contract. 2. If a party does not have a place of business, reference is to be made to his habitual residence. CONTRACT OF SALE OF GOODS (civil or commercial) Place of business (not nationality) in different member states Not to internal contracts Not to contracts that take place out of the place of business Not to itinerant contracts Disregarded when it does not appear from the contract or the dealings or the information disclosed by the parties. Protection of good faith in the negotiation of the contract and legal certainty Burden of the proof: the one that pretends not to know the international character of the contract. If it does not have place of business: residence 3

4 CASE 1 French buyer (place of business Paris) and German seller (place of business Lyon). Delivery of the goods in Portugal. Is this an international Contract? Would it be governed by Vienna Convention? What other national or international legal system could govern the situation? CASE 2 French buyer (place of business Berlin) and French seller (Place of business Lyon). Delivery of the goods in Portugal. Is this an international Contract? Would it be governed by Vienna Convention? What other national or international legal system could govern the situation? 4

5 SCOPE OF APPLICATION MATERIAL ASPECT Nature of the goods Movable and material goods Non applicable to immaterial or immovable GOODS Four categories Existing goods owned by seller at time contract made Future goods manufactured or acquired by seller after contract made Specific goods agreed and identified at time contract made Unascertained goods cannot be identified with certainty at time contract made 5

6 ARTICLE 2. EXCLUSIONS This Convention does not apply to sales: 1. Of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use. (Consumers) 2. By auction. 3. On execution or otherwise by authority of law. 4. Of stocks, shares, investment securities, negotiable instruments or money. 5. Of ships, vessels, hovercraft or aircraft. 6. Of electricity (not gas or oil). CASE 3 North American Company buys a French Company Would it be possible to apply Vienna? Contract of sale of Intellectual property Would it be possible to apply Vienna? Contract of sale ofcompany shares Would it be possible to apply Vienna? Contract of sale of two elephants for a circus Would it be possible to apply Vienna? 6

7 CASE 4 Contract of sale of know how Would it be possible to apply Vienna? Contract of sale of copyrights Would it be possible to apply Vienna? Contract of sale of trade marks Would it be possible to apply Vienna? Contract of sale of music and videos Would it be possible to apply Vienna? ARTICLE 4. CISG GOVERNS 1. The formation of the contract of sale. 2. The rights and obligations of the seller and the buyer arising from such a contract. 7

8 ARTICLE 4 AND 5 IT DOES NOT GOVERN 1. Validity ofthe contractoranyor any ofits provisions or of any usage. 2. Effects of the contract on the property in the goods sold. 3. Liability of the seller for death or personal injury caused by goods. FORMATION OF THE CONTRACT: o OFFER (ARTICLE 14, 15, 16 AND 17) o ACCEPTANCE (ARTICLES 18, 19, 20, 21 AND 22) 8

9 OFFER: proposal for concluding a contract addressed to one or more specific persons. o REQUIREMENTS: 1. Sufficiently definite Indicates the goods. Expresslyp y or implicitly fixes or makes provision for determining the quantity and the price. 2. Intention of the offeror to be bound in case of acceptance IF NOT INVITATION ( l th t i l l i di t db th ki th l) ARTICLE An offer becomes effective when it reaches the offeree. 2. An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer. 9

10 ARTICLE Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance. 2. However, an offer cannot be revoked: if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer. ARTICLES 17 An offer, even if it is irrevocable, is terminated when a rejection reaches the offeror. 10

11 ACCEPTANCE: statement made by or other conduct of the offeree indicating assent to an offer. BECOMS EFFECTIVE at the moment the indication of assent reaches the offeror. IS NOT EFFECTIVE if the indication of assent does not reach the offeror within the time he has fixed. if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. ORAL OFFER must be accepted immediately unless the circumstances indicate otherwise. However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, the acceptance is effective at the moment the act is performed, provided that the act is performed within the period of time laid down in the preceding paragraph. 11

12 A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offerand constitutes a counteroffer. However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes anacceptance, acceptance, unless the offeror,without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance. MATERIALLY ALTERATION OF THE OFFER Additional ordifferent terms relating, price payment quality and quantity of the goods place and time of delivery extent of one party's liability to the other the settlement of disputes 12

13 ARTICLE 21 A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect. If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect. ART 23. CONCLUSION OF THE CONTRACT A contract is concluded at the moment when an acceptance of an offer becomes effective in accordancewith the provisions ofthis Convention 13

14 OBLIGATIONS OF THE SELLER 1. Deliver the goods. 2. Hand over any documents relating to them. 3. Transfer the property in the goods. (As required by the contract and this Convention). PLACE OF DELIVER (If the seller is not bound to deliver the goods at any other particular place) 1. If the contract of sale involves carriage of the goods in handing the goods over to the first carrier for transmission to the buyer. 2. If the contract relates: specific goods. unidentified goods to be drawn from a specific stock or to be manufactured or produced. andat at the time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place. in placing the goods at the buyer's disposal at that place. 3. In other cases in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract. 14

15 DATE OF DELIVER The seller must deliver the goods: 1. If a date is fixed by or determinable from the contract, on that date. 2. If a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date. 3. In any other case, within a reasonable time after the conclusion of the contract. OBLIGATIONS OF THE BUYER 1. Pay the price for the goods 2. Take delivery of them (Asrequired by the contract and this Convention) 15

16 PLACE OF PAYMENT If the buyer is not bound to pay the price at any other particular place, he must pay it to the seller: 1. At the seller's place of business. 2. If the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place. The seller must bear any increase in the expenses incidental to payment which is caused by a change in his place of business subsequent to the conclusion of the contract. DATE OF PAYMENT If the buyer is not bound to pay the price at any other specific time, he must pay it when: The seller places either the goods or documents controlling their disposition at the buyer's disposal in accordance with the contractand and this Convention. The seller may make such payment a condition for handing over the goods or documents. 16

17 The buyer is not bound to pay the price until he has had an opportunity to examine the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity. The buyer must pay the price on the date fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller. DELIVERY The buyer's obligation to take delivery consists: 1. In doing all the acts which could reasonably be expected of him in order to enable the seller to make delivery, and 2. In taking over the goods. 17

18 If the buyer fails to perform any of his obligations under the contract or this Convention, the seller may: 1. Exercisetherights rights provided in articles 62 to Claim damages as provided in articles 74 to 77. The seller is not deprived of any right he may have to claim damages by exercising his right to other remedies. No period of grace may be granted to the buyer by a court or arbitral tribunal when the seller resorts to a remedy for breach of contract. SCOPE OF APPLICATION RRI Material: International contractual obligations (art.1) Temporal: Contracts concluded after its enter into force. Personal: Erga omnes Territorial: Territory of the EU Member States. CISG Material: Contract of sale of goods (art.1) Temporal: Contracts concluded after its enter into force (art. 100) Personal: Direct application: Contracting parties with place of business in different contracting States (Art.1.1 a) Indirect application: Contracting parties with place of business in different States, when the Rules of PIL lead to the application of the Law of a contracting States (Art.1.1b) Territorial: Territory of the contracting States 18

19 THANK YOU! 19

Contracts, the UCC, and the Vienna Convention on International Sales of Goods. What every US commercial lawyer needs to know

Contracts, the UCC, and the Vienna Convention on International Sales of Goods What every US commercial lawyer needs to know Convention on the International Sale of Goods 1980 CISG Vienna Convention Uniform