Contracts

Question 1

Valid contract

Answer 1

There must be a FIRM offer and an ACCEPTANCE of that offer

There must be an INTENTION to create a contract

There must be CONSIDERATION- each party provides something to other

There must be CAPACITY to contract- nature of the business is within the objectives set out in companys memorandum and articles

CONSENT must be freely given without duress and without basis in false information

The purpose must be LEGAL

Question 2

Pro Forma Invoice

Answer 2

Abridged or estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods

They are not being a demand or request for payment

When they is no agreement pro forma invoice could represent a contract. If buyer sends to seller with enquiry then seller accepts then it could become a contract

Question 3

Negotiating Contract

Answer 3

Once a seller has produced the contract it will constitute an offer to the buyer

Buyer has option to give acceptance as presented

• some jurisdictions allow verbal acceptance
• acceptance also occur by parties beginning to perform the contract

Buyer gives acceptance but with reservations or conditions

• this represents a counter-offer
• seller has to decide whether to accept the changed conditions
• therefore until seller accepts the counter-offer contract is not valid

Reject the offer entirely

It is vital that contracts specify the jurisdiction that will apply and that the jurisdiction specified is the one respected

Question 4

UN Convention on Contracts for the International Sale of Goods (CISG)

Answer 4

Ratified by 89 countries
Excludes UK, South Africa, India

CISG is deemed to be incorporated into the domestic law of any trade between these contracting states, unless excluded by the express terms of the individual contract

CISG governs contracts international sale of goods between private businesses, not sales to consumers and sales of services and certain types of goods(eg planes, ships, shares, electricity)

CISG allows for a sales contract to be oral or unsigned but some countries, contract is not valid unless its written

Inactivity or silence is not acceptance

CISG dosent consider electronic contracts nor the sale of services to be validity of the contract

Question 5

Arbitration

Answer 5

An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement

Can cover all aspects of a commercial contract not just transport issues

If dispute is submitted to the ICC courts the other party must respond within 30days

When decision is made by arbitrators the verdict is binding to both parties