Lecture slides: Sale of Goods Flashcards
What is CISG?
Uniform law on sale of goods.
It is quite successful but limited to to (some aspects of) international businss sales of movables
What are the main characteristics of International Sale of Goods?
- Long distances
- Uniform rules are needed to facilitate international trade
- High transport costs & time
What do tangible movable goods require under CISG?
- Requires obligation to transfer property
- Obligation to pay the purchase price (monetary consideration)
What does CISG not apply to?
- Goods bought for personal. Family or household use, unless the seller at any time before or at conclusion of contract, neither knew or ought to have known that the goods were bought for any such use
1. Domestic consumer-protection laws are not affected by CISG
2. Burden of proof is placed on party claiming applicability of CISG - By action
- On execution or otherwise by authority of loaw
- Of stocks, shares, investment securities, negotiable instruments or money
- Of ships, vessels, hovercraft or aircraft
- Of electricity
Does CISG law apply to mixed labour/ service agreements
This convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services
What is the preponderant part in mixed agreements?
- Preponderant part: criterion of economic (value). Value of goods compared to value of the labour / services
Name two types of labour/ services agreements that are excluded from CISG?
- Construction agreements
- Agency agreements
Does CISG apply to mixed agreements about manufacturing goods?
Contracts for the supply of goods to be manufactured or produced are to be considered sales (and thus follow CISG law) unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production
Name three characteristics about Mixed agreements: manufacturing goods?
- Mixed because manufacturing goods is in principle considered a service
- Substantial part of materials is based on criterion of economic value
- Plans & know-how are as such not materials
What are the places of Business?
Places of Business:
1. Must be place at which there is a stable business organization
2. Contracting party at that place must have autonomous power to enter into an agreement
- Location of an agent, representative, distributor etc = no International sale
What is the implication of having more than one place of business to whether or not CISG law should be followed?
place of business that has closest relationship to contract and its performance having to regard the circumstances know to or contemplated by the parties at any time before or at conclusion of the contract is leading in whether or not a business falls within CISG
What happens in the event a party does not have a place of business?
- If party does not have place of business, reference is to be made to his habitual residence (private persons acting for commercial purposes (and no household sales)
What items are not covered by CISG?
- Prescription
- Plurality of debtors
- Assignment of rights
- Subrogation
- Liability of seller for death or personal injury caused by goods to any person
- No property law
- No procedural law
What items are covered by CISG?
- Formation of contract
- Performance (rights & obligations of the parties)
- Non-performance and related questions
When are validity of contract items covered by CISG?
- Not covered: validity of contracts, except for
- No specific writing requirements
- Validity of open price contracts
What is the mirror approach of the formation of contracts?
Contract is concluded when there is a meeting of minds, both the offer and acceptance
What conditions should an offer fulfill?
- Sufficiently definite (indicates the goods, and creates provisions for determining quantity and price
- Indicates intention of offeror to be bound in case of acceptance
An offer becomes effective when it reaches the offeree. What does reaches mean?
when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence
An offer can be revoked until the offeree has dispatched acceptance, except:
- Irrevocability is indicated
- Offeree reasonable relied upon the irrevocable nature of offer and acted upon that reliance
- Offer indicates a specific period for acceptance
When is an offer no longer standing?
Offer is no longer standing if it is refused by the offeree even if the offer was irrevocable.
What does acceptance of a contract constitutde?
statement made by or other conduct of the offeree indicating consent to an offer is an acceptance. Acceptance can be withdrawn before it becomes effective
When does acceptance of an offer become effective?
Acceptance becomes effective when the indication of assent reaches the offeror
When does a counter-offer constitute an acceptance?
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 an acceptance
Under what condition does an unmaterial counter-offer not constitute an acceptance?
- Unless offeror without undue delay objects orally to the discrepancy or dispatches a notice to that effect
- If he does not so object, terms of contract are terms of the offer with modifications contained in the acceptance
What are the seller’s obligations?
- Delivery of the goods
- Transfer of property
- Delivery goods in conformity with the contract
What are the default rules regarding the delivery of goods when carriage is involved?
delivery takes place when goods are handed over to first independent carrier
The place of goods (ex works) is the default rule regarding the delivery of goods when there is no carriage is involved and contracts relate to?
- Specific goods
- Unidentified goods to be drawn from a specific stock
- Goods to be manufactured or produced and parties knew the goods were at, or were to be manufactured or produced at, a particular place
What are the default rules regarding the delivery of goods when there is no carriage or contract to relate to?
Seller’s place of busines
Name three times of performance?
- Fixed date
- Fixed period of time
- In other cases: reasonable time after conclusion of the contract
What does conformity of the goods mean?
Conformity only occurs when the goods are cumulative.
conformity with the specifications of the contract
- When parties intended the goods to be marketable on a certain market, requirements for access to that market are par of the contract
Performance - passing of the risk?
- According to the contract
- Default rule: At moment of delivery
What are the buyer’s obligations of performance?
- Take delivery
- Payment of the purchase price
- Examine the goods within a reasonable time
- Give notice of non-conformity
What are incoterms?
- Standardized terms / short abbreviations
- 19th century trade usages as defined by the ICC
- They apply if inserted in the contract both expressly and impliedly. Specify the chosen version / adaptable by the parties
What are the 4 basic categories of Incoterms?
- C-terms: seller pays carrier to agreed destination, but does not bear risk during carrier
- D-terms: seller bears cost of carriage and risk until arrival at agreed destination
- E-terms: ex works of the seller
- F-terms: delivery to the person paid by the buyer
Name the 5 rules of incoterms for any mode of transport?
- CPT = Carriage Paid To
- CIP = Carriage And Insurance Paid To
- DAP = Delivery At Place (even before unloading)
- DPU = Delivered At Place Unloaded (at Terminal)
- DDP = Delivery Duty Paid
What does EXW mean?
Ex Works
Variations are possible
What does FCA (Incoterm) stand for?
- Hand over to the carrier named by the buyer
- Preferred term for container shipments
- Delivery completed before loading on board
4 Rules for sea and inland waterway transport:
- CFR = Cost And Freight
- Risk passes over the ship’s rail - CIF = Cost, Insurance and Freight
- Worldwide mostly used Incoterm (60% International trade) - FAS = Free Alongside Ship
- FOB = Free On Board
- Risk passes when goods put on board
Name 5 other useful terms apart from the ones regulated by Incoterms?
- Payment conditions
- Place of inspection of the goods
- Boilerplate clauses
- Choice of law and jurisdiction clauses
- Recent responses to unfair practices in B2B contracts, especially in supply chains
What are the different possibilities of place of inspection of goods?
- Buyer must examine goods within as short a period as is practicable in the circumstances
- Examination may be deferred until after goods have arrived at their destination if the contract involves carriage of the goods
- If goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at time of the conclusion of the contract the seller knew or ought to have known of the possibility of such redirection or redispatch, examination may be deferred until after the goods have arrived at the new destination
What are boilerplate clauses?
Common clauses that determine standard contract issues
