Sales of Good Flashcards
Uniform Law CIGS
n law, CIGS stands for the “United Nations Convention on Contracts for the International Sale of Goods.” It is an international treaty that provides a standardized set of rules for contracts for the sale of goods between parties located in different countries.
The CIGS applies to contracts for the international sale of goods between businesses, as well as contracts between businesses and consumers, as long as the consumer is purchasing goods for commercial purposes.
ONLY sales of goods (paying->ownership)
Tangible movable goods, including gaz
It requires an obligation to transfer property; and
An obligation to pay the purchase price (monetary consideration)
No financial instruments, no derivatives, lease agreements
Examples:
When we refer to “commercial purposes,” we mean that the goods being purchased are intended for resale or use in the purchaser’s business or profession. In other words, the purchaser is acquiring the goods in order to use them to generate revenue or for other commercial activities.
For example, if a small business owner purchases a batch of electronic components from a supplier in another country, the purchase would be considered to have been made for commercial purposes because the components are intended to be used in the business owner’s products or services, which are sold for profit.
On the other hand, if an individual purchases a personal computer or a smartphone from a supplier in another country, the purchase would not be considered to have been made for commercial purposes because the computer or smartphone is intended for personal use rather than for resale or use in a business.
Whether a purchase is made for commercial purposes or not can have implications for the applicability of legal rules and regulations, including the CIGS in the context of international sales of goods.
Consumer Sales Directive
, Concerns only b2c
Is software CIGS
Canned software - you a buy box with CD-rom, driver - this software is qualified under CISG and UK Sale of goods act
oday: majority says that the software downloaded from the internet is a tangible good, cuz you put it on your hard drive and you can use it
Tailor-made software - I go to an IT company and ask them to build a virus for me - it is a service, not good
What else does not apply to CIGS
Tailor-made software - I go to an IT company and ask them to build a virus for me - it is a service, not good
B2C for personal use: if an individual purchases a personal computer or a smartphone from a supplier in another country, the purchase would not be considered to have been made for commercial purposes because the computer or smartphone is intended for personal use rather than for resale or use in a business.
On execution or otherwise by authority of law
E.g. enforced sales
Of stocks, shares, investment securities, negotiable instruments or money
MiFID
Of ships, vessels, hovercraft or aircraft
Of electricity
Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production
- Unless the seller has to find the materials himself for constructing a car e.g. - it will be considered a sales agreement; when the buyer has to supply a substantial part of the materials himself, then it is a service
What if the contract is mixed? Ex. the construction of the house and buying the house: Is CIGS relevant?
compare on economic value
if the value of construction is higher —> service, if the value of house is higher —> goods
Excluded from CIGS
Lease agreements
Construction agreements
Distribution agreements
Agency agreements
Direct application
CISG will apply if two businesses are located in two different, but contracting (have ratified CISG) states - the buyer is located in US, the seller is located in Germany
eg. the UK did not ratify the CISG
What is place of business
It must be a place at which there is a stable business organization
The contracting party at that place must have autonomous power to enter into an agreement
Location of an agent, representative or distributor, liaison office,conference center or exhibition or a rented office(s) at an exhibition… = no International sale
ex. Volkswagen - place of business is in Germany, even if the car is constructed in Romania
Place of Business - you want to sell cars, you go to Geneva Car Convention where you promote your own cars at a stand, this stand is not a place of your business
What if there is more than one places of business
“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 of the contract”
What if there is no place of business
f you don’t have a place of business, then your habitual residence will become one, but only if you are BUSINESS and a NATURAL PERSON at the same time
What does CISG govern?
1) when do you have an offer and when acceptance (formation)
2) what you can do and what to expect from the other side (performance)
3) what can you do if the other side does not perform (non-performance)
not governed by CIGS
Prescription
Plurality of debtors
Assignment of rights
Subrogation
Liability of the seller for death or personal injury caused by the goods to any person (art. 5)
No property law
No procedural law (e.g. burden of proof)
When is there an offer?
- intention to be bound
- the goods that are transferred are sufficiently defined and clear
When is it effective?
when it is reached by the offerree- at the disposal at the offeree
Becomes effective when it reaches the offeree
Receipt of an offer does not mean that the offeree has to be aware of its content.
Offer reaches the area of receipt or disposal of the offeree
“reaches” = “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
Can it be withdrawn?
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
basically as long as it is not effective
Can it be revoked?
between reached until acceptance (it reached the offeree before the acceptance was given )
Yes, until the offeree has dispatched acceptance, unless:
Irrevocability indicated (e.g. period for acceptance);or
Offeree reasonably relied upon the irrevocable nature of the offer and acted upon that reliance
An offer which has not yet become effective is withdrawn, while the offer which has become effective is revoked.
Late acceptance?
If you are late/refuse if your refusal is being reached by the offeror it ceases ->no more offer, needs new offer, mirror effect
Acceptance
Explicitly saying yes or it shows from the facts and circumstances
A statement made by or other conduct of the offeree indicating consent to an offer is an acceptance
Silence or inactivity does not in itself amount to acceptance
Acceptance can be withdrawn before it becomes effective
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 to…
Acceptance
Damage clauses, late payment interest clauses are NOT material alteration of the terms:
if you request a decrease in the lump sump it wont be regarded as a counter offer and would mean the acceptance
The battle of forms
ping-pong game of seller and buyer regarding the terms and conditions, each one claiming that their terms are better than their counterpart’s, they resend their terms and conditions to each other, and the one chosen is the last one in, last received - last shot rule
this situation is solved by the LAST-SHOT RULE - last received
Sellers obligations
Delivery of the goods (incl. documents) Documents - certificates, originality certificates with art, cars etc.
Transfer of property
Deliver goods in conformity with the contract- If you bought an Apple laptop, you get the Apple laptop, not Microsoft one
Delivery of the goods: default rules
First step - you check the contract and what it says about the delivery
When I buy a car from the US, and it has to be delivered to the Germany, the delivery takes place when the car is taken by the first independent carrier, in our case a ship -> then, if the car sinks, I, the buyer, have to pay the price, cuz the risk has been transferred to me already as the part of the contract, If I don’t pay the price, I am breaching the contract —> the moment I deliver the good to the delivery person my responsibility is concluded
RISK PASSES WHEN DELIVERY TAKES PLACE
When is there delivery?
if there is a carirreir when goods are given to the first independent carrier RISKS PASSES
What if there is no carriage agreement?
Then the good are being delivered where they are
example: If there is no carriage involved - if something happens on the route from China to US to Germany, the delivery has taken place in China; in other cases, in the seller’s place of business
In most cases, the delivery has taken place not in the country of the buyer - usually it is your problem if something happens to the good
Time of performance
Fixed date
Fixed period of time
In other cases: reasonable time after conclusion of the contract
Conformity of the goods
There is conformity only if the goods are (cumulative):
IN CONFORMITY WITH SPECIFICATION OF THE CONTRACT
(quantity, quality, packaging)
ex: If the contract states that the good has to be delivered in the bubble plastic, and it is not delivered in the bubble plastic, then you can refuse, meaning that the seller has breached the contract
if you want the goods to be used in the eu, they must be made so that they are legal and according to the regulations of the eu
If parties intended the goods to be marketable on a certain market, requirements for access to that market are part of the contract
FIT FOR ORDINARY
Opinion 18: list of factors (health, safety…)
Standards at the time of conclusion of the contract: you sign a deal to deliver plastic toys to children and you buy them in 2021, you agreed to perform in 2023, then the standards that are applicable in 2023 do not apply, because you set the standards at the conclusion in 2021
Standards of the PLACE OF USE- only if the seller knows less strict
not unaware to seller
seller already traded at that place
Fit FOR PARTICULAR PARTICULAR PURPOSE MADE KNOWN TO SELLER : In other words, if the buyer relies on the seller’s expertise and advice regarding the suitability of the goods for a specific purpose, and the goods turn out to be unsuitable for that purpose, the seller may be held liable for breach of contract.
For example, let’s say a customer goes to a sporting goods store and tells the salesperson that they need a pair of running shoes for a marathon they are planning to run. The salesperson recommends a particular brand of shoes, and assures the customer that they are suitable for long-distance running. The customer relies on the salesperson’s advice and purchases the shoes.
However, during the marathon, the shoes prove to be unsuitable for running long distances, causing the customer to suffer from blisters and other foot injuries. In this case, the customer may have a claim against the sporting goods store for breach of contract, as the shoes were not fit for the particular purpose made known to the seller.
PASSING OF THE RISK
seller-> customer takes the risk if the seller gave it to the carrier
Conformity of the goods
There is conformity only if the goods are (cumulative):
IN CONFORMITY WITH SPECIFICATION OF THE CONTRACT
(quantity, quality, packaging)
ex: If the contract states that the good has to be delivered in the bubble plastic, and it is not delivered in the bubble plastic, then you can refuse, meaning that the seller has breached the contract
if you want the goods to be used in the eu, they must be made so that they are legal and according to the regulations of the eu
If parties intended the goods to be marketable on a certain market, requirements for access to that market are part of the contract
FIT FOR ORDINARY
Opinion 18: list of factors (health, safety…)
Standards at the time of conclusion of the contract: you sign a deal to deliver plastic toys to children and you buy them in 2021, you agreed to perform in 2023, then the standards that are applicable in 2023 do not apply, because you set the standards at the conclusion in 2021
Standards of the PLACE OF USE- only if the seller knows less strict
not unaware to seller
seller already traded at that place
Fit FOR PARTICULAR PARTICULAR PURPOSE MADE KNOWN TO SELLER : In other words, if the buyer relies on the seller’s expertise and advice regarding the suitability of the goods for a specific purpose, and the goods turn out to be unsuitable for that purpose, the seller may be held liable for breach of contract.
For example, let’s say a customer goes to a sporting goods store and tells the salesperson that they need a pair of running shoes for a marathon they are planning to run. The salesperson recommends a particular brand of shoes, and assures the customer that they are suitable for long-distance running. The customer relies on the salesperson’s advice and purchases the shoes.
However, during the marathon, the shoes prove to be unsuitable for running long distances, causing the customer to suffer from blisters and other foot injuries. In this case, the customer may have a claim against the sporting goods store for breach of contract, as the shoes were not fit for the particular purpose made known to the seller.
PASSING OF THE RISK
seller-> customer takes the risk if the seller gave it to the carrier: - A ship that sunk with a car on board - I still (buyer) have to pay for the car
- if you buy a car, and it is already delivered to the car dealer, and you say “I will pick it up tomorrow”, and overnight a fire happens, the risk has passed, you have to pay
Buyer’s obligations
Take delivery : you have to take the delivery, otherwise you breach the contract, unless it is partial delivery
Payment of the purchase price
Examine the goods within a reasonable time
Give notice of non-conformity: If the goods are not in conformity, then you still have to take the delivery, then notify about the non-conformity
Incoterms
In simple terms, Incoterms (short for International Commercial Terms) are a standardized set of rules used in international trade that define the responsibilities and obligations of buyers and sellers for the delivery of goods. Incoterms determine who is responsible for paying for shipping, insurance, and other costs associated with the transport of goods from one country to another. The terms also specify when the transfer of risk from the seller to the buyer occurs during the shipment process. By using Incoterms, both parties can have a clear understanding of their respective roles and responsibilities in the transaction, which can help prevent misunderstandings and disputes.
-for international transfer of goods but also service agreement
Incoterms 4 basic categories
C-terms:
seller pays carrier to agreed destination, but does not bear risk during carriage: risk has been transferred before the shipment is transported to the buyer - my risk as seller stops when I give them at the port of departure, not arrival
In CIF buyer must pay before inspection
D-terms: seller bears cost of carriage and risk until arrival at agreed destination - seller keeps the risks if sth goes wrong during the transport; here a buyer is better protected
Some ‘arrival duties’ on the seller
E-terms: ex works of the seller- the risk passes after leaving the manufacturer —> buyer bears all the risk almost-> seller is the most protected
F-terms: delivery to the person paid by the buyer- I have to deliver to the person paid by the buyer, and only then the risk stops, not when I deliver to the agreed destination
‘Boilerplate clauses
Boilerplate clauses are standard provisions found in contracts that are often inserted in the agreement without significant negotiation or alteration. These provisions are known as “boilerplate” because they are commonly used in legal agreements and can be reused without significant changes.
Boilerplate clauses typically cover issues such as the governing law, jurisdiction, force majeure, termination, notice, confidentiality, and assignment. They are included in contracts to provide legal certainty and to cover common issues that arise in various types of contracts. These clauses help ensure that the agreement is enforceable and provides clear guidance to the parties involved.
E.g. Entire agreement clause
E.g. Validity of the contract
E.g. Battle of forms
E.g. Default interest
Place of inspection of the goods
Not determined by the Incoterms, but by art. 38 CISG:
Buyer must examine the goods within as short a period as is practicable in the circumstances
If the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination
If the goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at the 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
