International Sale of Goods Outline by pptfiles


									International Sale of Goods Outline

Uniform law – must be identical or substantially similar texts that are intended to be
interpreted in the same way in multiple jurisdictions. This is international law and will
not replace domestic law.

How do you create uniformity?
   Treaties/conventions – high degree of uniformity because you ratify it all or
      nothing (somewhat misleading due to the ability to create reservations in the
      treaty itself).
   Model Law – This has less uniformity because of the ability of all parties to
      change the rules.
   Guides – these are basically textbooks.
   Standard forms – this is good for companies that do business in multiple
      jurisdictions to be consistent, but it doesn’t create uniformity between countries
      and their laws.
   Specialized court – this is hard to do because of the language barriers, and the
      lack of a hierarchy between countries and their courts.
   Availability of different court decisions – see website sections below
   Digest – Uncitral has begun preparation of this. The English version is finished
      but the other 5 languages are not finished. Again there is no hierarchy between
      the countries or between arbitrators that see these issues every day as opposed to
      courts that see them rarely. Also the digest only has summaries of cases, no
      commentary on their correctness and no comment on articles that currently have
      not been litigated.

How do you benefit from uniformity?
        It lowers the chances for unknown results. However, it is only beneficial if the
parties involved know of the uniform rules and be able to predict results. Some claim
uniform rules help to lessen forum shopping. Ferrari says this is nonsense (the CISG
doesn’t always apply, the parties can contract out of it, the courts don’t necessarily use
the same interpretations, the procedures and evidence rules in each court are different, the
CISG has some gaps that will be filled by different laws, private international law is
different, the language of the forum may be different, time to complete a case,
enforcement of judgments of foreign courts). Forum shopping is “hated by bad lawyers
because a good lawyer can change the outcome to be in favor of his client”.

Uniform interpretation Art. 7(1)1 – The US has a tendency to interpret uniform laws by
looking at our domestic approaches. This is exactly what you should not do. There is
one US case, Chicago Prime (May 2004) that looks to foreign cases in order to decide a
case based on the law of the CISG. Divergences are not always a bad thing. Official
measures to create uniformity are things that Uncitral does. The websites by Pace and
unilex are unofficial ways to create uniformity. Right now, there is no uniformity, and
this is more dangerous than divergence because there is only an appearance of uniformity

    Must take into account foreign decisions when deciding a case under the CISG.
when that uniformity is really lacking. Foreign case law cannot be binding. In fact, a
line of cases decided the same way, could be lacking in some form and need to be

Websites that are useful in looking up foreign cases in order to promote uniform
     CLOUT – Uncitral – This is a network of international governments. Each
        government has a person compile cases on the Uncitral texts. All of the cases in
        this site have abstracts in all 6 languages of the UN. However, there are not as
        many cases on this website as on the other websites. Only about 380 cases
        involving the CISG.
     Unilex ( – There are about 500 cases on the CISG at this
        website. The abstracts are only in English. The full texts are sometimes available
        in the original language. This also deals with Unidroit. Unidroit are principles
        and are NOT law.
     Pace University – this is the best of the websites. It has 1,302 arbitration and
        court decisions. You can search by country, year, article, word, and author, click
        on links to other website’s summaries, find biographies of law review articles and
        books, and search in different languages. This has a full text of decisions and
        articles. 540 of the cases have been translated into English. It has an annotated
        version of the articles included Secretariat commentary and history of the

CISG is not mandatory law. The parties can contract out of it. If you are considering
opting out of the CISG, you need to look at your party and what is best for him.

                      Art. 74 – Limit          Art. 78 – Interest       Art. 39 - Notice
                      Damages to               begins to run as soon    of lack of
                      Foreseeable Damages      as payment is due        conformity within
                                               (notice not necessary)   reasonable time
Good Seller           Do not want to limit     Want to have this        Want to have a
                      possible recovery        provision                definite and
                                                                        shorter period.
Bad Seller            Want to have this        Want to have this        Want to have a
                      provision                provision                shorter period.
Good Buyer            Do not want to limit     Do not want this         Still want a
                      possible recovery        provision.               definite time, but
                                                                        reasonable is
                                                                        longer than some
Bad Buyer             Want to have this        Do not want this         Still want a
                      provision                provision                definite time, but
                                                                        reasonable is
                                                                        longer than some
Hague convention of 1964 –
The only country with this still in effect is England, but England has a reservation that
this will apply when both parties are contracting states. Since England is the only
contracting state, 1964 Hague will never apply after 2002. If England is on the exam, as
a forum, run through the Hague convention applicability and come to conclusion of
which law would apply stating the reservation is what makes the Hague convention not
apply. To put this into effect you need to ratify the convention and to introduce it into the
domestic laws of the contracting state. There were only 9 countries that ratified this.
Internationality here is different than internationality under the CISG. Here
internationality is parties who have places of business in different countries and one of
the following:
    1. Goods cross the border of a country (de facto crossing isn’t enough, need to have
        intent at the time of the contract for a border crossing)
    2. Offer and acceptance occurred in different countries
    3. Conclusion of the contract (formation) and performance of the contract are in
        different countries

Under Hague, if the contract was international, then the Hague convention applied.
Citizenship is IRRELEVANT. US and France didn’t ratify because of the fear of
imperialism. However, the only way Hague could apply to two international parties that
did not contract to it, was if the forum was a contracting state.

CISG (Went into affect January of 1988)
Internationality of the CISG is based solely on two parties having their place of business
in different countries. This definition of internationality is both too broad and too
narrow. Two problems with this definition of internationality are that party
(intermediaries) and place of business (multiple locations of the same corporation) are not

Does the CISG apply?
   1. Is the forum a contracting state at the time the proceedings start2? If yes, go to 2.
       If no, go to private international law (conflicts of laws) of the forum.
   2. Does the convention have its own applicability rules? If so, apply them because
       they are more specific then the private international law. In addition, if private
       international law is used, then there is a two step process: 1) use private
       international law to determine which country’s law will apply, and 2) find the
       substantive law of that country and apply it. With a convention, the applicability
       of the convention automatically gives the substantive rules to apply.
   3. Is the contract international under the substantive convention (CISG places of
       business)? If no, go to private international law. If yes, go to 4.

  A state that took the art. 92 reservation is a contracting state if it is the forum. When you look to art. 95
reservation states, they are contracting states. If a contracting state with art. 95 reservation is the forum and
art. 1(1)(a) is not met, then look to privation international law and that will be the reason the CISG is
applied. 1(1)(b) CANNOT be the reason for the CISG to apply if the forum is a contracting state with an
art. 95 reservation.
    4. Was there a reliance on domestic transaction? If yes, internationality under CISG
        is disregarded; go to private international law. If no, go to 5.
    5. Is there an intermediary? If yes, go to 6. If no, go to 7.
    6. Was the intermediary disclosed? If yes, the intermediary is probably not a party
        under private international law; go to 7. If no, the intermediary may be a party go
        to 7.
    7. Where is the party’s place of business (durability, stability, autonomous power –
        place of business; art. 10 – closest connection to contract)? No matter your
        answer go to 8.
    8. Are the parties both from contracting states before and at the time of formation3?
        If yes to both, the convention will apply under 1(1)(a). If no to “before the
        formation” but yes to “after the formation”, use CISG parts I, III, and IV but
        private international law for rules of formation. If no to both, go to private
        international law.
    9. What do the private international rules of the forum say? If country ratified the
        Rome convention only (Austria, Belgium, Germany, Netherlands, Spain, England
        and Portugal), go to 10. If the country ratified the Hague 55 and the Rome
        convention (France and Italy)4 or only the Hague 55 convention (Switzerland), go
        to 10. If the country has not ratified either, assume the choice of parties would be
        applied, or if no choice was made, the law of the seller.
    10. Did the parties choose a law? If yes, under Rome convention art. 3 OR under
        Hague convention art. 2, the choice of law will be respected. If no, under Rome
        convention, go to 11. If no under Hague 55 convention, go to 13.
    11. What is the law most closely connected to the contract (art. 4(1))? Art. 4(2) says
        the law must closely connected is presumed to be the law of the place of business
        of the party who has to effect the characteristic performance5. Go to 12 regardless
        of your answer.
    12. Is the presumption rebutted? If no, use the law of the country identified in 11. If
        yes, use the law of the country that is most closely connected to the contract.
    13. Did the seller accept the buyer’s order in the buyer’s country? If no, Hague 55
        art. 3(1) applies and the general rule is law of the seller will be used. If yes,
        Hague 55 art. 3(2) applies. Art. 3(2) is the exception and will allow the law of the
        buyer to apply.

Art. 1(1) – Internationality is when parties have places of business in different states.
Art. 1(1)(a) – The convention will apply when both parties are from contracting states.
Art. 1(1)(b) – the convention will apply when the rules of private international law lead to
the application of the law of a contracting state.

  Countries that made art. 92 reservations are contracting states to parts I, III, and IV. But, they are non-
contracting states as to part II. Countries that made art. 95 reservations are contracting states fully.
  The Rome convention is more general than the Hague 55 convention. The drafters of the Rome
convention included art. 21, which says the Rome convention will not apply when there are other
conventions in force, if the other convention is more specific.
  Paying money is usually not the characteristic performance.
Art. 1(2) – If it is unknown from the contract, dealings between the parties, or
information disclosed that the parties are from different countries, then internationality is
to be disregarded.
Art. 1(3) – citizenship is irrelevant.
Art. 5 – death or personal injury caused by a good is not covered by the CISG.
Art. 8 – parties must act reasonably in dealing, understanding of communication, etc.
Art. 10 – Place of business will be the place with the closest relationship to the contract
and the performance. If no place of business, then habitual residence.
Art. 90 – conflicts of conventions provision gives way to regional unification efforts.
Art. 92 – A party can opt out of part II (formation of the contract) or part III
(nonperformance) of the convention. (Sweden, Finland, Norway, Denmark used this
reservation to avoid Part II of CISG). For this reservation, the countries are treated as
non-contracting states as to part II of the CISG.
Art. 94 – this allows countries with similar laws in a region to use their law instead of the
CISG to decide cases. (Sweden, Norway, Finland Denmark)
Art. 95 – reservation that allows countries to not apply art. 1(1)(b). (United States, and

  For this reservation, BE CAREFUL. The only time the CISG won’t apply due to this reservation is when
the buyer and forum is the same country and that country has made the reservation.

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