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United Nations Convention on Contracts for the International Sales by vow15418


									United Nations Convention on
Contracts for the International
       Sales of Goods

            Vienna Convention

International standard literature
John O. Honnold, Uniform Law for International
 Sales, 600 p.
Peter Schlechtriem – Ingeborg Schwenzer,
 Commentary on the UN convention on the
 internationals Sale of Goods is 800 p.
Bianca – Bonell, Commentary on the International
 Sales Law more than 800 p.
Ramberg – Herre, Internationella köplagen, 925 p.
Joseph Lookofsky, Understanding the CISG
           A.F.M. Maniruzzaman
• “The United Kingdom has not yet ratified the
  CISG, perhaps because of pride in its
  longstanding common law legal imperialism or in
  its long-treasured feeling of the superiority of
  English law to anything else that could even
  challenge it.”[1]

  [1] A.F.M. Maniruzzaman, IBA´s International Business Lawyer, December 2001 p.
 But coming from Finland I doubt if I have any
 right to criticize the English choice. When
 ratifying CISG the four Nordic countries,
 Denmark, Norway, Sweden and Finland made
 two essential reservations:

- Not Part II, formation of contracts

- Sales between Denmark, Norway, Iceland,
  Sweden and Finland, not CISG but the Nordic
  Sales Laws
     A.F.M. Maniruzzaman:

the insular attitude of the United Kingdom /
read Nordic countries/ to the
harmonization phenomena is, in fact
regrettable. It is time to wake up and face
reality, and deal with it efficiently
                 A short history
• The first milestone was the foundation of UNIDROIT
  (the Institute for the Unification of Private Law) in Rome
  was founded by the League of Nations in 1926,

• the second was a first draft convention presented Ernst
  Rabel in 1929, the work was interrupted by the 2nd world

• A third milestone was the Hague Sales Law from 1964,
  which after all did not turn out to be a success.

• The success came more than twenty years later, the
  UN Convention from 1980. The convention came into
  force on January 1988.
    CISG’s indirect influence on
    harmonization of commercial
           contract law:

- the UNIDROIT Principles of International
  Commercial Contracts (UPICC).
• Secondly Principles of European Contract
  Law (PECL), sometimes called the Lando
  principles after the Danish professor Ole

• Thirdly EC-Directives, here I especially
  have in mind the directive on certain
  aspects of the sale of consumer goods
  and associated guarantees.
• Fourthly
  the Sales Chapter in the Draft Common
  Frame of Reference (DCFR, Book IV, Part
  A Sales) is strongly influenced by the
  convention (Based on the work of the
  Study Group on a European Civil Code,
  (SGECC )).
• As a fifth point one could mention the
  influence CISG has had on domestic
  Sales Laws.

 This has been the fact e.g. in the Nordic countries,
 Norway, Sweden, Island and Finland and also in
 Germany and not to forget e.g. new member states of
 EU enacting new Codes.
  Peter Schlechtriem’s words
“CISG has become a kind of lingua franca
 for international sales law questions, and it
 allows us to communicate with lawyers all
 around the world without the need – and
 enough knowledge – of understanding
 foreign law systems.”
CISG is a great success, or is it,
            really ?

CISG is not mandatory law!
   And influencing the contract

“This contract is not governed by
    Federation of oils, Seeds and Fats
 Association (FOSFA) and Grain and Feed
       Trade Association (GAFTA)

“The following shall not apply to this
- The Uniform Law of Sales …;
- The United Nations Convention on
  contracts for the international sales of
  goods …”
         An alternative:

Tailor-made clauses on e.g.


excluding the CISG system
 The ICC model sales contract:
Liability for delay

Liquidated damages for delay in delivery
  shall be:
  ____ % of the price of the delayed goods
  (service) per week,
  with a maximum of ______% of the price
  of the delayed goods (service) or
               Part I
   The convention is applicable to:
International Contracts of Sales of Goods

• but excluding e.g. the questions of
  –   the capacity of the parties
  –   the transfer of ownership
  –   legal effects of the contract in respect of third party.
  –   Consumer sales, goods bought for personal, family or household

These are governed by the law of the country,
  found by using the normal conflict of law rules
         International Sales
between parties whose place of business
  are in different sates, and

• the states are Contracting States; or

• when the rules of international private law
  lead to application of the law of a
  Contracting State
    Other perhaps less important
       exemptions are sales

• by auction
• on execution or otherwise by authority of
• of stocks, shares, investment securities,
  negotiable instruments of money
• of ships, vessels, hovercraft or aircraft
• of electricity.
  Interpretation of International

• Sunken rocks:
  – bad translations
  – unfamiliar terminology
  – familiar terminology, “dangerous friends”
  – the lack of clear logical preparatory works
  – the reader’s national looking glass
          Part I CISG Art. 7

(1) In the interpretation of this Convention,
 regard is to be had to its international
 character and to the need to promote
 uniformity in its application and the
 observance of good faith in international
              CISG Art. 7

(2) Questions concerning matters governed
  by this Convention which are not expressly
  settled in it are to be settled in conformity
  with the general principles on which it is
  based or, in the absence of such
  principles, in conformity with the law
  applicable by virtue of the rules of private
  international law.
Part II of the convention deals with
       formation of contract

• An offer is an expression of the offeror’s
  will addressed to one or more identified
• the offer must be clear and sufficiently
• it becomes effective as soon as it reaches
  the offeree.
 CISG - Nordic law, differences
• CISG: the contract is concluded at the
  moment when the acceptance of the offer
  reaches the offeror, Art. 23, Art. 18(2).

• The Nordic system: it becomes effective
  when the acceptance has come to the
  offeror’s attention, the Finnish Contract
  law § 7.
             Part III, sales
Classical articles on the obligations of the
  seller, e.g.:
She must deliver
- at the right place and at the right time,
- goods which are in conformity with the
  contract, quality, quantity and description,
  package in the manner required
  (objective and subjective test, art. 35)
      Obligations of the buyer
 The main obligation is of course
 - to pay the price.
 She/he has
- to give notice in case of lack of
 Passing of the risk from the seller
           to the buyer

• the First Carrier Rule (art. 31, 35)
  Buyer’s optional remedies:
• specific performance, he/she may order
  the repair of the goods or if the non-
  conformity is fundamental delivery of
  substitute goods.

• When there is a fundamental breach of
  the contract the s/he may declare the
  contract avoided.
• Reduction of price

• Damages
                          Article 50

If the goods do not conform with the contract and
    whether or not the price has already been paid, the
    buyer may reduce the price in the same proportion
    as the value that the goods actually delivered had at
    the time of the delivery bears to the value that
    conforming goods would have had at that time.

However, if the seller remedies any failure to perform his obligations in
  accordance with article 37 or article 48 or if the buyer refuses to
  accept performance by the seller in accordance with those articles, the
  buyer may not reduce the price.
Reduced value 20 % compared with the
 contractual value

Price reduction 20 %
    Declare the contract avoided
    when there is a fundamental
Art. 25 the breach is fundamental if it results
  in such detriment to the other party as
  – substantially to deprive him from what he is
    entitled to expect under the contract, unless
    the party in breach did not foresee and a
    reasonable person of the same kind in the
    same circumstances would not have foreseen
    such a result.
  – delay, the so-called Nachfrist procedure.
                 Article 74

Damages for breach of contract by one party
consist of a sum equal to the loss, including loss
of profit, suffered by the other party as a
consequence of the breach.

Such damages may not exceed the loss which
the party in breach foresaw or ought to have
foreseen at the time of the conclusion of the
contract, in the light of the facts and matters of
which he then knew or ought to have known, as
a possible consequence of the breach of
                Article 79

(1) A party is not liable for a failure to
  perform any of his obligations if he proves
  that the failure was due to an impediment
  beyond his control and that he could not
  reasonably be expected to have taken the
  impediment into account at the time of the
  conclusion of the contract or to have
  avoided or overcome it or its
                               Art. 79
(2) If the party's failure is due to the failure by a third person whom he has
    engaged to perform the whole or a part of the contract, that party is exempt
    from liability only if:
    (a) he is exempt under the preceding paragraph; and
    (b) the person whom he has so engaged would be so exempt if the
    provisions of that paragraph were applied to him.

(3) The exemption provided by this article has effect for the period during
    which the impediment exists.

(4) The party who fails to perform must give notice to the other party of the
    impediment and its effect on his ability to perform. If the notice is not
    received by the other party within a reasonable time after the party who
    fails to perform knew or ought to have known of the impediment, he is
    liable for damages resulting from such non-receipt.

(5) Nothing in this article prevents either party from exercising any right other
    than to claim damages under this Convention.
    : avoidance, reduction of price, specific performance
    Nordic Sales Law § 40, 67
An impediment beyond control
liability (only) for direct losses

Culpa / negligence
liability for direct and indirect losses

Loss of profit, an indirect loss
       CISG 1980 – outdated?
Risky to re-open CISG, but:
- fantastic databases: literature, cases etc.
- CISG Advisory Council, expert opinions, e.g. on
  electronic,Op. 1, on the controversial issue on
  buyers notice in case of lack of conformity of the
• article 7(1): international character, to the need
  to promote uniformity in its application, and
  the observance of good faith in international
- Art. 7(1): international character, to the
  need to promote uniformity in its
  application, and the observance of good
  faith in international trade

- Art. 7 (2): matters governed by CISG but
  not expressly settled in the convention are
  so be settled in conformity with:
  - the general principles on which it is based on
  – or in the absence of such principles in
    conformity with the law applicable by virtue of
    the rules of private international law.

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