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What Are the Characteristics of Contract of Sale of Goods - DOC

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					Law of the Republic of Moldova on purchase and sale of goods.
                  No. 134-XIII of 03.06.94.
The parliament of the Republic of Moldova passes the present law.

The present law establishes the fundamental principles of settlement of economic
relationships among economic subjects that arise from legal (contractual) norms, without
restricting the liberty of contract and freedom of subjects to participate in the commercial
circuit, observing the spirit of honesty and good faith.


                          Chapter I. General provisions.

Article 1.              Settlement of contractual relationships.
1. Relationships regarding conclusion, modification, rescission and executions of sale
    contracts are settled by this Law, other legal acts and by parties’ contracts, as
    stipulated by law.
2. This Law settles the relations arising from sale of goods of any type regardless of their
    destination: agricultural and industrial products, buildings, constructions,
    transportation means, intellectual goods etc., except goods intended for personal use
    or for use in the family or household, other goods, in compliance with the law.

Article 2.            Contract for sale of goods.
1. The seller transfers and delivers the goods (the ownership right over the goods) to the
    buyer and the buyer receives and accepts to pay in accordance with the contract.
2. The contract for sale includes the completed sale as well as the future sale.
3. According to this Law:
    a) “Buyer” means a person who buys or contracts to buy goods.
    b) “Seller” means a person who sells or contracts to sell goods.

Article 3.            Liberty of contract.
Economic subjects (thereinafter – parties) without restriction and in any conditions may
conclude contracts in compliance with the law, that do not affect the equality of a
participant at the commercial circuit.

Article 4.             Equality of parties.
1. Contracts are concluded based on the free will of parties, which is protected by the
    law. Contracts concluded as a result of fraud, coercion, threat and other illegal actions
    of one party are void.




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2. Losses of one party caused by its incompetence to predict the effects of contract’s
   clauses do not affect the validity of the contract.

Article 5.              Protection of parties rights.
1. Law protects rights of parties.
2. Upon conclusion of contracts the state bodies can not make illegal restrictions or
    aggravate the liabilities stipulated by law.

Article 6.             Obligations of parties.
1. In compliance with the law and conditions of the contract, parties are liable for not
    honoring contractual obligations.
2. Even if the contract does not stipulate, losses caused by non-execution of contractual
    obligations are repaired.
3. Parties can not set in a contract clauses that mitigate the liability defined by law.

Article 7.             Contract interpretation.
The contract is interpreted by parties and in case of litigation by arbitral tribunal: by
determination of the express meaning of clauses, by comparison of clauses with the
general context of the contract, by determination of intentions of each party and of the
scope of the contract, considering parties’ behavior, correspondence, usage and traditions
of business transactions.

   Chapter II. Conclusion, modification and rescission of the contract.

Article 8.             Conclusion of the contract.
1. The contract is concluded directly by parties or by means of bodies that act as
    intermediaries (exchanges, advertising companies) or by any other way not forbidden
    by law.
2. The contract may be concluded based on minutes, letters or other agreements
    previously signed and compulsory for parties.
3. Refusal to conclude a contract based on a previously signed agreement is permitted
    only in cases when:
    a. Refusal stems from the agreement.
    b. Agreement stipulates the right of parties to cease negotiations at any moment in
        time before conclusion of the contract.
    c. Parties reserved the right to negotiate with other partners.
    d. Agreement was signed by unauthorized persons and a party objects.
    e. The event stipulated in the agreement did not occur because of causes beyond
        parties’ will.




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   Article 9.                 Form of contract and main clauses.
   1. The contract is concluded by drafting a document signed by parties, or by an
       exchange of letters, telegrams, teletype or by other written way not forbidden by
       law.
   2. The contract is considered concluded if it defines goods, quantity, price or way of
       its determination, terms of delivery and other essential clauses in absence of
       which the contract can not be executed.

   Article 10.                 Method of concluding the contract.
   1. The initiative of concluding a contract equally belongs to both parties. The offer is
       considered determined (binding) if it is in writing and contains the essential
       clauses of the contract or defines ways of their determination.
   2. The offer does not produce effects if it was rejected or withdrawn, or the
       acceptance period has expired.
   3. The offer is considered withdrawn only if notification was received before
       acceptance.
   4. Acceptance must be in writing and must contain answers to all clauses of the
       offer.
   5. Offeror may reject a late acceptance, even if the tardiness was not caused by the
       acceptor, provided that the latter will be informed within three days since the late
       acceptance was received.
   6. The late acceptance is considered a new offer.
   7. In case the acceptance differs from the offer, it is considered as a new offer and
       the contract is not concluded if the offeror does not accept the differences. The
       acceptor should be informed.
   8. In compliance with the law and parties mutual agreement differences may be
       solved by the arbitral tribunal.

Article 11.           Modification and rescission of contract and cessation of its
                      effects.
1. Contract can be modified or cancelled by mutual agreement of parties, in compliance
   with the law.
2. If the law does not stipulate otherwise, effects of the contract cease in cases when the
   contractual obligations have been performed, the contract was cancelled before
   expiration, or in case of liquidation of one party for legal persons or death of the
   entrepreneur – natural person.




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         Chapter III.                    Rights and obligations of parties.

Article 12.             General obligations of the buyer and the seller.
Obligation of the seller is to transfer the ownership right and to deliver the goods and that
of the buyer is to receive the goods and to pay in accordance with the contract.

Article 13.             Place of execution of the contract.
1. Unless otherwise specified by the contract the goods are delivered:
    a. At the place where the goods are produced or stored or at the seller’s location if
        the buyer is known.
    b. If the contract stipulates their transportation, to the transporter for transmitting the
        goods to the buyer.
1. If the seller has contractually committed to transport the goods, he must conclude a
    contract to ensure that transportation will be made to the point of destination, with
    appropriate transportation means and observing the usual conditions for a
    transportation of this kind.
2. The seller has the obligation to insure the goods during transportation, if the contract
    does not stipulate otherwise.

Article 14.           Strict execution of contractual obligations.
Contractual clauses are considered to be strictly executed in cases when goods:
1. Are of the quality specified by contractual clauses, if the legislation does not stipulate
    otherwise;
2. Are free of any right or claim from a third party of which the seller was aware or
    could not be not aware; if only the buyer was aware of existence of a right or claim or
    he could not be not aware of; as well if the right or claim arises from the fact that the
    seller observed the technical documentation, projects and forms supplied by the
    buyer.
3. Correspond to other clauses of this Law and of the contract.

Article 15.            Non-execution of contractual obligations.
If parties did not agree otherwise, contractual obligations are considered not executed if
goods:
a. Are not fit for purposes, for which goods of the same kind are used.
b. Can not have the usage specified by the buyer at conclusion of the contract.
c. Do not have the characteristics of the sample presented by the seller to the buyer.
d. Are not marked and packed according to standards, technical conditions, other
    documents or the contract.
e. Do not correspond with other clauses of the present law or the contract.




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Article 16.            Quantity of goods.
1. The quantity of goods delivered by the seller should be the same as specified in the
    contract.
2. If the quantity of goods delivered is larger than that specified in the contract, the buyer
    can accept or refuse to receive the excess quantity, paying according to clauses of the
    contract.

Article 17.           Terms of sale.
The seller must deliver the goods:
a. At the time specified in the contract or that can be determined from contents of the
    contract.
b. At any time during the period specified in the contract, if the buyer can not indicate
    the receipt date.
c. In other cases during a reasonable period after conclusion of the contract.

Article 18.             Price of goods.
1. The price of goods is defined in monetary units, but may be paid in kind. If the price
    is paid in kind parties are considered respectively as buyer and seller.
2. If the price is not determined by the contract, parties will refer to a reasonable price,
    used at the moment of delivery.
3. If the contract stipulates that the price will have effects on ulterior price
    determination, in case this clause is not observed the contract is considered
    unconcluded.

Article 18.             Execution of payments.
1. If the contract does not stipulate otherwise, the buyer has the obligation to pay the
    price:
    a. At the place of delivery of goods, if the payment is made for goods or for
        shipment and delivery documents.
    b. At the seller’s place.
1. If execution of the contract implies transportation of goods, the seller may forward the
    goods or the shipment and delivery documents to be exchanged for the amount
    stipulated in the contract.
2. If parties did not agree otherwise, the buyer has the right not to pay until inspection of
    goods.

Article 20.            Receipt of goods.
1. Law, standards, technical conditions and contract clauses stipulate the quality and
    quantity of goods received by the buyer.
2. Goods are inspected by the buyer:


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     a.  At the moment of delivery;
     b.  At the moment of transmission by the transporter;
     c.  Within three days after discovering hidden defects.
     d.  Within three days after discovering discrepancies with the contract or within the
         warranty period established by parties or in other obligatory way.
1.   The buyer loses the right to object to the quantity and quality of goods, if the next day
     after receipt he does not forward the seller a letter or a notification informing him
     about discrepancies between actual and characteristics specified in the contract.
2.   On receiving the notification the seller is obliged:
     a. To send within three days a representative who will participate at a common
         inspection of goods and at acknowledgement of discrepancies.
     b. To establish nonconformity of goods in another way together with the buyer.
1.   If the seller does not respect the paragraph 4, without infringing seller’s rights, the
     buyer is entitled to assess alone or to determine together with the seller a way to
     acknowledge nonconformity of goods
2.   Parties may define in the contract other ways of receiving the goods, including
     participation of experts from institutions specialized in this area.

Article 21.             Custody of goods in case the receipt of goods did not take place.
1. A party, alone or with assistance of a third party, is obliged to take reasonable
    measures on expenses of another party to ensure integrity of goods transmitted on the
    purpose of executing a contract, as in case when a third party has rights over the
    goods as well as in the case when receipt of goods is rejected.
2. Informing the other party the party, in whose custody are the goods, is entitled to
    alienate them in any legal way, if goods are liable to deterioration, if their custody
    requires unreasonable expenses, if another party is late to enter into possession or to
    receive, to pay the price or storage expenses.
3. Party that alienated the goods remits the amount to another party after withholding
    storing and alienation expenses.

Article 22.              Risk of loss or of fortuitous deterioration.
1. If not specified otherwise risk of loss or of fortuitous deterioration is transferred to
    receiving party provided that risks are not consequent to action or inaction of the party
    that delivers the goods.
2. If a party does not receive the goods during the period stipulated by the contract, risk
    is transferred at the moment of delivery.
3. If the goods are delivered at the place stipulated in the contract, the risk is transferred
    to the buyer at the moment of expiration of period for delivering the goods.
4. If transportation of goods is stipulated by in the contract, risks are transferred at the
    moment of their delivery to the transporter for ulterior forwarding to the buyer.


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5. If the contract is concluded after the delivery, risks known or whose existence could
   not be not known to the seller at the moment of conclusion remain of the seller.

Chapter IV.                    Legal protection and parties obligations.

Article 23.            Breach of contractual clauses.
1. Contractual clauses are considered breached if obligations of parties are partially or
    completely not respected and one party damages another party and the latter loses
    what is according to the contract rightfully his.
2. On breach of contractual clauses by a party, the other party may take actions of legal
    protection and property liability in accordance of the present law, other legal acts and
    the contract.

Article 24.             Legal protection of the buyer.
1. If the seller does not respect his contractual obligations or respects them incompletely,
    the buyer is entitled to:
    a. Request execution of obligations in kind, including delivery of individually
        determined goods (property), which had to be delivered pursuant to the contract;
        to impose new conditions and terms for execution. If the obligation will be
        respected, the buyer can not take other actions except requesting damages.
    b. Accept or refuse premature execution; accept or refuse execution of obligations if
        the quantity is not equal to that specified in the contract; not to accept execution
        of obligations if due to lateness he lost interest for the goods.
    c. Request replacement of goods not of the quality specified in the contract or
        gratuitous repair of defects, simultaneously forwarding the documents specified in
        the clauses of the article 20 paragraph 3.
    d. Repair the defects of goods on seller’s expense.
    e. Reduce the price, even it was paid, depending on the value of goods at the
        moment of sale. This right can not be exercised if the seller on his own expense
        repaired the defects nor if the buyer does not agree with such repair, which
        nevertheless does not restrict the buyer to request damages.
    f. Declare rescission or suspension of execution of the contract in accordance with
        the way established by this Law or by the contract.
1. If execution of actions mentioned in the paragraph 1, section b., c., e., f., does not
    repair buyer’s loss, he has the right to request damages.
2. If the legislation or the contract does not stipulate otherwise, upon discovering of
    hidden defects the buyer may exercise his right regarding quality of the goods within
    the warranty or validity period and in absence of such terms within 6 months from the
    moment when the ownership title was transferred in accordance with the contract.




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3. If the producer of goods of inappropriate quality is not the seller from the contract, the
   latter, according to the contract, is entitled to claim from the producer replacement or
   gratuitous repair of defects in production facilities of the producer or by companies
   rendering services to the producer.

Article 25.           Legal protection of the seller.
1. If the buyer does not respect his contractual obligations, the seller is entitled to:
    a. Suspend delivery of goods.
    b. Stop delivery through an intermediary.
    c. Sell the goods and recover his losses.
    d. Request restitution of goods.
    e. Stop transportation of goods.
    f. Collect the damages and the amount of the criminal clause.
    g. Recover the value of goods not delivered.
    h. Refuse execution of the contract, in the way established by the present Law or by
        the contract.

Article 26.            Buyer’s right for execution in kind of obligations.
The buyer is entitled to obtain execution of obligations in kind, if such request is justified
for parties and for protection of buyer’s rights regarding unique goods, contractually
determined individual goods or other goods that can not be acquired by the buyer from
other persons, if such actions with the purpose to acquire goods remain without result.

Article 27.            Contract Rescission.
1. Rescission of the contract may be declared if:
    a. Essential clauses are not executed.
    b. A party does not execute contractual obligation or refuses to execute them during
        additional time given by the other party.
1. If a party honors its contractual obligations, the other party loses the right to declare
    rescission of the contract, except the case when the declaration was made before its
    author learned that the other party has executed its obligations.
2. Party, which declared in writing rescission of the contract, may give another party a
    reasonable period to execute its obligations. Declaration of rescission or of
    modification of the contract must be answered within 10 days from receiving the
    declaration.
3. Rescission of the contract occurs at the moment of:
    a. Receiving the rescission declaration, if such way is stipulated in the contract.
    b. Entering in force of the arbitral tribunal’s decision regarding rescission of the
        contract.




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1. Declaration of complete rescission of the contract may be made only if partial non-
   execution or partial inaccurate execution of contractual obligations result in
   significant losses to another party.
2. If non-execution of some contractual obligations provide another party with grounds
   to consider that other obligations will be inaccurately executed, it can declare
   rescission of the contract.
3. Rescission declaration may refer to obligations that have been already executed, if
   object of execution can not have the use stipulated in the contract.

Article 28.             Effects of contract rescission.
1. Rescission of a contract has the following effects:
    a. Parties are relieved from contractual obligations, except the clauses that define
        settlement of litigation, parties’ liability, rights and obligations in case of
        rescission.
    b. As agreed, parties restitute revenues resulting from execution of obligations,
        including profits of the buyer resulting from use of goods that had to be returned.
    c. The seller pays interest on the amount received from the buyer for the entire
        period the amount was at his disposal.
1. If the buyer can not return the seller the goods in the condition they were received, he
    loses the right to declare rescission of the contract, request replacement of goods or
    rendering of other work, except cases when impossibility to return the goods result
    from seller’s action or inaction or unfitness of goods, their deterioration result from
    nonobservance of provisions from art.20 section2, or if goods were used in economic
    activity before the lack of conformity was discovered.
2. Buyer’s loss of the right to declare rescission of the contract or to request replacement
    of goods does not result in loss of other means of legal protection, stipulated by the
    present Law and by the contract.

Article 29.           Liabilities of Parties.
1. The party, which did not execute its contractual obligations or executed them
    inaccurately, must pay another party damages equal to the incurred loss, including
    production expenses, lost or deteriorated goods, lost profit.
2. Party is entitled to claim reduction of damages, if the party, which claims
    nonobservance of contractual clauses, did not take all adequate measures to diminish
    losses.
3. On conclusion of the contract parties may stipulate a certain penalty, a way of its
    determination, methods of proving and other conditions that will permit calculation of
    damages that should be paid.
4. Contract may stipulate a penalty (fine, mulct), set by law or by contract, for non-
    execution or inaccurate execution of contractual obligations.


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5. If the contract does not stipulate otherwise and there is a penalty clause, damages for
   non-execution or inaccurate execution of contractual obligations may not exceed the
   amount of the penalty clause.
6. The contract or the law may stipulate recovery of the amount from penalty clause or
   repair of total damage, as well as optional recovery or either penalty amount or total
   damages.

Article 30.             Guilt as condition of parties liability.
1. Party that does not respect contractual clauses is liable according to the law or
    contract only if its guilt is proven. Lack of guilt is being proved by the party, which
    does not respect contractual clauses.
2. A party is not liable for non-execution of any of its obligations, if this non-execution
    is determined by force-majeure, whose effects could not be predicted, avoided or
    overcome at conclusion of the contract. Exoneration based on this reason produce
    effects only during the period when force-majeur or its consequences are in effect.
3. If non-execution by a party of obligations is determined by non-execution of
    obligations by a third party involved in execution of the contract, exoneration may be
    granted only in accordance with paragraph 2, which is also ground for exoneration of
    the third party.
4. In case of force-majeure during execution of obligations, the party must notify in
    writing the other party within the periods stipulated by contract, but not later than 3
    days. Otherwise, party is liable for losses occurred because no notification was
    received.
5. A party can not invoke non-execution by another party to the extent this execution is
    determined by its own action or inaction.

                        Chapter V.              Final provisions.

Article 31.            Examination of litigation.

1. The arbitral tribunal, pursuant to the law and the contract, examines lawsuits that
   appear in the process of conclusions and execution of contracts.
2. Litigation regarding obligatory conclusion of contracts or coordination of contractual
   clauses are solved by the arbitral tribunal, if relations between parties are based on a
   compulsory act of state bodies or on an agreement between them, as well as in cases
   stipulated by art. 8.




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Article 32.           Application of the law to international economic contracts.
The present law may be applied to international economic contracts if:
a. Between parties was concluded a contract regarding application of the legislation of
    the Republic of Moldova.
b. Despite absence of a treaty on application of legislation, the seller lives, has its
    headquarters on the territory of the Republic of Moldova or the goods are located on
    this territory.




PRESIDENT OF THE REPUBLIC OF MOLDOVA                                     Mircea
SNEGUR

Chisinau, June 3, 1994
Nr. 134-XIII.




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