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InternationalTradePracticeandOperation1Chapter3FormationoftheInternationalSalesContract(CISG)TeachingObjectives1.OutlinethestructureandcontentsofCISG.2.UnderstandtheapplicationrulesofCISG.3.DiscussthelegalfeaturesofofferandacceptanceinCISG.4.IntroduceUNCITRALModelLawonElectronicCommerce.2Section1StructureandContents
oftheCISGTheUnitedNationsConventiononContractsfortheInternationalSaleofGoods(CISG)wasratifiedby71countriesby2008.CISGhas101articlesintotal,whichfallintofourparts:1.Articles1-13:thesphereofapplicationoftheConventionandgeneralprovisions.2.Articles14-24:formationofcontract.3Section1StructureandContents
oftheCISG3.Articles25-88:saleofgoods,obligationsofthesellerandthebuyer,passingofrisk.4.Articles89-101:finalprovisionsincludinghowandwhentheConventioncomesintoforce,permittedreservationsanddeclarations,andtheapplicationoftheConventiontointernationalsaleswherebothStatesconcernedhavethesameorsimilarlawonthesubject.
4Section1StructureandContents
oftheCISG
CISGdoesnotgovern:validity,transferofproperty,limitationofclaims,productliability,legalityofacontract.Thegap-fillingislefttotheapplicablenationalcontractlaw.5Section2ApplicationoftheCISGInaccordancewithArticles1and95ofCISG,theapplicationofCISGcanbedescribedasfollows:1.Thecontractisforthecommercialsaleofgoods;and2.Thecontractisbetweenpartieswhoseplacesofbusinessareindifferentcountries(nationalityorcitizenshipofindividualsisnotadeterminingfactor);and3.TheplacesofbusinessarelocatedincountriesthathaveratifiedtheCISG.6Section2ApplicationoftheCISGCase3-1AsanteTechnologies,Inc.v.PMC-sierra,Inc.Facts:TheAsante(P),inCalifornia,purchasedelectronicpartsfromthePMC(D),whoseofficeandfactorywereinCanada.PdirectlycorrespondedwithDatD’sCanadianaddress.PplaceditsordersthroughD’sauthorizeddistributor,UniqueTechnologies,locatedinCalifornia.InvoicesweresentfromUnique,andpaymentremittedtoUnique.Pclaimedthatthegoodsdidnotmeetitsspecifications.Whatlawisappliedtothiscase?7Section2ApplicationoftheCISGCase3-1ThislitigationisbetweenpartiesoftwodifferentContractingStates–Canada&US.Therefore,CISGapplies.8Section3FormationofInternational
SalesContract1.Offer
Anindicationofwillingnesstodoorrefrainfromsomethingthatiscapableofbeingconvertedbyacceptanceintoalegallybindingcontract.Anofferismadefromanofferortoanoffereeandiscapableofbeingacceptedonlybysomeonewhoknowsofitsexistence.Theoffermustbecommunicateddirectlytotheoffereetobealegalcontract.Anoffercannotbeacceptedwithoutknowledgeofit.9Section3FormationofInternational
SalesContractArticle14(1)Aproposalforconcludingacontractaddressedtooneormorespecificpersonsconstitutesanofferifitissufficientlydefiniteandindicatestheintentionoftheofferortobeboundincaseofacceptance.Aproposalissufficientlydefiniteifitindicatesthegoodsandexpresslyorimplicitlyfixesormakesprovisionfordeterminingthequantityandtheprice.(2)Aproposalotherthanoneaddressedtooneormorespecificpersonsistobeconsideredmerelyasaninvitationtomakeoffers,unlessthecontraryisclearlyindicatedbythepersonmakingtheproposal.10Section3FormationofInternational
SalesContractCase3-2(WastheContractMade?):Facts:AFrenchcompany(theseller)sentafaxinEnglishtoaGermancompany(thebuyer)proposingthedeliveryoftwentytruckloadsoftomatoconcentrate.Thebuyerrepliedbyfaxacceptingdelivery.Thereafter,onlyonetruckloadwasreceivedbythebuyer.
Question:Wasthereacontractestablishedbetweenthesellerandthebuyer?11Section3FormationofInternational
SalesContractCase3-2
Itwassufficientlydefiniteastotypeofgoods,priceandquantity,anditindicatedtheofferor’sintentiontobebound.12Section3FormationofInternational
SalesContractCase3-3IstheProposalanOffer?Facts:AnAustrianbuyerorderedfromaGermansellera‘certainquantity’ofmediumtogoodqualityChinchillafurs,atapricerangingfrom35to65GermanMarksapiece.Thesellersent249furs,239ofwhichweresoldonbythebuyertoanItaliancustomer.Thebuyerpaidonly2400Markstotheseller,whothencommencedanactiontorecovertherestofthepricedue.
Question:Wasbuyer’sproposaldefiniteenoughtobeanoffer?13Section3FormationofInternational
SalesContractCase3-4Counter-offerorAcceptance?Facts:AnItaliansellerandaBelgianbuyerwantedtoenterintoacontractforthesaleoftextiles.Thesellerprovidedsamplesofitsfabricstothebuyeronthebasesofwhich,thelatterdetermineditscollectionofsandalstobepresentedtoitscustomers.Afterselectingacertainfabricthebuyerplacedanorder.However,thesellerproposedasubstitutefortheorderedfabricand,shortlyafterthat,itcommunicatedtheimpossibilityofdeliveryunlessalargerquantityoffabricwasordered.Thebuyerrefusedboththeseproposals.
Wasthereacontractconcluded?14Section3FormationofInternational
SalesContract2.AcceptanceAgreementtotermsoftheofferthat,providedthatcertainotherrequirementsarefulfilled,convertstheofferintoabindingcontract.Ifthemethodofacceptanceisindicatedbytheofferor,thatmethodalonewillbeeffective.
Offer+Acceptance=Contract(mutualagreement)15Section3FormationofInternational
SalesContractCase3-5SilenceasAcceptance?Facts:OneofthetermsinaconcessionagreementwasthatSellerwasrequiredtorespondtoanyordersplacedbyBuyerwithin14daysofreceipt.IfSellerdidnotrespondwithin14days,theorderwouldbedeemedtohavebeenacceptedbySeller.On1JulySellerreceivedanorderfor100unitsfromBuyer.On25JulySellernotifiedBuyerthathecouldnotfilltheorder.
Wasthereacontractbetweenthetwoparties?16Section3FormationofInternational
SalesContractCase3-5
Thisisanexampleofexception.Inthiscase,acontractwasconcludedon15Julyforthesaleof100units.17Section4Formality
Article11:acontractofsaleneednotbeevidencedbywritingandisnotsubjecttoanyotherrequirementsastoform.Article96:acontractingstatecanmakeadeclarationatthetimeofratificationthatArticle11(andsomeotherprovisionsoftheConventioninvolvingrequirementsofform)“doesnotapplywhereanypartyhashisplaceofbusinessinthatstate.”18Section5ElectronicCommerce
ModelLawonElectronicCommerce(1996)adoptedbyUNCITRALprovidesincreasedcertaintyastothelegaleffectorvalidityofelectronicmessages,andcreatesamoresecurelegalenvironmentfore-commerce.
UnitedNationsConventionontheUseofElectronicCommunicationsinInternationalContracts,adoptedin2005,establishesuniformlegaltermsfore-commerce.19Section5ElectronicCommerce
UNCITRALModelLawonElectronicSignatures,adoptedin2001,aimsatbringingadditionallegalcertaintytotheuseofelectronicsignatures.Article7:criteriaoftechnicalreliabilityfortheequivalencebetweenelectronicandhand-writtensignatures.20Section5ElectronicCommerceCase3-6SMIntegratedTransware
PteLtd.v.SchenkerSingapore(Pte)Ltd.BetweenOct.2002andFeb.2003,SMI(P)wasinnegotiationwithSchenker(D)fortheleaseofawarehousefromtheplaintiff.Throughoutthenegotiationsandtheirsubsequentdealings,bothpartiescontactedeachotherbytelephoneande-mail.Theyalsohadpersonalmeetings.However,nocorrespondenceintheformofletterswasexchangedbetweenthem.21Section5ElectronicCommerceCase3-6ByFeb.2003,thepartieshadagreedontheessentialtermsofthelease.Thetermsoftheagreementwerecontained(asthecourtfound)inadraftLogisticsServiceAgreement(“LSA”),sentbye-mailbytheplaintifftothedefendantinJanuary2003,andwhichthedefendantacceptedbye-mailinFebruaryofthesameyear.Theleasewassupposedtocommenceon1March2003andtolasttwoyears.22Section5ElectronicCommerceCase3-6
Afewdayslater,thedefendantsoughttorepudiatetheleaseagreementwhenitwasinformedthatoneofitsownclientswouldnotbeproceedingwithamajorlogisticsproject.Theplaintiffsoughtcompensationfromthedefendantbut,asnoagreementoncompensationwasreached,theplaintiffsuedthe
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