International Transactions Law - Assignment Example

International Trade By + Introduction The sale of goods is fundamental international commercial transaction. Most states have a national legislation that regulates sales of goods transactions. Most of the legislation supports and promotes sales of goods in different states. There are more similarities as opposed to differences among various states legislation regarding the sale of goods. The existing differences in the international trade law are to be eliminated and a uniform law on international sale of goods is to be produced (bhagwati, 2007). This production is intended to provide traders and business enterprises with an amiable environment to international trade. The harmonisation rationale is meant to develop a comprehensive legal basis for easy and free movement of trade across boundaries of nations. The aim of harmonization is to make the regulations of different nations similar. Such similarity leads to the adoption of common law principles which reduce the differences among states laws. International trade may be hindered by obsolete laws which are unsuited for business practice. The international law on the transaction for the sale of goods should aid in harmonization of international trade (Scott, 2005). Discussion International laws on the sale of goods are generally similar in character. The common laws are continually reviewed through dispute arbitration and through the establishment of policies by international associations (Martinussane, 2006). The international laws have seen the creation of conventions that govern the contracts on sale of goods internationally. Such conventions include the Vienna Convention, which have the merit of neutrality and hence more acceptable. There has also been the development of standard contracts, which aim to achieve a fair balance in the transactions of sales. Contracts for the international sales of goods (CISG) incorporate principles of common, civil, and socialist law (Bridge, 2009). The CISG compromises the principle of international trade from different legal systems. This has led to complexity of international trade harmonization. This is because it does not apply to consumer transactions, sale of auction, and sale of stocks such as shares and investment securities (Taussig, 2007). The CISG rules relate to offer and acceptance, which are a combination of civil and common law. There are several deviations, which lead to complexity of the rules that govern international transactions (Madl, 2002). When an offer is to be made, there must be clarity on the offer and the offer price must be communicated to the offeree. An offer may be revoked before acceptance, unless the offer is irrevocable. An offer can be irrevocable even without the support of consideration. Such rules of the offer make the international trade complex and limits harmonization. The CISG gives a counter-offer concept, but deviates from common law. Non-material discrepancies can form an acceptance, provided the offeror does not have an objection to the discrepancy. The final form of the CISG has a testament that shows the constraints on the making of treaties. Such treaties are meant to act as mechanisms for harmonisation from a legal perspective. Making of the treaties require labor and ample time and the process is more likely to succeed if all states are inclusive (Whale, 2002). International sales of goods that intend to harmonise trade make an assumption that that differences exist in legal techniques of states. There are major differences between the socialist and legal systems of the west. The laws of international trade also differ between developed and countries which are in the process of development (Willis, 2002). The differences in the systems have been illustrated. For instance, in systems of common law, in order for contracts to be enforceable, there must be a consideration. However, the concept of consideration is not recognized by countries that apply the civil law. Civil laws are sympathetic to concerns of specific performance, whereas common laws restrict on circumstances that it can be applied. In socialist systems, contracts have to be in writing whereas western systems recognize contracts without necessarily being in writing. The western legal systems allow contracts to come to existence even if the way of fixing the consideration is not determined. The socialist system makes sure that there is predetermination of consideration before a contract comes to existence. Such issues lead to complexity of harmonisation of international trade as the rules of international transactions on sale of goods are not homogenous (Zeller, 2009). Article 67 of the CISG intimates that provided that the risk of goods passes to the buyer when the goods are handed over to the first carrier for transmission. However, the risk does not pass to the buyer until the goods are identified to the contract. They can be identified through marking of the goods, documents’ shipping, and through giving notices to the buyer. The purpose of the article is to determine the way risk on the goods passes from the seller to the buyer (Eastwood, 2006). The article has defined a typical transaction in the international trade. It has defined a transaction as the as the exchange of goods from the seller to the buyer through a carrier. In common law, certain concepts like delivery, property and title would be used to describe the law. They have been eliminated because they are sourced from a single legal system and have certain legal nuances. Avoidance of getting the language source from a single legal system was not possible. Some legal language similarity exists in some states and is different in other states. Such similarities and differences make harmonisation of international trade complex. Parties to transactions of international trade have developed particular trade terms. The terms are used for the allocation of rights and duties among the trading parties. The terms have been expressed through internationally accepted standard abbreviations. Each term of abbreviation comes with specific legal consequences. The most terms used are; cost, insurance and freight (CIF0 and free on board (FOB) (Fawcett, 2005). However, there are uncertainties that arise because interpretation of the terms may vary depending on the laws that govern the contract. For instance, the Uniform Commercial Code in the U.S. definitions of the terms differs from those of common English law. In order to avoid the controversy, the parties should make a specification of which definitions to apply. They can resolve to make use of the definitions put in place in the Incoterms. The Incoterms provide a set of rules which are used for the interpretation of trade terms. Incoterms provide specifications which deal in the rights and obligations of the parties transacting internationally. Sale of goods internationally is also protected by the laws that apply to intellectual property. There may be an issue on the legality of such goods in the state of import. An increasing concern of parallel imports has been observed (Folsom, 2006). A scenario of parallel import involves goods that are placed on the market in the exporting country. An importer avails goods in a country and the distributor of such goods objects to the importation. This is because the importer competes for the market share and the goods are sold cheaply. Comprehension of the applicable law is done through critical evaluation of the circumstances surrounding the parallel imports. The laws on parallel imports differ in various states (Enderlein, 2002). The governments of different states need to formulate trade policies which are closely related to other states in regard to parallel imports. The doctrine of common origin justifies parallel importation. According to the doctrine, the rights of intellectual property are not infringed. The goods have a common origin, and there is no justification between the local distributor’s goods and the parallel imports as being more legitimate. Parallel imports concept is in itself complex in nature and contributes to complexity of international trade (Mikic, 2002). The lack of specificity in the international trade laws imposes complexity to contracts of international laws. Harmonization of basic international sales laws is vital. Recognition of other rules that are not treated uniform and which govern international sales should be done. The process of unification of international trade laws is a complex and long one (Galston, 2004). The process can only be completed if the rules are interpreted consistently in order to promote international harmonization. Interpretation of the international rules should be done in good faith, in order to ensure that different legal systems apply the rules in a uniform manner. This may lead to reduction of obstacles that may arise in the exchange of goods and services internationally. Where no laws on international transactions exist, problems might emerge between the transacting parties (Grimwade, 2000). The laws on international trade bring out the advantages of harmonisation of international trade. Some of the advantages include; facilitation of commerce without barriers and complexities. The creation of a tailor-made legal framework for international transactions is another advantage. Harmonisation leads to the production of neutral law which is compatible and applicable by both civil and common laws (Morgenstern, 2009). Harmonisation leads to provision of international transactions laws that were inexistent in many legal systems. It is also significant in the reduction of transactional costs since there are reduced conflicts. Legal risk is reduced significantly as harmonisation provides increased predictability and reduced legal uncertainties (Sarcevic, 2006). It also leads to the reform of international law on trade once there is adoption of a particular law at international level. However the costs involving transactions are high which derail the harmonisation process. The degree of unification of the international laws may be restricted because of different traditions among states. International trade regulations may lead to sovereignty issues certain treaties of harmonisation are not negotiated (Schwenzer, 2010). When new laws are formulated, legitimacy and accountability issues arise, which leads to undermining of new global order brought about by the new laws. International conventions operate normally through positive Acts of laws. There may be delays in ratification of the results of the conventions. Such delays do not guarantee harmonisation of international trade. Conclusion The purpose of international transactions laws is the formation of uniform, accountable, and predictable policies that govern the transactions. The laws are meant to encourage international trade among different nations. It is important for law makers to formulate laws that lead to harmonisation of international trade. Such laws should put into consideration the different cultures that different nations have. Despite the many challenges facing harmonisation, its implementation is still important. This is because it ensures the elimination of legal barriers when different nations are trading (Blackburn, 1987). The formulation of a uniform law on the international sale of goods has come to be a reality. Parties that are trading internationally need to be conversant with the laws that govern such transactions (Ramberg, 2007). Lawyers need to be aware of the provision of the articles contained in the contracts for the International sale of Goods. For instance, one of the articles provide the rules of what constitutes ‘international sale’. The note has been discussed and the definitions contained therein have been found to be ambiguous. The codification of the laws of international sales needs to be derived from the customs and beliefs of the international trading community. In the trading field, legislation must not only reflect on the application of the laws, but also on the development and refining of the laws. The differences arising in national legal systems on international transactions should be eliminated. Uncertainties that arise need also to be dealt with in order to avoid an oppressive international trade. Codification of the laws must be subsidiary in that the rules should only apply when being used on decisive contracts. The laws should not be ambiguous or silent; this makes the process of interpretation of the laws easy. Harmonisation is an achievable process provided international trading communities are in consensus on the laws that govern the trade. Bibliography Bhagwati, J. N. (2007). International trade selected readings (2nd ed.). Cambridge, Mass.: MIT Press. Blackburn, C. B., & Graham, J. C. (2007). A treatise on the effect of the contract of sale on the legal rights of property and possession in goods, wares, and merchandise ([2nd ed.). Philadelphia: Blackstone Pub. Co.. Bridge, M. G. (2009). The sale of goods (2nd ed.). Oxford: Oxford University Press. Eastwood, R. A. (2006). The contract of sale of goods (2d ed.). London: Butterworth. Enderlein, F., & Maskow, D. (2002). 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