Whether Code on International Sales Law is Based on the UN Convention on International Sale Contract - Essay Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : International sales law Tutor : xxxxxxxxxxx @2010 Introduction CISG defines the duty of a seller that she/he must deliver goods, hand any existing document and transfer the property in the same way it was required in the contract. Similarly the duty of the buyer is to take reasonable steps to take the delivered goods and pay in time (Fritz and Dietrich 1992). CISG ensures that the goods delivered are of the right quantity, quality and description as stated in the contract. The sellers are to ensure that they deliver goods that are not subject to claim of the third party. On the other hand, the buyer is required to examine the goods promptly; the buyer must immediately inform the seller if the goods delivered lacked any sort of conformity within a reasonable stated time (Kruisinga 2004). Their remedy (seller and the buyer) depends on the breach of the contract. If breach of contract is fundamental, the other party to the contract will be deprived what he/she is expected to receive under the law of contact of international sales law. As long as the objective test proves there is breach of contract, the contract may be terminated through avoidance and the injured party may ultimately seek compensatory damages. Where only part of the contract has been performed, the performing party to the contract may recover payment made, this is a contract of common law where there is no right to recover any good supplied unless the damages proven are inadequate (Review 2007). If the breach is not elementary then the contract will not be evaded and remedies may be sought including claiming adjustment of price, compensatory damages and specific performance. Compensatory damages may be awarded in order to match to the common law rules in Hadley v Blaxendale .however it has been argued that the test of foreseeability is broader and as a result more charitable to the injured party. The CISG excludes a party from legal responsibility to claim damages where there is failure to carry out attributable duty which is beyond the party’s control and which could not have been rationally projected. Such an inappropriate occasion might elsewhere be referred to as power majeure, and frustration of the contract. Where a seller has been refunded the price paid then, he/she should pay interest to the buyer from the date of payment. It has been said that the interest rate is based on rates current in the seller’s State ‘since the obligation to pay interest partakes of the seller's obligation to make restitution and not of the buyer's right to claim damages’, although this has been debated. In a mirror of the seller’s obligations, where a buyer has to return goods the buyer is accountable for any benefits received. Hadley v Blaxendale This is a rule that was set to determine consequential damages from a breach of contract, which states that one is liable for any loses that, must have been in contemplation of the seller and the buyer. Mr. Hadley (the plaintiff) worked together as proprietors in Gloucester. A crankshaft engine had broken down and Mr. Hadley made a new one by Joyce & co. Limited. Before a new engine was made, Joyce & Co Ltd needed the broken engine to be sent so that it may be able to fit together other parts of the engine. Mr. Hadley contracted the defendants, who were operating under the name of Pickford & Co to deliver the engine to the engineer for repair at the cost of $ 2 and 4 shilling. Blaxendale however failed to deliver the engine on the date in question, which led to Hadley loss of business. Hadley later on sued Blaxendale for loss of profit, the jury awarded $ 25 as a compensatory damage. Baxendale appealed the case stating that he was not aware that Hadley would suffer injuries (Flechtner 2007). United National Convection on Contracts for international sale of goods (CISG) is a law that was enacted in the year 1988. Over two-third of the world nations have adapted CIGS. CIGS is an outstanding success in law governing the international sale of goods. The aim of CIGS is to govern the formation of a contract of sale, the rights and obligations of both the buyers and the sellers. CIGS is an international convention that allows members states to apply commercial contracts between parties from the states members. It applies to contacts of goods between parties or states whose places of work or business are in different countries: (1) where the sates are contracting parties or, (2) where the rule of private international law leads to an application of laws of a contracting state. Therefore my advice to the attorney general is that legal code on international sale law should be based on the United Nation Convention on Contracts for the International sale (Felemegas 2007). Contract is refers to an agreement between two people or more which gives rise to rights and duties and which are legally binding between the contracting parties. CIGS paves way for uniformity of contracts between the buyer and the seller from different parts of the world, thus helps to eliminate any sort of doubt and misunderstanding which may arise as the courts tries to solve this issues. It basically uses two manifestation of assent, this are: offer and acceptance- as the essential elements of a contract. Majority of the contracts involving the international transaction (UNCIGS) helps to identify an offer and acceptance, principally because it is able to eliminate any uncertainties in the parties. The international sales law should be based under the Unconventional contracts for international sale since majority of the countries if not all are party to CIGS. CIGS helps to eliminate conflicts of laws between different states. For instance let us consider the case of Filanto SpA v Chilewich Int’l Corp. Filanto SpA v Chilewich Int’l Corp Russian and US enterprise entered into an agreement for the sale of footwear. The agreement had a clause which required disputes to be arbitrated in Moscow. In order to fulfill the terms and condition of the agreement, the US buyer entered into a binding multiple contract with an Italian supplier of footwear. Under the contract between the Italian and the US, was that the Italian seller distributed shoes to the US buyer, but the buyer made partial payment. The seller (Italian) sued the buyer (US) in US federal courts in order to recover the price. Arguing out that the contract incorporated an agreement containing the arbitration clause, but the US buyer wanted the hearing to be made in Moscow. The courts held that CIGS was the applicable law to be used since both parties to the contract come from different states which they were signatories to the existing convention (Moens 2005). Offer and acceptance An offer refers to the promise which when accepted it establishes a binding agreement between the parties to the contract i.e. the seller and the buyer. It is something which is done by one party to the contract which the law deduces it as an intension to enter into a binding contract with the other party. Under Article 14 (2) of CIGS, it distinguishes between an offer, invitation to treat and declaration of intension. UNCIGS establishes a concrete requirement for sale of contracts. Invitations to treat are not offers, but just an invitation made by the seller to the buyer in order to make bids or request. Examples of cases that show the notion of invitation to treat are in the case of Fishers vs. Bell and Pharmaceutical Society of Great Britain vs. Boots cash chemist. UNCIGS establishes a real requirement between the buyer and the seller when they wish to be bound in a contract of sale (Lookofsky 2008). Offer must clearly indicate the number of goods to be sold, make provision for establishing the quantity as well as fixes its prices. It would therefore be ideal for the attorney General to enact a code on international sales law based on the United Nation Convention on Contract for the International Sale. It provides special circumstances of how special matters should be dealt with, for instance in the case of trust and urgency. Therefore the UNCIGS will help different states to have a common law or uniform law. This will ultimately help member states that is judges, to apply similar ruling while handling similar matter in court, thus enhance the rule of equity (Maggi 2004) Fishers vs. Bell The accused was prosecuted for contravening an act of parliament which criminalized the conduct of offering to sell a weapon. The accused had displayed a flicker knife on his window shop with a price tag on it. The prosecutor contended that it was an offer to sell the weapon. The court however, held that the accused was not guilty because the display was not an offer but merely an invitation to treat (Schlechtriem and Butler 2008). .Pharmaceutical Society of Great Britain vs. Boots cash chemist A health service chemist had varieties of drugs on sale come which could be sold under the authority of a qualified physician in accordance with the relevant act of parliament. The Pharmaceutical Society of Great Britain claimed that placing drugs on the shelf was offering to sell without the required supervision therefore contravening the statute. It was held that placing drugs on shelves in a self service shop is only an invitation to treat but not an offer and that the customer who picks the drugs from the shelves and presenting it to the cashier where a qualified physician was available (Klotz 2008). On the other hand, a declaration of intension is not an offer. It refers to a statement made by a person regarding the future course of action; this however does not amount to an offer. I will consider the case of Harris vs. Nickerson. Harris vs. Nickerson N (Nickerson) an auctioneer declared in an advert that there will be a sale of office furniture. H (Harris) a prospective buyer travelled all the way in order to attend the auction. In the meanwhile, N cancelled the auction. H sued N for loss of time as well as travelling expenses. The court held that N was not bound to sell the office furniture because the advertisement was not an offer but a mere declaration of intension. A buyer refers to that person who usually makes an offer by requesting and the auctioneer usually accepts it at the fall of the hammer. Acceptance of an offer Acceptance must be communicated. It may be defined as the willingness of the offeree to enter into a contract of sale of goods. Acceptance of an offer must be communicated in the manner prescribed by him and it is effective once it has reached the offeror knowledge. Under this, i will consider the case of Household Fire insurance vs. Grants and Adam vs. Lindsell. In German code, there is a difference between an acceptance sent late and that which has been received on time. Therefore my advice to the attorney general is to establish a code of international sales law under UNCIGS so that it can eliminate difference between states while handing matter (Gillies and Moens 1998). Household Fire insurance vs. Grants G applied to purchase shares in a company. The offer was accepted by the company. The company secretary posted an allotted share later to him. Unfortunately the letter never reached G. it was held that the contract was complete the moment the letter was posted and G was liable to pay for those allotted shares. Adam vs. Lindsell The case dealt with sale of wool. On 2nd September, the defendant wrote a letter to the plaintiff offering to sell the wool and required an answer through post. The defendant misdirected the letter such that it reached the plaintiff on 5th of September. The plaintiff hurriedly posted their acceptance which was received on 9th of September. Since the defendant did not receive acceptance by 7th of September, he sold the wool t someone else. The defendant argued out that there was no legal contract since the letter of acceptance was received so late. The court held that was actually impossible to complete a contract through post. Therefore the defendant was not liable. Breach of the contract The fundamental breach of the contract plays a major role in United National Convection on Contracts for international sale of goods (UNCISG). This is where the goods delivered do not conform to the terms of the contract. United National Convection on Contracts for international sale of goods (CISG) limits avoidable contracts through fixing additional time (DiMatteo 2009). It protects the breaching party from unforeseeable consequences and it also ensures that the injured party has fulfilled his/her duty under the contract. The injured party to the contract must prove that he/she has suffered legal damages. CISG provides circumstance under which the sale of good will amount to a breach; this includes if the seller fails to insure the goods on transits, where he/she was required to do so this act will amount to breach of contract (DiMatteo 2005). If one party to the contract has breached the contract, this contract will be terminated. Under CISG termination may take the following forms; termination by agreement, waiver etc. termination by agreement occurs where the mutual agreement is terminated by waiver and novation. Novation is where the party to the contract enters into a new agreement, the new agreement terminate the old agreement. For instance, A owes B some money; parties agree that D should take over the rights of B and become the new creditor (WINSHIP 1999). CISG provides remedy for a breach of contract to both the seller and the buyer. If the buyer has breached the terms of the contract, the following remedies will be advocated under the CISG- specific performance, damages, avoidance and price reduction. Different countries have different ways on which they handle matters that deals with international sale. From the term international, it means that the countries is willing to transact with more than one country state, therefore if the attorney general establishes the code under the domestic law, then many countries are likely not to enter into such contracts (Law 2008). Conclusion United National Convection on Contracts for international sale of goods (CISG) is the appropriate law which the attorney general of Cantabria may enact a code on the international sales law. Since the international sale will involve many country states, but not just the domestic state of Cantabria, it would then be appropriate to develop the code under the United National Convection on Contracts for international sale of goods (CISG). This will help promote certainty of the law between states that are to enter into a contract. References DiMatteo, Larry A. International sales law: a critical analysis of CISG jurisprudence. London: Cambridge University Press, 2005. DiMatteo, Larry A, Law of international contracting. UK: Kluwer Law International, 2009. Felemegas, John. An international approach to the interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as uniform sales law. United Kingdom: Cambridge University Press, 2007. Flechtner, Harry M. Uniform law for international sales under the 1980 United Nations convention. United Kingdom: Kluwer Law International, 2007. Fritz, Enderlein, and Maskow Dietrich. International sales law: United Nations Convention on Contracts for the International Sale of Goods : Convention on the Limitation Period in the International Sale of Goods : commentary. UK: Oceana, 1992. Gillies, Peter, and Gabriël Moens. International trade and business: law, policy and ethics. London: Routledge, 1998. John, Honnol,, and Flechtner Harry. Uniform law for international sales under the 1980 United Nations convention. UK: Kluwer Law International, 2009. Klotz, James M. International sales agreements: an annotated drafting and negotiating guide. UK: Kluwer Law International, 2008. Kruisinga, Sonja. (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept? United Kingdom: Intersentia nv, 2004. 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Review of the Convention on Contracts for the International Sale of Goods (CISG): 2005-2006. 2007: sellier. european law publ, New York. Schlechtriem, Peter, and Petra Butler. UN law on international sales: the UN Convention on the International Sale of Goods. UK: Springer, 2008. Schwenzer, Ingeborg H., and Christiana Fountoulakis. International sales law. New York: Taylor & Francis, 2007. WINSHIP, SPANOGLE. International Sales Law. New York: Sweet & Maxwell, Limited,, 1999. Read More