Applicability of CCISG, SOGA - Essay Example

Commercial Law Name Institution Date Commercial Law Applicability of CCISG The United Nations Convention on Contracts for the International Sale of Goods (CCISG) is applicable to contract of sale of goods between whose business locations are within different states are contracting states (Article 1(1) (a). The CISG is also applied in case the contracting parties are within different nations and the conflict of law rules lead to the application of the law of a contracting state1. For instance, in this case, a contract between Maurice and Phillipa where Maurice is from Wellington while Phillipa is from Sydney, the contract could have a clause that arbitration will take place within Sydney under Australian law with the result that the CISG would be applied. The CISG is applicable to just commercial goods and products and not services. With some limited exclusions, the CISG is not applicable to services, domestic goods as well as auction, aircraft or intangibles and services2. In CISG, contract of sale of goods exists where the seller transfers or agrees to transfer the property within goods to the purchaser for a price; the property refers to the titles of goods and not the good itself. However, there are transactions that are excluded and the transaction between Maurice and Phillipa is one of them and therefore CISG is not applicable here. Form the above, it is evident that within a contract of sale, there is transfer of ownership and possession of goods whereas in a contract for work and labour there might be delivery of goods but the emphasis in on the exercise of skill and labour on the goods. Therefore, it follows that the United Nations Convention on Contracts for the International Sale of Goods (CCISG) is not applicable to the agreement between Maurice and Phillipa because there is a contract for work, labour and not a contract for sale of goods3. Depending on the nation, CISG can depart from the local legislation allied to the sale of goods. According to CISG, it is the duty of the seller to deliver the goods and hand over any document connected with the goods and then transfer the property in the goods according to the contract4. Likewise, the purchaser had the responsibility of taking the delivered goods and paying for them, the vendor hence has the obligation of delivering goods that are not subject to claims from any third party for breach of industrial or intellectual property rights within the State where goods are being sold. On the other hand, the purchaser had the duty of promptly examining the goods and paying for them. Accordingly, Maurice has the obligation of delivering the statue in suitable condition, handing over the related documents and transferring the property to Phillipa while Phillipa has the obligation of examining the statue and paying for it as per the agreement5. Applicability of SOGA The contract between Maurice and Phillipa is a contract to work and materials. This is a contract involving skill as well as labour and property transfer of goods like portrait by an artist. As a result, it is possible to separate the element of work from the goods because Maurice will work on the sculpture, which is contract for work, and the sculpture is the contract for sale and hence there are two contracts namely, contract for labour and contract for sale respectively6. In this case, Maurice is commissioned to work of the sculpture and the verity that materials like paint and work of art will also pass under the contract nullifies the idea of this contract being a contract for sale of goods. Greener LJ argued that the test involves establishing whether the skill is “just ancillary” or whether the contract substance is the skill and experience of the artist in constructing the picture (Robinson v Graves [1935] 1 KB 579). The merit in this case was between the one who painted the portrait and the producer of a set of dentures. The conclusion was that in painting, there is a sale of goods since the major element of that which the parties are dealing with is the chattel which will exist when such skill as might be essential to produce the portrait is applied. As a result the ruling was that this was a contract for work and labour and nor a contract for sale7. The distinction between these kinds of contract relies on the particular nature of each particular contract (Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454). In this case, the House of Lords argued that similar principles are supposed to be applied irrespective of if goods were supplied under a sale of contract or a contract for work and materials8. This has been put into effect by the Supply of Goods and Services Act 1982, which entails terms with respect to the supplied goods that in principal equal those implied into a contract for sale of goods9. In addition, the Act imposes in the supplier the obligation to apply reasonable care and skill in respect to the supplied service.10 Section 2 (1) SOGA defines contract and it follows the elements of the definition should be present and hence if there is no transfer of property, there is no sale of goods11. For a sale of contract, price is supposed to be a money consideration and in case the parties have not yet fixed the price, it follows they might not have reached an agreement and hence there is no contract. Nonetheless, in this case Maurice and Phillipa have fixed a price. A contract for sale of goods is a contract where the seller agrees to transfer to the buyer and the buyer agrees to accept form the buyer property transfer in goods. In this case, the substance of the matter was an agreement to exercise skills and hence there is no contract for the sale of goods between Maurice and Phillipa in the meaning of Section 4 of the Sale of Goods Act, 1923, but it was a contract for labour and materials12. Furthermore, the subject matter of contract of sale should be movable goods. Contracts allied to services are not contracts of sale and Maurice and Phillipa’s contract involved services and hence it is not a contract for sale of goods and it is not is within s 6(1) of the Sale of Goods Act 1923 (NSW). Finally, their agreement involved services and contract for sale of goods only involves transfer of movable goods and not services13. Passing of Property Basically, it is the ownership that is transferred. The ownership is agreed to be transferred within an agreement to sell. Property implies the general property within the goods and not just a special property14. Therefore the general property is transferred from the vendor to the purchaser. However, since this is not a contract of sale, the possession of the goods is transferred to Phillipa while the ownership rights remains with Maurice until the transaction is completely finalised. The right of property and the right of possession are different since the right of possession might be within one individual and the right of property within the other party. The facts in the case Dennat v Skinner and Collom [1948] 2 KB 164 illustrate that the seller remains in the possession of the goods and posses the rights against a purchaser who defaults15. No property within the goods is transferred to the purchaser unless and until the goods are established. Therefore, the passing of the goods will only be referred to Phillipa after the goods have been ascertained and when the transaction between Maurice and Phillipa is complete. This is founded on what Lord Mustlli referred to as “a priori common sense” which states that the purchaser cannot attain the title until when it is established to what the goods the title relates16. When the goods are specific, property passes when the parties intend the property to be passed. To establish the parties’ intent to pass the goods, consideration is given to the contract terms, the conduct of the contract parties as well as the state of affairs of the case. Property can still pass even if the payment time or delivery time has not yet arrived. Generally, the buyer cannot acquire an equitable interest within the goods until all transaction processes have been ascertained. In reference to the case Sillavan Ltd v Aliakmon Shipping Co Ltd, The Aliakmon [1986] Ac 785, Lord Brandon asserted that a vendor or a buyer might establish any equity he/she pleases by way of charge, fair assignment or any other dealing with goods’ disposition, the sale and he/she can establish such an equity as one of the terms expressed in their agreement17. As a result, the parties can agree in their agreement that the goods are to be in possession of the vendor on trust for the purchaser. The parties should have the intention of creating a trust and also the intention of limiting the freedom of the vendor to deal with the goods and the goods should be evidently indentified. In the agreement between Maurice and Phillipa, Maurice who is the seller is supposed to deliver the sculpture in the suitable state and then Phillipa will assess its state where if it is in a suitable state, the final payment will be made. Therefore, the property will not pass until Maurice fulfils all the agreed requirements and Phillipa confirms this. After Maurice carried out the work required to render the sculpture deliverable and delivers it at the agreed premises, the property will pass when Phillipa has been notified as the agreement specifies. Therefore, the property will pass when Phillipa will pay all the balance and is informed that the sculpture has been completed according to the agreed terms, where Phillipa will access the statue and evaluate compliance and then she will remove the statue to her gallery after paying the balance. In a nutshell, the passing of property will pass after Maurice has delivered the statue and Phillipa ascertains that it is in the right and agreed state and finally settles all the balance18. References Texts Andersen, Camilla, Sharing International Commercial Law across National Boundaries, (Wildy, Simmonds & Hill, 3rd ed, 2008). Kolsky Lewis, The Future of the International Sales Convention from a Common Law Perspective, (Victoria University of Wellington Law Review, 2006). Sharma Rajeev, The United Nations Convention On Contracts For The International Sale of Goods (Victoria University of Wellington Law Review, 2008). Verweyen Toufar, United Nations Convention on Contracts for the International Sale of Goods (CCISG), (Boorberg Publishing Munich, 2nd ed, 2008). Cases Dennat v Skinner and Collom [1948] 2 KB 164 Robinson v Graves [1935] 1 KB 579 Sillavan Ltd v Aliakmon Shipping Co Ltd, The Aliakmon [1986] Ac 785 Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454 Legislations Section 6(1) of the Sale of Goods Act 1923 (NSW) Section 4 of the Sale of Goods Act, 1923 Supply of Goods and Services Act 1982 Read More