global sales law
DESCRIPTION
Global Sales Law. Prof. Dr. Ingeborg Schwenzer University of Basel Switzerland. Introduction. Development of global trade 2010: 9,5% increase (WTO) 2000-2008: average annual growth 5% Focus: China, Brazil, Russia, Africa 2007/08: Africa annual growth: exports: 18/28%, imports: 23/27% - PowerPoint PPT PresentationTRANSCRIPT
Global Sales Law
Prof. Dr. Ingeborg Schwenzer
University of Basel
Switzerland
Introduction
• Development of global trade• 2010: 9,5% increase (WTO)• 2000-2008: average annual growth 5%• Focus: China, Brazil, Russia, Africa• 2007/08: Africa annual growth: exports: 18/28%,
imports: 23/27%• Different laws = obstacle to trade
Introduction
• Different sets of sales law• Domestic: SGA, CC, others• Regional: OHADA Uniform Act on General
Commercial Law (UAGCL), general contract law
• Global: UN Convention on Contracts for the International Sale of Goods (CISG), UNIDROIT Principles of International Commercial Contracts
Introduction
• History of Unification of sales law• 1920s: Ernst Rabel• 1960s: Hague Conventions ULIS/ULF• 1980: Vienna Conference CISG• 1988: Entering into force• 2011: 76 member states covering 80% of world
trade• Africa: 9 member states, only two OHADA states
Introduction
• Structure of the CISG
• Part I: Sphere of application
• Part II: Formation of the contract
• Part III: Substantive rules for the sale of goods, incl. duties of the parties, remedies, risk of loss
• Part IV: Final provisions – international public law
Part I: Sphere of application
• Application and ambit of CISG (Art. 1-6)• CISG itself determines ist applicability• Art. 1(1) CISG: different states (Art. 10 CISG)• Art. 1(1)(a) CISG: both states are member states• Art. 1(1)(b) CISG: rules of private international
law lead to member state• Example China – Cameroon• Application by arbitral tribunals
Part I: Sphere of application
• Party autonomy Art. 6 CISG
• Opting out in whole or in part
• Choice of domestic law, f.e. Swiss law
• Litigating under the wrong law
Part I: Sphere of application
• Ambit of the CISG
• Sale of goods contracts
• Barter contracts, back-to-back-sale
• Distribution agreements
• Art. 3 CISG: work and labour, services
• Art. 3(1) CISG: manufacture of goods
• Art. 3(2) CISG: mixed contracts (factory)
Part I: Sphere of application
• Ambit of the CISG• Goods: factory, machine, food, shoes,
clothes, cars, circus elephant• Documents representing the goods• Art. 2 CISG exceptions• Art. 2(a) CISG: consumer sales• Art. 2(b)(c) CISG: auctions, bancruptcy• Art. 2(d)(e)(f) CISG: certain goods
Part I: Sphere of application
• Substantive ambit
• Art. 4 CISG: Formation, rights and obligations of parties
• Art. 4(a) CISG: validity questions
• Public policy, mandatory rules, capacity of the parties, fraud, mistake?
• Art. 4(b) CISG: transfer of title, retention of title, bona fide purchase
Part I: Sphere of application
• Substantive ambit
• Art. 5 CISG: Compensation for personal injury and death
• Compensation for damage to property
• Limits of the CISG (external gaps)
• Agency, assignment, transfer of debts, joint debtors, limitation of actions, set-off?
• Form requirements: Art. 11 CISG
Part I: Sphere of application
• Art. 7 CISG: Interpretation of the CISG
• Art. 7(1) CISG: international character, promotion of uniformity, good faith
• Art. 7(2) CISG: gap-filling
• General principles of CISG (party autonomy, burden of proof, stamdard of proof, set-off)
• PICC?
Part I: Sphere of application
• Art. 8 CISG: Interpretation of party statements and conduct
• Art. 8(1) CISG: true intention of parties
• Art. 8(2) CISG: reasonable person
• Art. 8(3) CISG: circumstances to be considered
• Art. 9(1) CISG: usages and practices
• Art. 9(2) CISG: international usages
Part I: Sphere of application
• Art. 11 CISG: freedom of form
• Formation, Art. 29(1): modification
• Excluded: procedural requirements, pariol evidence rule, consideration, cause, statute of frauds
• Art. 12 CISG: reservation
• Agreed form, Art. 13 CISG: writing
• Art. 29(2) CISG: modification
Part II: Formation of the contract
• General remarks
• Art. 14 et seq. CISG antiquated
• Offer-acceptance mechanism
• e-commerce, UNCITRAL Concention 2004
• Standard terms: incorporation – validity
• Pre-contractual duties
• Breaking off negotiations
Part II: Formation of the contract
• Offer
• Art. 14 CISG: criteria for an offer
• Art. 14(1) CISG: definiteness (pretium certum – Art. 55 CISG), intention to be bound (invitatio ad offerendum)
• Art. 14(2) CISG: public offer (advertisements, websites)
Part II: Formation of the contract
• Offer• Art. 15(1) CISG: effective upon reaching
the offeree• Art. 15(2) CISG: withdrawal of offer• Art. 16 CISG: revocability of offer• Art. 16(1): Common Law starting point• Art. 16(2): restrictions on revocability• Art. 17 CISG: termination of offer
Part II: Formation of the contract
• Acceptance (Art. 18-22 CISG)
• Art. 18(1): acceptance by declaration
• Statement or conduct (delivery, payment)
• Acceptance by silence
• Effectiveness of acceptance: Art. 18(2 s.1): reaching, Art. 18(3): performance of act
Part II: Formation of the contract
• Acceptance (Art. 18-22 CISG)• Deadline for acceptance (Art. 18(2) CISG)• Art. 20 CISG: calculating the period of time• Art. 21 CISG: when late acceptance may
be effective• Divergence between offer and acceptance• Art. 19(1): rejection and counter-offer• Art. 19(2)(3): insignificant modifications
Part II: Formation of the contract
• Battle of forms
• Practical importance
• Possible solutions: last shot doctrine, knock-out doctrine
• Commercial letter of confirmation (acceptance by silence?)
Part II: Formation of the contract
• Effectiveness of statements
• Importance of statement reaching the other party, Art. 23: conclusion of contract
• Art. 24: when does statement reach the other party?
• e-commerce, standard terms (making available, transparency)
• Art. 29: modification of contract
Part III/1: Substantive Rules - General
• Content of Part III: General, obligations of seller, obligations of buyer, passing of risk, common provisions
• Basic remedies• Specific performance (Art. 28 CISG)• Right to withhold performance• Damages• Avoidance of contract, Art. 25:
fundamental breach
Part III/1: Substantive Rules - General
• Art. 26 CISG: declaration of avoidance
• Art. 27 CISG: dispatch principle – transmission risk
• Other notices (non-conformity
Part III/1: Substantive Rules - General
• Art. 25 CISG: fundamental breach• Fundamentality: effect on creditor• Foreseeability• In case of non-performance: impossibility,
delay – time of the essence, ancillary duties
• Non-conformity of the goods: purpose of the contract, repairable defect, time of the essence
Part III/1: Substantive Rules - General
• Art. 25 CISG: fundamental breach
• Breach of buyer‘s obligations
• Payment, repudiation, insolvency
• Taking delivery
• Art. 28 CISG: Specific performance
• Common law – Civil law
Part III/2: Substantive Rules – Seller‘s obligations
• Overview Art. 30-44 CISG
• Cornerstone of any sales law
• Art. 30-35: delivery, conformity
• Art. 37-40: non-conforming goods
• Art. 41-43: third party rights
• Art. 44: buyer‘s excuse for not giving notice
Part III/2: Substantive Rules – Seller‘s obligations
• Seller‘s duty to deliver• Art. 30 CISG: delivery, documents,
transfer of title• Art. 31 CISG: place of delivery• Primarily party agreement• Incoterms 2010: EXW (ex works), FCA
(free carrier)/FOB (free on board), CIF (cost, insurance, freight), DAP (delivered at place)
Part III/2: Substantive Rules – Seller‘s obligations
• Seller‘s duty to deliver• Subsidiary rules• Art. 31(a): carriage of goods• Art. 31(b): goods at specific place• Art. 31(c): seller‘s place of business• Making available• Art. 32: obligations during transport• Jurisdiction at place of delivery
Part III/2: Substantive Rules – Seller‘s obligations
• Seller‘s duty to deliver
• Art. 33: time of delivery: primarily party agreement
• Art. 33(a): fixed date
• Art. 33(b): fixed period of time
• Art. 33(c): reasonable time after conclusion of contract
• Art. 52(1): early delivery by seller
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 34: handing over of documents
• Documents of title
• Other documents
• Place and time of handing over of documents
• Right to cure in case of early delivery
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 35 CISG: conformity of the goods• Most important provisions of CISG• CISG key concept: quality, quantity, aliud
packaging treated alike• Domestic approaches: warranties/
conditions (SGA), express/implied warranties (UCC), vices cachés (CC), peius/aliud (CC, Germanic systems), partial non-delivery, ancillary duties
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 35 CISG: conformity of the goods• Art. 35(1): primarily party agreement• Quantity: trade usages• Quality: features of goods, origin, manufacturing
practices, ethical standards• Dicrepancies in nature: aliud• Packaging• Additional duties: services, non-competition
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 35 CISG: conformity of the goods
• Art. 35(2): objective criteria to determine conformity
• Art. 35(2)(a): fitness for ordinary purpose
• Commercial purposes, resalability, average quality?
• Public law requirements, regional v. global players
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 35 CISG: conformity of the goods• Art. 35(2)(b): fitness for particular purpose• Purpose made known to seller• Buyer reasonably relying on seller‘s skill
and judgement• Art. 35(2)(c): sample or model• Art. 35(2)(d): adequate packaging• Art. 35(3): buyer‘s knowledge
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 36: determinative time for conformity
• Art. 36(1): passing of risk
• Burden of proof
• Art. 36(2): after risk has passed: breach of obligation, guarantee
• Durability in general
• Art. 37: seller‘s right to cure non-conformity
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 38, 39: Examination and notice
• Comparative overview: SGA, CC, UCC, Germanic systems
• Drafting history
• Art. 38: Examination
• Method of examination
• Period for examination: general, carriage of goods, redirection or redispatch
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 39: notice
• Specificity of notice
• Form and transmission risk
• Reasonable time: nature of goods, „noble month“
• Beginning of period
• Art. 39(2): two year cut-off period
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 40: seller‘s knowledge
• Consequences of failure to give notice
• General – Art. 44: reasonable excuse
• Limitation periods
• UN Convention on Limitation period: 4 years
• Domestic rules vary from 6 months to 6 years, compatability with Art. 39(2)
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 41, 42: defects in title and intellectual property rights
• Distinction unknown to most countries
• Art. 41: defects in title
• Third party rights (property, encumbrances)
• Third party claims
• Public law encumbrances
Part III/2: Substantive Rules – Seller‘s obligations
• Art. 42: third party industrial or intellectual property rights
• Third party rights or claims
• Art. 42(1)(a)(b): territorial restriction
• Seller‘s knowledge
• Art. 42(2): exclusion of seller‘s liability
• Art. 43: notice requirement
Part III/3: Substantive Rules – Buyer‘s remedies in case of breach• Art. 45-52 CISG: buyer‘s remedies
• Unified approach: breach of contract
• Some special rules: non-conformity
• Art. 45: overview of buyer‘s remedies
• Concurrent domestic remedies: contract law (mistake), tort law (culpa in contrahendo, negligent misrepresentation)
Part III/3: Substantive Rules – Buyer‘s remedies in case of breach• Art. 48 CISG: seller‘s right to cure• Distinguish Art. 37• Relationship to buyer‘s right to avoid the
contract• Setting time limits• Art. 47: buyer fixing additional time for
performance• Art. 48(2)(3): seller requesting additional
time
Part III/3: Substantive Rules – Buyer‘s remedies in case of breach• Art. 46, 47 CISG: right of performance and
substitute performance• Art. 46(1): right to specific performance
subject to Art. 28 and Art. 79• Art. 46(2): restriction on right to substitute
goods in case of non-conformity (fundamental breach)
• Art. 46(3): restriction on right to repair in case of non-conformity
Part III/3: Substantive Rules – Buyer‘s remedies in case of breach• Art. 49: Avoidance of contract
• Art. 49(1)(a): fundamental breach
• Art. 49(1)(b): „Nachfrist“-principle (additional period in case of non-delivery and breach of additional obligations)
• Art. 49(2): restriction in case of delivery of goods
• Avoidance by declaration
Part III/3: Substantive Rules – Buyer‘s remedies in case of breach• Part performance and delivery of partly
non-conforming goods
• Art. 51 and Art. 73 CISG
• Art. 51(1), 73(1): principle: partial avoidance only
• Art. 51(2), 73(3): avoidance of the whole contract in case of fundamental breach
• Art. 72: Anticipated breach of contract
Part III/3: Substantive Rules – Buyer‘s remedies in case of breach• Art. 50 CISG: reduction of purchase price• Roman law descent• Difference to damages: calculation, Art. 79 not
applicable• Art. 45(1)(b), 74 et seq.: damages• Right to withhold performance, general principle• Art. 71: right to suspend performance• Right to reject the goods (perfect tender rule?)• Art. 52(2): rejection of excessive quantity
Part III/4: Substantive Rules – Buyer‘s obligations
• Art. 53 CISG: payment, taking delivery
• Art. 54-59: payment of purchase price
• Art. 54: encompasses all arrangements, form of payment, letter of credit, compliance with public law regulations etc.
• Currency: agreement, place of seller
• Art. 57(1): place of payment
• Jurisdiction?
Part III/4: Substantive Rules – Buyer‘s obligations
• Art. 58: time of payment• Agreement • Art. 58(1)(2): subsidiarily: step by step-
performance• Art. 58(3): reasonable opportunity to inspect the
goods• Art. 60 CISG: duty to take delivery• Necessary preparatory steps, taking over• Offer of non-conforming goods
Part III/4: Substantive Rules – Buyer‘s obligations
• Art. 66-70 CISG: passing of risk
• Art. 66: payment obligation if seller performed all of its obligations, even if goods destroyed or damaged
• Which events are covered? Acts of states?
• Exception: loss or damage due to seller
• Primarily: agreement of parties (practice)
• Incoterms – who must insure the goods?
Part III/4: Substantive Rules – Buyer‘s obligations
• Art. 66-70 CISG: passing of risk• Art. 67(1): handing over to first carrier, retention
of documents irrelevant• Art. 67(2): generic goods must be identified to
contract• Goods sold in transit: unclear when goods were
destroyed• Art. 68: conclusion of contract. Dating back to
handing over in case of insurance (contract valid)
Part III/4: Substantive Rules – Buyer‘s obligations
• Art. 69: catch all provision
• Art. 69(1): goods at seller‘s place of business: taking over of goods or failing to take delivery
• Art. 69(2): other places of delivery (incl. buyer‘s place of business): when delivery is due, notification of buyer, identification to contract
Part III/5: Substantive Rules – Seller‘s remedies in case of breach• Art. 61 CISG: overview of seller‘s
remedies• Art. 61(3): no period of grace as CC• Art. 62: payment of purchase price, Art. 28
applicable• Can Art. 77 be applied to specific
performance of purchase price? Disputed.• Art. 62: taking delivery and other duties• Art. 63: fixing additional period of time
Part III/5: Substantive Rules – Seller‘s remedies in case of breach• Art. 64: avoidance of contract
• Art. 64(1)(a): fundamental breach
• Art. 64(1)(b): lapse of „Nachfrist“
• Fundamentalility of breach very rare: discuss non-payment, taking delivery, other duties
• Art. 64(2): restriction where price has been paid in the meantime (price main interest)
Part III/5: Substantive Rules – Seller‘s remedies in case of breach• Art. 61(1)(b), 74: damages
• Rights of retention: Art. 58(1): step-by-step-principle, Art. 71(1): if seller must perform first, Art. 71(2): right of stoppage in transitu (does not apply against carrier)
• Specification by the seller, Art. 65
• Notice to buyer necessary
• Art. 65 applicable to other duties?
Part III/6: Substantive Rules – Common provisions
• Art. 71: right to suspend performance and stoppage
• Art. 71(1)(a): deficiency in ability to perform (f.e. political situation, natural disaster), creditworthiness (buyer or seller)
• Art. 71(1)(b): debtor‘s conduct• Relevant time: after AND before
conclusion of the contract (becomes apparent), domestic remedies for mistake
Part III/6: Substantive Rules – Common provisions
• Art. 71: right to suspend performance and stoppage
• Evidential threshold: reasonable person• Weight of anticipated breach: „substantial part“
less than fundamental breach• „suspension“ of performance as well as
preparatory steps• Art. 71(2): right of stoppage• Art. 71(3): duty to give notice, adequate
assurance of performance
Part III/6: Substantive Rules – Common provisions
• Art. 71: right to suspend performance and stoppage
• End of in-between-state: Art. 72: no adequate assurance of performance, fundamental breach threatening
• Art. 72: anticipatory breach
• Art. 72(1): prior to date of performance, fundamental breach, „clear“
Part III/6: Substantive Rules – Common provisions
• Art. 72: anticipatory breach
• Repudiation by one party, demanding price adjustment, factual circumstances
• Art. 72(2)(3): possibility to give adequate assurance of performance, reasonable notice
• Duty to avoid contract before date of performance, Art. 77?
Part III/6: Substantive Rules – Common provisions
• Art. 73: installment contracts• Faulty performance of one installment (non-
delivery, late delivery, non-conformity)• Art. 73(1): partial avoidance only if fundamental• Art. 73(2): future installments, anticipatory
breach, lower threashold than Art. 72• Art. 73(3): retrospective avoidance• Other remedies? Damages, price reduction
Part III/7: Substantive Rules – Damages
• Responsibility and discharge• Any breach of obligation• No fault requirement – strict liability• Exemption under Art. 79, 80• Art. 79(1): impediment beyond control, not
foreseeable, not avoidable• Covers all contractual duties• Subsequent and initial impediments
Part III/7: Substantive Rules – Damages
• Typically: force majeure situations• Hardship? Threshold, consequences (duty
to renegotiate?)• Non-conformity of goods. Exemption rare• Liability for own employees: Art. 79(1)• Liability for third persons: Art. 79(2)• Passing impediment: Art. 79(3)• Art. 79(4): duty to give notice
Part III/7: Substantive Rules – Damages
• Art. 79(5): other remedies: withholding performance, avoidance, reduction of price, specific performance?
• Art. 80: creditor causing failure to perform
• All remedies excluded
• Causation by both parties (…to the extent)
• Apportionment of damages, avoidance?
Part III/7: Substantive Rules – Damages
• Extent of damages claim, Art. 74• Principle of full compensation• All losses, causation required• Non-performance loss, incl. Loss of use, costs of
repair• Incidental loss, additional costs etc. Legal costs?• Consequential loss, f.e. penalty, liability, damage
to property• Loss of profit
Part III/7: Substantive Rules – Damages
• Pecuniary (loss of reputation, loss of a chance) v. non-pecuniary loss (pain and suffering, loss of amenities)
• Calculation of loss• Concrete and abstract calculation• Art. 75: concrete: cover purchase• Art. 76: abstract: market-price-rule• Abstract calculation of other losses, esp.
loss of use?
Part III/7: Substantive Rules – Damages
• Betterment
• Disgorgement of profits (performance principle)
• Art. 74: foreseeability rule (contemplation rule)
• Standard: „possible consequence“
• Examples: non-performance loss, incidental loss, consequential loss
Part III/7: Substantive Rules – Damages
• Contractual stipulations on liability• Freedom of contract, Art. 6• Agreed sums (liquidated damages, penalties)• Limitations of liability – validity Art. 4(a)• Art. 77: duty to mitigate• Scope: damagess, other remedies?• Examples, substitute transactions• Consequences of breach
Part III/8: Substantive Rules – Interest
• Art. 78: price or any sum in arrears
• Highly controversial, Islamic countries
• Preconditions: sum due
• Interest rate: CISG itself? PICC? Domestic law?
• Full compensation -> interest rate at creditor‘s place, currency of payment
• Compound interest?
Part III/9: Substantive Rules – Effects of Avoidance
• Art. 81(1): release from primary obligations, arbitration clauses not affected
• Art. 81(2): restitution of what has been performed, concurrently
• Art. 82(1): impossibility of restitution = bar to avoidance or substitute delivery (antiquated rule, better: damages)
• Art. 82(2): cases excluded: other than buyer‘s conduct, examination, normal use
Part III/9: Substantive Rules – Effects of Avoidance
• Restitution: nature of claim? Effect of avoidance on property. CISG: contract remains intact (Art. 81(1) CISG)
• If goods are damaged after avoidance -> damages (Art. 74)
• Art. 84(1): interest on purchase price• Art. 84(2): benefits from goods,
surrogates, fruits, use (no abstract calculation)
Part III/10: Substantive Rules – Preservation of goods
• Breach of contract: problem: fate of the goods? Examples
• Art. 85: seller‘s duty if buyer does not take delivery
• Art. 86: buyer‘s duty if it rejects the goods• Art. 86(2): duty to take possession• Reasonable preservation measures,
depend on nature of goods• Art. 87: storage in a warehouse
Part III/10: Substantive Rules – Preservation of goods
• Art. 88: self-help sale
• Art. 88(1): normal self-help sale („may), notice required
• Art. 88(2): emergency sale, perishable goods („must“), possible notice
• Art. 88(3): proceeds: set-off against costs, account for balance