Beruflich Dokumente
Kultur Dokumente
Understand the framework of obliga/ons on the B and S in the CISG Understand the framework of remedies under the CISG Understand the concept of fundamental breach
Readings Ar/cles 25 88 CISG Prepara/on GePng to know Incoterms exercise GePng to know contractual terms exercise Problem Ques/ons Three scenarios from the ppt slides on when the CISG applies 2 (Sterling Industries) 3 (Williams and Nguyen)
2. When
does
property
pass
under
an
interna/onal
contract
for
sale
of
goods?
3. What
are
the
B
and
S
obliga/ons
under
the
CISG?
4. Remedies
under
the
CISG
5. When
is
there
a
fundamental
breach
of
contract?
6. Ar/cle
79
and
Force
Majeure
7. What
if
the
CISG
doesnt
apply?
Australian
provisions
of
law
(FYI)
Nicola
Charwat
2013
1. Recap
25/08/13
B.
Recap:
Incoterms
Standard
delivery
terms
Express
delivery
terms:
ie.
Par/es
must
expressly
include
an
incoterm
in
their
contract
otherwise
they
have
no
applica/on
Under
each
incoterm
the
delivery
process
is
divided
into
ten
subparts.
Each
part
makes
clear
the
responsibili/es
of
the
B
and
S
Commonly
used
in
intnl
trade:
especially
F-terms
and
C- terms
We
are
especially
interested
in
the
point
of
delivery/risk
passing
Risk
passing
is
not
a
ques/on
of
fault
(ie
who
is
to
blame
for
loss/damage
to
goods),
but
fact
(ie.
Have
the
goods
passed
the
point
where
the
risk
passes
to
B?)
Nicola
Charwat
2013
The 11 Incoterms
11
dierent
Incoterms
which
detail
dierent
delivery
obliga/ons
of
the
buyer
(B)
and
seller
(S)
EXW
ExWorks
FCA
Free
Carrier
FAS
Free
Alongside
Ship
*
FOB
Free
on
Board
*
CFR
Cost
and
Freight
*
CIF
Cost,
Insurance
and
Freight
*
CPT
Carriage
paid
to
CIP
Carriage
and
Insurance
Paid
to
DAT
Delivered
at
Terminal
DAP
Delivered
at
Place
DDP
Delivered
Duty
Paid
Most favourable to buyer
[*
indicates
incoterm
is
appropriate
for
waterway
only]
Nicola
Charwat,
Monash
University
2012
Class
Exercise
Back
to
scenario
from
slide
3,
week
4:
Victorian
Fruit
Exporters
and
Fiji
General
Stores
You
should
have
completed
the
Incoterms
2010
Quick
Reference
Table
For
each
Incoterm
you
should
have
iden/ed
When
delivery
is
complete
Where
the
risk
passes
Who
must
organise
and
pay
for
main
carriage
If
the
par/es
used
the
FOB
Incoterm,
how
would
you
resolve
the
issues
raised
in:
Scenario
A
Who
is
responsible
for
obtaining
export
clearances
for
carriage
from
Australia
to
Fiji?
Scenario
B
Who
carries
the
risk
for
the
goods
en
route?
Does
the
arrival
of
damaged
apples
cons/tute
a
breach
of
K
by
the
Seller?
Does
the
B
have
to
pay
the
S
for
the
apples
even
though
they
have
arrived
damaged?
Nicola
Charwat,
Monash
University
2012
Inten/on
to
create
legal
rela/ons/to
be
legally
bound
Considera/on
Capacity/
Legality
Does
a
contract
have
to
be
in
wri/ng?
Can
a
contract
be
modied?
Things
that
should
not
be
present:
undue
inuence,
fraud,
misrepresenta/on,
duress
Nicola
Charwat,
Monash
University
2012
What is acceptance? When is it eec/ve? Are there any restric/ons as to form? Can silence be acceptance?
CISG provisions on contract forma/on are not iden/cal to those found in Australian common law Class Exercise Four: Ge.ng to Know Sales of Goods Contracts under the CISG
In
the
right
hand
column
iden/fy
the
relevant
ar/cle
number
in
the
CISG
and,
where
necessary
make
a
brief
note
of
how
the
CISG
provision
diers
from
the
rules
of
common
law
Most
of
the
provisions
relevant
to
contract
forma/on
are
found
in
Ar/cles
14-24,
but
you
will
have
to
look
further
aeld
for
the
last
two
This
exercise
should
help
you
prepare
Problem
QuesDon
3
(Williams
and
Nugyen)
Nicola
Charwat,
Monash
University
2012
25/08/13
What
is
the
governing
law
of
the
contract
of
sale
between
Williams
and
Li?
Is
there
a
contract?
If
so,
what
are
the
terms
of
their
contract?
Does
the
CISG
apply
to
their
contract?
Under
the
terms
of
the
contract,
is
Williams
responsible
for
payment
of
the
tax?
Is
this
a
breach
of
contract
by
Li?
Nicola
Charwat
2013
Nicola
Charwat
2013
In law the passing of property (ownership) does not necessarily pass with physical possession
Eg. I lend you my stereo. Do you own it once you have it?
When does ownership pass in an international contract for the sale of goods?
On delivery? On possession? On payment?
2. Default provisions in the CISG? NO 3. Default provisions in domestic law? Goods Act (Vic)
The law will deem the property to pass when the parties intend it to Ss. 22-23 Goods Act. Usually in international contracts, the parties are deemed to intend the property to pass when the goods are delivered (ie. Most often, when they are handed over to a carrier at the port of departure or even before).
Nicola
Charwat
2013
Deliver
goods
free
from
any
third
party
rights
To
deliver
goods
in
conformity
with
the
contract
Nicola
Charwat
2013
25/08/13
Art 58
Art 38
S
can
not
rely
on
Bs
breach
of
Arts
38
or
39
if
it
knew
of
the
non-conformity
when
delivered
the
goods
(Art
40)
If
B
can
show
reasonable
excuse
as
to
why
the
goods
were
not
inspected/no/ce
not
provided
in
reasonable
/me,
then
may
s/ll
be
able
to
claim
damages
Nicola
Charwat
2013
20
FUNDAMENTAL BREACH
NON-FUNDAMENTAL
Availability of remedies reect an aim of the CISG, which is to preserve the contract Consider the costs and inconvenience of terminated contracts and returns of goods Therefore, the remedies available depend on the nature and seriousness of the breach
Avoid the Contract (Arts 49 and 64) Avoiding the contract is also available for anticipatory fundamental breach (72-73) Demand replacement goods (Art 46(2)
2. Correc/ve
remedies
and
damages
are
available
for
ANY
breach
(ie.
Fundamental
or
non-fundamental)
Nicola
Charwat
2013
23
Corrective Remedies: include Replacement goods (46(3) B can reduce price (50) More time (47 & 63) Require performance (46 (1)) S has right to make up shortcomings of an early delivery (37) S can complete specs of an order (65) S may make up/remedy/ repair order (48) S or B can suspend the contract in some circs (71)
Nicola
Charwat
2013
25/08/13
Note: If B Avoids Contract or Demands Replacement Goods where there is FB, B must make res/tu/on of non- conforming goods (Art 82)
Damages
Damages
under
ArDcle
74
are
always
available
for
a
fundamental
or
non-fundamental
breach
Ar/cle
74
An
injured
party
is
en/tled
to
damages
for
the
amount
equal
to
a
partys
loss
and
can
include
loss
of
prots
Damages
are
limited
to
what
is
foreseen
or
foreseeable
B
loses
the
right
to
avoid
the
contract
or
demand
subs/tute
goods
if
it
is
impossible
to
make
res/tu/on
(return)
of
the
goods
substan/ally
in
the
condi/on
the
goods
were
received.
Ie.
excess
or
damaged
goods
must
be
preserved/returned
unless
impossible
to
do
so
and
caused
not
by
Bs
act
or
omission
eg.
perished
due
to
examina/on
or
used/sold
before
non-conformity
becomes
apparent.
Damages
under
ArDcles
75
and
76
specically
provide
for
damages
associated
with
addi/onal
costs
of
purchasing
replacement/reselling
goods
where
the
contract
has
been
avoided
Regardless
of
which
ar/cle
a
party
is
claiming
damages
under,
ArDcle
77
requires
the
injured
party
to
take
measures
to
mi/gate
loss
(ie.
where
appropriate
sell
on
or
preserve
goods)
25 Nicola
Charwat
2013
26
B must preserve goods rejected for non-conformity: Art 86 S also has obliga/on to preserve goods, eg in cases where B delays in collec/ng goods: Art 85
Both
par/es
can
claim
reasonable
expenses
for
preserva/on
from
the
party
in
breach:
Art
87
If
goods
are
perishable,
the
party
in
possession
must
take
reasonable
steps
to
sell
them
Art
88
Nicola
Charwat
2013
27
To prove FB, need to focus on two tests: 1. Substantial deprivation of what a party is entitled to expect under the contract
FB is defined in reference to the consequences of the breach: substantial deprivation focuses on the degree of detriment suffered by the injured party measured against what was agreed in the contract. Considera/ons
include:
What
is
the
purpose
and
nature
of
the
goods?
Can
the
buyer
s/ll
sell
or
use
the
goods?
Were
there
any
express
s/pula/ons
in
the
contract?
Is
there
acute
economic
loss?
B
(Aus)
contracts
to
supply
petrol
with
a
sulphur
content
of
not
more
than
.60%.
B
purchases
petrol
from
S
(Kuwait)
and
species
not
more
than
.50%
sulphur
content.
Petrol
delivered
has
sulphur
content
of
.55%.
Is
there
a
FB?
Has
the
buyer
been
substan/ally
deprived
of
what
they
were
en/tled
to
expect?
If
so,
can
the
seller
claim
that
it
did
not
foresee
(nor
would
a
reasonable
seller)
that
the
consequences
of
sending
petrol
with
a
.55%
sulphur
content
would
have
caused
substan/al
depriva/on?
If the seller can show that they did not and a reasonable person would not have foreseen the consequences of their breach, then no FB. Foreseeability of the result (substantial deprivation) not the breach
Nicola
Charwat
2013
29
25/08/13
If timely delivery is a special interest of B and it was foreseeable that late delivery would substantially deprive B of benefit entitled to expect under the K, then late delivery may constitute a FB
Is time of the essence and expressed in K? Purpose of goods/nature of goods? Did B have obligation to provide the goods to a third party Eg. Order for Xmas themed pyjamas, ties, socks with last delivery date of December 5. Goods arrive December 31.
Article 49 provides B with a right to avoid the contract where S fails to deliver within additional reasonable time provided by B, and B has declared will not accept goods thereafter.
Nicola
Charwat
2013
32
Cathys
Wine
In
Sept.
2010,
Cathy
Burgundy,
a
ne
wine
merchant
in
Melbourne,
responded
to
a
brochure
sent
by
a
French
champagne
supplier,
Jacques
de
Jacques,
by
ordering
a
large
quan/ty
of
high
quality
French
champagne.
Cathy
requested
that
the
champagne
should
be
delivered
not
later
than
the
end
of
Nov.
and
agreed
to
pay
for
the
goods
by
telegraphic
transfer
of
the
funds
on
proof
of
delivery.
The
contract
of
sale
was
made
on
CIF
(Melbourne)
Incoterms
2010.
Cathy
made
the
order
in
an/cipa/on
of
the
high
demand
for
high
quality
champagne
from
her
customers
for
New
Years
Eve
celebra/ons
on
31
Dec.
The
French
supplier
shipped
the
champagne
on
the
1
Dec.
and
sent
the
bill
of
lading
to
Cathy.
On
receipt
of
the
bill
of
lading
Cathy
paid
for
the
goods.
However,
when
she
collected
the
champagne
from
the
Melbourne
port
2
weeks
later
on
its
arrival
she
discovered
that
the
cargo
consisted
of
an
inferior
quality
sparkling
wine,
which,
not
coming
from
the
Champagne
region
and
not
made
by
the
approved
mthode
champenoise
did
not
bear
the
exclusive
appella/on
contrle
label.
Cathy
was
very
disappointed.
She
knew
that
she
would
not
be
able
to
sell
this
wine
to
her
exis/ng
client
base
and
would
be
unlikely
to
secure
another
delivery
of
high
quality
champagne
from
France
to
full
her
NYE
orders.
Like
all
wine-merchants,
prots
made
over
the
New
Year
Season
make
up
a
signicant
part
of
Cathys
yearly
prots.
Advise
Cathy
of
her
rights
against
the
French
supplier.
Nicola
Charwat
2013
Court decided for the S: The late delivery did not constitute a fundamental breach
Time not of the essence/no special notice (art 49)
While delivery of defective goods constitutes a breach of contract, it may or may not constitute a fundamental breach
B must clearly show how goods are defective and must show how important the defect is to Bs interest that the Bs intended use of the goods is now not possible In this case, B needed to show that the shoes could not be sold in order to establish fundamental breach http://cisgw3.law.pace.edu/cases/940118g1.html
Nicola
Charwat
2013
33
7. Another way to avoid the contract? Force Majeure Clauses and Ar/cle 79 CISG
FM
bears
some
similarity
to
the
doctrine
of
frustra/on
in
common
law,
although
oven
seek
to
extend
it.
BEWARE:
Usually
inserted
by
and
operate
to
the
advantage
of
seller
However,
Courts
are
wary
of
permiPng
powerful
par/es
to
abuse
their
posi/on
and
will
construe
them
narrowly
Will
not
permit
a
seller
to
avoid
obliga/ons
under
a
contract
due
to
own
negligence
or
wilful
default
Nicola
Charwat
2013
36
25/08/13
Whats
an
impediment?
War,
strike,
re,
legal
change,
vola/lity
in
interna/onal
markets,
shortage
of
supply,
sore
nger?
8. If the CISG does not apply and the governing law is Australian law? Goods Act Provisions and Remedies under common law (FYI).
If the CISG does not apply, the provisions of the Goods Act 1958 (Vic) may apply
Sec/on 19 (b): Goods will be of merchantable quality and s. 19(a) t for their intended purpose Ss. 18 & 20: Goods will match the descrip/on or sample provided before sale Ss. 22 & 23: Ownership passes as intended by par/es. In interna/onal contracts: delivery to carrier. S.25: Risk of loss of or damage passes with ownership S.39: Delivery to buyers carrier is delivery to buyer
9. Summary
If
the
CISG
does
not
apply,
the
common
law
remedies
are
available
Breach
of
condi/on?
Avoid
the
contract
&
damages
Breach
of
warranty?
Damages
Nicola
Charwat
2013
39 Nicola
Charwat
2013
Summary
Read
the
provisions
of
the
CISG
-
especially
provisions
men/oned
Remember
FB
is
central
to
the
opera/on
of
the
CISG
the
range
of
remedies
available
the
aim
of
the
CISG
is
to
keep
the
K
alive
where
it
would
not
result
in
unfairness
and
substan/al
detriment
to
one
of
the
par/es
contractual
rights
NEXT WEEK,
Cover both sides of the arguments Clearly iden9fy and explain the law you are applying (ie, FOB incoterm, CISG ar/cle, provision of the contract) Apply the law to the facts show how the facts t/dont t Ensure sucient discussion of fundamental breach (where relevant) Write with a clear logical structure; use headings; underline Ar/cle numbers and Nicola Charwat 2013 case names
Topic
Two
Essen/al
Materials
Readings
include:
Ar/cles
1-3,
6A
and
10
Modied
Hague
Visby
Rules
(Schedule
1A
of
the
Carriage
of
Goods
by
Sea
Act)
(Topic
Two
Essen/al
Materials)
Problem
Ques/on
1
(Drake
and
Mallard
Exports)
Problem
Ques/on
2
(Sisco)
Nicola
Charwat
2013
42