THE UN CONVENTION

ON CONTRACTS FOR
THE INTERNATIONAL
SALE OF GOODS
International Law
Group Presentation

Overview

Scope of application: The convention applies only to Contracts of Sale of Goods. Cross-border sales, except
consumer contracts, application can be excluded

Rules on: formation of the contract, obligations of seller (conformity of goods!) & buyer, consequences of breach

Remedies of the buyer based on breach of contract by the seller: supplementary performance by repair or
substitute,

avoidance of the contract, reduction of the price, damages

Buyer must examine goods and notify the seller of lack of conformity in order not to lose remedies

Seller/buyer is not liable if he can prove an impediment beyond his control which he could not reasonably
take into account/avoid/overcome

Coverage of CISG

Subject Matter of CISG

The Formation of Contracts

The performance of contracts

The remedies available to buyers & sellers in case of breach of contract

Merchants CISG applies only to commercial sales transactions

between merchants. CISG Art. 2: The conversion does not apply to Sale
of Goods brought for personal, family or household use.

Excluded from the Convention

Auction Sales

Sale of execution or otherwise by authority of law

Sales of Stocks, Shares, Investment securities, negotiable instruments

or money.

Sale of ships, vessels, hovercrafts or aircrafts & sale of electricity

Terms Not Covered In

CISG

Validity of Contracts
Conditions
Warranty

Passing of Property
Intention of Parties
Reservation of the Right of Disposal

Fraud

Terms Not Covered In

CISG

Reservation of the Right of Disposal

General rule Nemo Dat
According to this rule, a thief cannot pass good title to stolen goods,
and the original owner of the goods does not lose his title to them.
Capacity
Minors
Contracts with Minors
Mental Incapacity and Drunkards

Case Law
Commercial Court Zrich (Sunflower oil case)
Decision The court awarded the buyer the restitution of the advance payment plus
interest (Art. 78 CISG). As to the applicable rate of interest, the court applied
the interest rate of the sellers' place of business, that being the place in
which the sellers usually invest their money.
Officine Maraldi S.p.A. v. Intesa BCI S.p.A. et alii
Decision In Conclusion, the Court declared that no breach of contract had been
committed by the seller and prevented the buyer from executing the
guarantee as well as the banks from making any payment under the same.

Case Law

ICC Arbitration Case No. 6653 of 26 March 1993 (Steel bars case)
Decision - The court finally held that as CISG does not determine the
rate of interest, the applicable rate was to be the one currently used in
international trade with respect to eurodollars, the currency in which
payment had to be made. The court applied the annual London
International Bank Offered Rate (LIBOR).

Dansk Blomsterexport A/s v. Frick Blumenhandel

Decision - Under the circumstances, there was no need to address the
further question of whether notice of non conformity had been timely and
sufficiently precise.

Recommendations

Adaptation of CISG in the Sri Lankan Law System

The main reason as to why countries such as Sri Lanka, who have still not
ratified under CISG should adopt this system is quite simple. Being
adopted internationally with the consent of many major states of the world
CISG tries to harmonize the International Trade and its regulations so that
it would effectively result in efficiency and convenience when it comes to
trade between countries.

Sri Lanka, has its own Sale of Goods Act which oversees the International
Trade as well, however, most of the adaptation of CISG will prove to be
beneficial to Sri Lanka in a number of ways.

Recommendations

One of the main benefits of CISG is its unified code of rules and regulations,
making importing and exporting and other facets of international trade easier.
Instead of dealing with the domestic laws for international trade in several foreign
countries, companies can readily apply CISG.

The convention is also a great way to build trust. Domestic laws within a foreign
country can be interpreted in different ways, while the interpretations of CISG are
static.

Sellers can avoid difficulties of reaching agreement with foreign buyers on choice
of law issues as the CISG text will be readily available for compromise.

Use of the CISG will decrease the time and legal costs otherwise involved in the
research of unfamiliar foreign laws.

The CISG will reduce the problems of proof of foreign law in domestic and foreign
courts.

Recommendations

However, there are several aspects that also need to be considered if Sri
Lanka is to adopt CISG into their legal system. CISG was formulated mainly
taking the western legal traditions into consideration, and it has not
individually looked at alternative legal systems such as Islamic Law or
Hindu Law.

Also there are dissimilarities which are faced between Civil Law
Jurisdictions and Common Law Jurisdictions is some aspects of the
contract. For example if the contract formation is done through mail, there
is a difference on how the acceptance of an offer is confirmed. In most
common law systems the contract is formed when the acceptance letter is
mailed, where as in civil law systems the contract is formed when the
acceptance of the offer is received.

Thus, there are various positives and negatives that are common in trying
to adopt CISG in to the Sri Lankan legal system.

Conclusion

It is hoped that this short introduction to the CISG will be of use to lawyers
and businesspersons in need of a quick overview of the CISG and of its
application in the Singapore context.We must however remind the reader
that there is much more to say on the CISG, and it is my hope that this
short overview will only be used as a first step in any research on the
CISG.

Questions and Discussion