Presentation on theme: "INTERNATIONAL TRADE LAW"— Presentation transcript:
1 INTERNATIONAL TRADE LAW Dr. Özlem Döğerlioğlu IŞIKSUNGURYaşar UniversityFaculty of Economics andAdministrative ScienceInternational Trade Law – Lecture Notes
2 Convention on Contracts for the International Sale of Goods CISGCISG = United NationsConvention on Contracts forthe International Sale of Goods(Vienna 1980)
3 AIM OF THE CONVENTIONThe Vienna Convention aims to establish a uniform substantive law on contracts for international sales.The term of international sales covers all the sales relating to an international link.
4 UNITED NATION’S CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) In effect since January 1, 1988Current state parties: 76 (As of 1 September 2010)Turkey 07/07/2010 (Approval) 01/08/2011 (Enter into force)
5 CISG rules and principles? PART I - Sphere of Application and General ProvisionsChapter I - Sphere of ApplicationChapter II - General ProvisionsPART II - Formation of the ContractPART III - Sale of GoodsChapter I - General ProvisionsChapter II - Obligations of the SellerSection I - Delivery of the goods and handing over of documentsSection II - Conformity of the goods and third party claimsSection III - Remedies for breach of contract by the sellerChapter III - Obligations of the BuyerSection I - Payment of the priceSection II - Taking deliverySection III - Remedies for breach of contract by the buyerChapter IV - Passing of RiskChapter V - Provisions Common to the Obligations of the Seller and of the BuyerSection I - Anticipatory breach and instalment contractsSection II - DamagesSection III - InterestSection IV - ExemptionsSection V - Effects of avoidanceSection VI - Preservation of the goodsPART IV - Final Provisions
6 TO WHOM? The provisions of the Vienna Convention apply if the Articles 1-4 that determine the sphere of applicationVienna Convention applies clearly to cases where the application of different legal systems would come into forceThe provisions of the Vienna Convention apply if theA-“places of business” of the parties in different statesinvolved states are participants in the Vienna Convention orB-“places of business” of the parties in different statesrules of private international law lead to the application of the law of a contracting state.
7 SCOPE OF APPLICATION CISG applies to ”international sale of goods” It does not apply to:- consumer sales- sales by auction- sales on execution or otherwise by authority of law- sales of stocks, shares, investment securities, negotiable intstruments or money- sale of ships, vessels, hovercraft or aircraft- sale of electricityNeither does it apply to:manufacturing contracts, where the party ordering the goods supplies a substansial part of the materialcontracts, where labour or other services is the preponderant part of the obligationsIt does not govern:- matters of validity, at least not as a rule- matters concerning the right to the property of the goods- product liability
8 Hierarchy on norms in international sales law 1. The "mandatory norms” that prevail over the rules of the Convention (art. 4[a])2. Contract provisions (art. 6)3. Trade usages, either expressly referred to by the parties (art. 9[l]) or found applicable by a court or arbitrator (art. 9)4. The rules of the Convention5. The "general principles" on which the Convention is based (art. 7[l])6. If no such principles are identified, the non-mandatory norms of the law applicable under the conflict rules of the forum (art. 7)
9 Hierarchy on norms in international sales law 1- Finding the mandatory rules of the applicable (domestic) lawThe rules of Vienna Convention apply if the parties :did not exclude the applicability of the Vienna Convention andat the same time they did not choose a specific code to be applied exclusively,2- Sales contract of partiesParties’ will receives priority3- Accepted trade usagesThe parties may have explicitly or implicitly made applicable to their contract some of the well known global trade usages – such as INCOTERMS. When express provision is made, like questions regarding the place of delivery or the passing of risk, the issue will be decided by reference to the chosen usages.
10 Hierarchy on norms in international sales law 4- The provisions of the Vienna Convention the parties made no specific provision – either by contract or by the usages 5- The general principles underlying the Convention priority is given to (Article 7/I): international character, uniform interpretation the observance of good faith 6-The law applicable by virtue of the rules of private international law of the forum state
11 Conformity of Goods and Liability Takes place in the The Section II of the Vienna Conventionrequirements for conformity of the goodsobligations : seller & buyer
12 Conformity of Goods and Liability The seller’s liability for the quality and quantity:Article 35: 1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract. (2) Except where the parties have agreed otherwise, the goods do not conform with the contract unless they:(a) are fit for the purposes for which goods of the same description would ordinarily be used;(b) are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement;(c) possess the qualities of goods which the seller has held out to the buyer as a sample or model;(d) are contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods.(3) The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph for any lack of conformity of the goods if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity
13 Conformity of Goods and Liability The seller’s liability for the quality and quantity:priority of parties’ will to determine their obligations.The goods must conform with the quantity, quality and description mentioned in the contractual provisionsUnless otherwise agreed by the parties Vienna Convention's criteria shall be applied. In other words, the criterions of Article 35 are applicable only in the absence of an express or implied agreement. (Importance of interpretation)a minimum of contractual indications about the goods must be provided.
14 Conformity of Goods and Liability The seller’s liability for the quality and quantity:The price is, however, an indicative factor to estimate level of qualitythe delivered goods must at least meet the general description of the contractICC :in case of unidentified goods the seller is obliged to deliver goods which generally conform to the purpose and description of the contract’s subject
15 Conformity of Goods and Liability The seller’s liability for the quality and quantity:Four determinative standards (Article 35)A- Fitness of the goods for the purposes for which goods of thesame description would ordinarily be used.Art. 35 para. (2) Except where the parties have agreed otherwise, the goods do not conform with the contract unless they: (a) are fit for the purposes for which goods of the same description would ordinarily be usedB-C- To deliver goods possessing the qualities of goods which the seller has held out to the buyer as a sample or model.D-The seller must deliver goods properly contained or packaged.
16 Conformity of Goods and Liability The seller’s liability for the quality and quantity:Art. 35 para. (3) The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph for any lack of conformity of the goods if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity.The buyer who knows or ought to know what kind of goods the seller would deliver, cannot ask for goods of better qualitiesThe seller is liable, for defects not known by the buyer and not reasonably discoverable by examining the goods.The seller is responsible for hidden defects that need an unusual examination to be detected.
17 Obligations of the Seller Article 30“The seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention.”
18 Obligations of the Seller To deliver the goodsHand over the relevant/necessary documentsTransfer the ownership in the goods to the buyer in accordance with the terms and conditions of the contract and as required by the Convention
19 Obligations of the Seller To deliver the goodsArticle 35/1 “The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.”Article 41 “The seller must deliver goods which are free from any right or claim of a third party, unless the buyer agreed to take the goods subject to that right or claim. However, if such right or claim is based on industrial property or other intellectual property, the seller’s obligation is governed by article 42.”Article 42 “The seller must deliver goods which are free from any right orclaim of a third party based on industrial property or other intellectualproperty, of which at the time of the conclusion of the contract the sellerknew or could not have been unaware, provided that the right or claim isbased on industrial property or other intellectual property:
20 Obligations of the Seller To deliver the goodsThe seller must deliver goods that are of the quantity, quality and description required by contractAs being contained or packaged in the manner agreed between partiesThe goods shall be free from any right or claim by third party
21 Obligations of the Seller Delivery conditions&mode:The parties are free to choose.– Freedom to contractIn case parties made no contractual arragement apply article 31 of ConventionIf the contract of sale involves carriage (transportation)of the goods, seller is under obligation to deliver goods to a carrier to be carried to the buyerIf the contract relates toGoods to be manufactured or produced,AND at the time of the conclusion of the contract the parties knew that - the goods were to be manufactured or produced at, a particular placein placing the goods at the buyer’s disposal at that place;specific goods, orunidentified goodsto be drawn from a specific stockAND at the time of the conclusion of the contract the parties knew that-the goods were at a particular place,in other cases—(in placing the goods at the buyer’s disposal) at the place where the seller had his place of business at the time of the conclusion of the contract.
22 Obligations of the Seller Time of Delivery: (Article 33)Parties are free to make arrangement concerning time of deliveryif a date is fixed by the contract on that dateif the date is not fixed but determinable from the contract, on that dateIn case parties made no contractual arragement apply article 33/b-cin any other case, within a reasonable time after the conclusion of the contract.
23 Obligations of the Seller Delivery of Documents– Article 34“If the seller is bound to hand over documents relating to the goods, he must hand them over at the time and place and in the form required by the contract. If the seller has handed over documents before that time, he may, up to that time, cure any lack of conformity in the documents, if the exercise of this right does not cause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention.”
24 Obligations of the Buyer Article 53“The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention.”
25 Obligations of the Buyer Primarily obligation isTo pay the the price for the goods andTo take delivery of the goods
26 Obligations of the Buyer Payment of Price: (Article 54-59)“The buyer’s obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made.”
27 Obligations of the Buyer Payment of Price: Article 54Payment of import dutiesArrangement for exchange approvalsMaking provisions for letter of credit or other mode of payment as foreseen in the contractPayment of bank charges and expenses
28 Obligations of the Buyer Price: Article 55 “Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned.”
29 Obligations of the Buyer Price: Article 55In case the parties determineneither the price nor any procedure concerning determinationIt is accepted thatThe price shall be that generally charged at the formation of the contract for such goods sold under comparable circustances in the trade
30 Obligations of the Buyer Place of the paymentUsually mentioned in the contractIf not, apply article 57at the seller’s place of business; orif the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place.
31 Obligations of the Buyer Time of the paymentUsually mentioned in the contractIf not, apply article 58“(1) If the buyer is not bound to pay the price at any other specific time, he must pay it when the seller places either the goods or documents controlling their disposition at the buyer’s disposal in accordance with the contract and this Convention. The seller may make such payment a condition for handing over the goods or documents.(2) If the contract involves carriage of the goods, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer except against payment of the price.(3) The buyer is not bound to pay the price until he has had anopportunity to examine the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity.”
32 Passing the Risk Convention does not deal with the passing of title It regulates passing of riskDefinition of passing the risk: The buyer shall bear the burden of loss of or damage to goods before acquires title on the goods and still has to pay the purchase price to the sellerParties free to determine the conditions, if the parties do not regulate in then contract apply 66-70
33 Article 66Loss of or damage to the goods after the risk has passed to the buyerdoes not discharge him from his obligation to pay the price, unless the lossor damage is due to an act or omission of the seller.Article 67(1) If the contract of sale involves carriage of the goods and the selleris not bound to hand them over at a particular place, the risk passes to thebuyer when the goods are handed over to the first carrier for transmissionto the buyer in accordance with the contract of sale. If the seller is boundto hand the goods over to a carrier at a particular place, the risk does notpass to the buyer until the goods are handed over to the carrier at that place.The fact that the seller is authorized to retain documents controlling thedisposition of the goods does not affect the passage of the risk.(2) Nevertheless, the risk does not pass to the buyer until the goodsare clearly identified to the contract, whether by markings on the goods, by shipping documents, by notice given to the buyer or otherwise.
34 Article 68The risk in respect of goods sold in transit passes to the buyer from the time of the conclusion of the contract. However, if the circumstances so indicate, the risk is assumed by the buyer from the time the goods were handed over tothe carrier who issued the documents embodying the contract of carriage.Nevertheless,if at the time of the conclusion of the contract of sale the sellerknew or ought to have known that the goods had been lost or damaged and didnot disclose this to the buyer, the loss or damage is at the risk of the seller.Article 69(1) In cases not within articles 67 and 68, the risk passes to the buyerwhen he takes over the goods or, if he does not do so in due time, fromthe time when the goods are placed at his disposal and he commits a breachof contract by failing to take delivery.(2) However, if the buyer is bound to take over the goods at a placeother than a place of business of the seller, the risk passes when delivery isdue and the buyer is aware of the fact that the goods are placed at hisdisposalat that place.(3) If the contract relates to goods not then identified, the goods areconsidered not to be placed at the disposal of the buyer until they are clearlyidentified to the contract.Article 70If the seller has committed a fundamental breach of contract, articles 67,68 and 69 do not impair the remedies available to the buyer on account ofthe breach.