Presentation on theme: "Validity and Formation of International Sales Contracts (I) I. What does the CISG govern II. The writing requirement III. Enforcement of illegal contract."— Presentation transcript:
Validity and Formation of International Sales Contracts (I) I. What does the CISG govern II. The writing requirement III. Enforcement of illegal contract IV. Problems of interpretation
The substantive study of the CISG uniform code for the international sale of goods the CISG balance common law civil law
I. What does the CISG govern? What is the CISG not concerned with? (Art. 4,5 & 11) Only govern (1) Formation (2) Rights and obligations of the buyer and seller (3)The form of contract Not govern (1) Validity (2) The property of the goods sold (3) Liability for death or personal injury caused by goods (4) Legal capacity of parties …
II. Enforcement of illegal contracts Contracts with illegal purposes have no legal effect. Such contracts are void and unenforceable. ( Tarbert Trading, LTD. v. Cometals, Inc) III. The writing requirement (the form of the contract) 1.The UCC (the 2003 proposed amendaments) 2.The CISG 3.Foreign Economic Contract Law of China (1985) 4. New contract law of China (1999)
Iv. Problems of Interpretation some general guiding principles of interpretation of contract: 1. Plain English principle (the literal rule) 2. The principle of four corners 3. Types of writing Handwritten words>Typed words>Printed words 4. Standard form contract Such contract is construed against the party who drafts it, otherwise exclusion clauses are construed against the party inserted them into the contract.
5. Contracts affecting public interests Such contracts shall be construed in favor of the public. 6. When one interpreter renders the contract valid and the other renders it invalid, the court usually adopt the one which renders the contract valid. 7. Parol evidence rule (1) A. Where the parties have entered into a written sales contract that is intended to the final expression of the parties ’ agreement, the written agreement may not be contradicted by any prior agreement or contemporaneous oral agreement.
( Where the sum payable is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable.) B. Function of parol evidence: A. To clarify an ambiguity B. To prove additional terms of the agreement (2) Whether the CISG adopts the parol evidence rule? ----No. Under the CISG in deciding the intend of the parties, all related circumstances may be considered. (Art. 8 CISG)
Whether the CISG allows to use parol evidence? ----Yes. Under the CISG courts have wide leeway in using parol evidence in deciding the intend of the parties to a contract. 8. In common law countries the courts often look to the past dealings of the parties and to trade usages for guidance in interpreting contracts or filling the gaps. The CISG closely resembles the way trade usages are handled under American law. (Art.9 CISG)
Case analysis: Snow v. Winn Facts: A landlord sued his tenant in order to terminate the tenant ’ s lease. The landlord claimed the tenant had breached the lease agreement by using the premises for a convenience grocery store in violation of the “ purpose clause ” of the agreement. This clause stated that the tenant would use the premises for a gasoline service station, car wash, and “ associated activities ”. The landlord alleged he had an oral understanding with the tenant that the premises would not be used as a convenience store.
Legal issue: Whether this oral testimony is admissible under the parol evidence? Reasoning: The parol evidence rule states that ….. A.In this case, the parol evidence rule prohibits oral testimony about an integrated, written instrument. B. Furthermore, even if the phrase “ associated activities ” may be viewed as an ambiguity. Here the oral testimony would be admissible to explain the meaning of such words.
C. There was sufficient support for the court ’ s conclusion that retail gasoline operations are commonly associated with convenience store facilities and that parties intended to have good items sold on the premises. Decision: The court held this testimony was inadmissible.