Presentation on theme: "Prof. Dr. Ingeborg Schwenzer University of Basel Switzerland"— Presentation transcript:
1 Prof. Dr. Ingeborg Schwenzer University of Basel Switzerland Global Sales LawProf. Dr. Ingeborg SchwenzerUniversity of BaselSwitzerland
2 Introduction Development of global trade 2010: 9,5% increase (WTO) : average annual growth 5%Focus: China, Brazil, Russia, Africa2007/08: Africa annual growth: exports: 18/28%, imports: 23/27%Different laws = obstacle to trade
3 Introduction Different sets of sales law Domestic: SGA, CC, others Regional: OHADA Uniform Act on General Commercial Law (UAGCL), general contract lawGlobal: UN Convention on Contracts for the International Sale of Goods (CISG), UNIDROIT Principles of International Commercial Contracts
4 Introduction History of Unification of sales law 1920s: Ernst Rabel 1960s: Hague Conventions ULIS/ULF1980: Vienna Conference CISG1988: Entering into force2011: 76 member states covering 80% of world tradeAfrica: 9 member states, only two OHADA states
5 Introduction Structure of the CISG Part I: Sphere of application Part II: Formation of the contractPart III: Substantive rules for the sale of goods, incl. duties of the parties, remedies, risk of lossPart IV: Final provisions – international public law
6 Part I: Sphere of application Application and ambit of CISG (Art. 1-6)CISG itself determines ist applicabilityArt. 1(1) CISG: different states (Art. 10 CISG)Art. 1(1)(a) CISG: both states are member statesArt. 1(1)(b) CISG: rules of private international law lead to member stateExample China – CameroonApplication by arbitral tribunals
7 Part I: Sphere of application Party autonomy Art. 6 CISGOpting out in whole or in partChoice of domestic law, f.e. Swiss lawLitigating under the wrong law
8 Part I: Sphere of application Ambit of the CISGSale of goods contractsBarter contracts, back-to-back-saleDistribution agreementsArt. 3 CISG: work and labour, servicesArt. 3(1) CISG: manufacture of goodsArt. 3(2) CISG: mixed contracts (factory)
9 Part I: Sphere of application Ambit of the CISGGoods: factory, machine, food, shoes, clothes, cars, circus elephantDocuments representing the goodsArt. 2 CISG exceptionsArt. 2(a) CISG: consumer salesArt. 2(b)(c) CISG: auctions, bancruptcyArt. 2(d)(e)(f) CISG: certain goods
10 Part I: Sphere of application Substantive ambitArt. 4 CISG: Formation, rights and obligations of partiesArt. 4(a) CISG: validity questionsPublic policy, mandatory rules, capacity of the parties, fraud, mistake?Art. 4(b) CISG: transfer of title, retention of title, bona fide purchase
11 Part I: Sphere of application Substantive ambitArt. 5 CISG: Compensation for personal injury and deathCompensation for damage to propertyLimits of the CISG (external gaps)Agency, assignment, transfer of debts, joint debtors, limitation of actions, set-off?Form requirements: Art. 11 CISG
12 Part I: Sphere of application Art. 7 CISG: Interpretation of the CISGArt. 7(1) CISG: international character, promotion of uniformity, good faithArt. 7(2) CISG: gap-fillingGeneral principles of CISG (party autonomy, burden of proof, stamdard of proof, set-off)PICC?
13 Part I: Sphere of application Art. 8 CISG: Interpretation of party statements and conductArt. 8(1) CISG: true intention of partiesArt. 8(2) CISG: reasonable personArt. 8(3) CISG: circumstances to be consideredArt. 9(1) CISG: usages and practicesArt. 9(2) CISG: international usages
14 Part I: Sphere of application Art. 11 CISG: freedom of formFormation, Art. 29(1): modificationExcluded: procedural requirements, pariol evidence rule, consideration, cause, statute of fraudsArt. 12 CISG: reservationAgreed form, Art. 13 CISG: writingArt. 29(2) CISG: modification
15 Part II: Formation of the contract General remarksArt. 14 et seq. CISG antiquatedOffer-acceptance mechanisme-commerce, UNCITRAL Concention 2004Standard terms: incorporation – validityPre-contractual dutiesBreaking off negotiations
16 Part II: Formation of the contract OfferArt. 14 CISG: criteria for an offerArt. 14(1) CISG: definiteness (pretium certum – Art. 55 CISG), intention to be bound (invitatio ad offerendum)Art. 14(2) CISG: public offer (advertisements, websites)
17 Part II: Formation of the contract OfferArt. 15(1) CISG: effective upon reaching the offereeArt. 15(2) CISG: withdrawal of offerArt. 16 CISG: revocability of offerArt. 16(1): Common Law starting pointArt. 16(2): restrictions on revocabilityArt. 17 CISG: termination of offer
18 Part II: Formation of the contract Acceptance (Art CISG)Art. 18(1): acceptance by declarationStatement or conduct (delivery, payment)Acceptance by silenceEffectiveness of acceptance: Art. 18(2 s.1): reaching, Art. 18(3): performance of act
19 Part II: Formation of the contract Acceptance (Art CISG)Deadline for acceptance (Art. 18(2) CISG)Art. 20 CISG: calculating the period of timeArt. 21 CISG: when late acceptance may be effectiveDivergence between offer and acceptanceArt. 19(1): rejection and counter-offerArt. 19(2)(3): insignificant modifications
20 Part II: Formation of the contract Battle of formsPractical importancePossible solutions: last shot doctrine, knock-out doctrineCommercial letter of confirmation (acceptance by silence?)
21 Part II: Formation of the contract Effectiveness of statementsImportance of statement reaching the other party, Art. 23: conclusion of contractArt. 24: when does statement reach the other party?e-commerce, standard terms (making available, transparency)Art. 29: modification of contract
22 Part III/1: Substantive Rules - General Content of Part III: General, obligations of seller, obligations of buyer, passing of risk, common provisionsBasic remediesSpecific performance (Art. 28 CISG)Right to withhold performanceDamagesAvoidance of contract, Art. 25: fundamental breach
23 Part III/1: Substantive Rules - General Art. 26 CISG: declaration of avoidanceArt. 27 CISG: dispatch principle – transmission riskOther notices (non-conformity
24 Part III/1: Substantive Rules - General Art. 25 CISG: fundamental breachFundamentality: effect on creditorForeseeabilityIn case of non-performance: impossibility, delay – time of the essence, ancillary dutiesNon-conformity of the goods: purpose of the contract, repairable defect, time of the essence
25 Part III/1: Substantive Rules - General Art. 25 CISG: fundamental breachBreach of buyer‘s obligationsPayment, repudiation, insolvencyTaking deliveryArt. 28 CISG: Specific performanceCommon law – Civil law
26 Part III/2: Substantive Rules – Seller‘s obligations Overview Art CISGCornerstone of any sales lawArt : delivery, conformityArt : non-conforming goodsArt : third party rightsArt. 44: buyer‘s excuse for not giving notice
27 Part III/2: Substantive Rules – Seller‘s obligations Seller‘s duty to deliverArt. 30 CISG: delivery, documents, transfer of titleArt. 31 CISG: place of deliveryPrimarily party agreementIncoterms 2010: EXW (ex works), FCA (free carrier)/FOB (free on board), CIF (cost, insurance, freight), DAP (delivered at place)
28 Part III/2: Substantive Rules – Seller‘s obligations Seller‘s duty to deliverSubsidiary rulesArt. 31(a): carriage of goodsArt. 31(b): goods at specific placeArt. 31(c): seller‘s place of businessMaking availableArt. 32: obligations during transportJurisdiction at place of delivery
29 Part III/2: Substantive Rules – Seller‘s obligations Seller‘s duty to deliverArt. 33: time of delivery: primarily party agreementArt. 33(a): fixed dateArt. 33(b): fixed period of timeArt. 33(c): reasonable time after conclusion of contractArt. 52(1): early delivery by seller
30 Part III/2: Substantive Rules – Seller‘s obligations Art. 34: handing over of documentsDocuments of titleOther documentsPlace and time of handing over of documentsRight to cure in case of early delivery
31 Part III/2: Substantive Rules – Seller‘s obligations Art. 35 CISG: conformity of the goodsMost important provisions of CISGCISG key concept: quality, quantity, aliud packaging treated alikeDomestic approaches: warranties/ conditions (SGA), express/implied warranties (UCC), vices cachés (CC), peius/aliud (CC, Germanic systems), partial non-delivery, ancillary duties
32 Part III/2: Substantive Rules – Seller‘s obligations Art. 35 CISG: conformity of the goodsArt. 35(1): primarily party agreementQuantity: trade usagesQuality: features of goods, origin, manufacturing practices, ethical standardsDicrepancies in nature: aliudPackagingAdditional duties: services, non-competition
33 Part III/2: Substantive Rules – Seller‘s obligations Art. 35 CISG: conformity of the goodsArt. 35(2): objective criteria to determine conformityArt. 35(2)(a): fitness for ordinary purposeCommercial purposes, resalability, average quality?Public law requirements, regional v. global players
34 Part III/2: Substantive Rules – Seller‘s obligations Art. 35 CISG: conformity of the goodsArt. 35(2)(b): fitness for particular purposePurpose made known to sellerBuyer reasonably relying on seller‘s skill and judgementArt. 35(2)(c): sample or modelArt. 35(2)(d): adequate packagingArt. 35(3): buyer‘s knowledge
35 Part III/2: Substantive Rules – Seller‘s obligations Art. 36: determinative time for conformityArt. 36(1): passing of riskBurden of proofArt. 36(2): after risk has passed: breach of obligation, guaranteeDurability in generalArt. 37: seller‘s right to cure non-conformity
36 Part III/2: Substantive Rules – Seller‘s obligations Art. 38, 39: Examination and noticeComparative overview: SGA, CC, UCC, Germanic systemsDrafting historyArt. 38: ExaminationMethod of examinationPeriod for examination: general, carriage of goods, redirection or redispatch
37 Part III/2: Substantive Rules – Seller‘s obligations Art. 39: noticeSpecificity of noticeForm and transmission riskReasonable time: nature of goods, „noble month“Beginning of periodArt. 39(2): two year cut-off period
38 Part III/2: Substantive Rules – Seller‘s obligations Art. 40: seller‘s knowledgeConsequences of failure to give noticeGeneral – Art. 44: reasonable excuseLimitation periodsUN Convention on Limitation period: 4 yearsDomestic rules vary from 6 months to 6 years, compatability with Art. 39(2)
39 Part III/2: Substantive Rules – Seller‘s obligations Art. 41, 42: defects in title and intellectual property rightsDistinction unknown to most countriesArt. 41: defects in titleThird party rights (property, encumbrances)Third party claimsPublic law encumbrances
40 Part III/2: Substantive Rules – Seller‘s obligations Art. 42: third party industrial or intellectual property rightsThird party rights or claimsArt. 42(1)(a)(b): territorial restrictionSeller‘s knowledgeArt. 42(2): exclusion of seller‘s liabilityArt. 43: notice requirement
41 Part III/3: Substantive Rules – Buyer‘s remedies in case of breach Art CISG: buyer‘s remediesUnified approach: breach of contractSome special rules: non-conformityArt. 45: overview of buyer‘s remediesConcurrent domestic remedies: contract law (mistake), tort law (culpa in contrahendo, negligent misrepresentation)
42 Part III/3: Substantive Rules – Buyer‘s remedies in case of breach Art. 48 CISG: seller‘s right to cureDistinguish Art. 37Relationship to buyer‘s right to avoid the contractSetting time limitsArt. 47: buyer fixing additional time for performanceArt. 48(2)(3): seller requesting additional time
43 Part III/3: Substantive Rules – Buyer‘s remedies in case of breach Art. 46, 47 CISG: right of performance and substitute performanceArt. 46(1): right to specific performance subject to Art. 28 and Art. 79Art. 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
44 Part III/3: Substantive Rules – Buyer‘s remedies in case of breach Art. 49: Avoidance of contractArt. 49(1)(a): fundamental breachArt. 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 goodsAvoidance by declaration
45 Part III/3: Substantive Rules – Buyer‘s remedies in case of breach Part performance and delivery of partly non-conforming goodsArt. 51 and Art. 73 CISGArt. 51(1), 73(1): principle: partial avoidance onlyArt. 51(2), 73(3): avoidance of the whole contract in case of fundamental breachArt. 72: Anticipated breach of contract
46 Part III/3: Substantive Rules – Buyer‘s remedies in case of breach Art. 50 CISG: reduction of purchase priceRoman law descentDifference to damages: calculation, Art. 79 not applicableArt. 45(1)(b), 74 et seq.: damagesRight to withhold performance, general principleArt. 71: right to suspend performanceRight to reject the goods (perfect tender rule?)Art. 52(2): rejection of excessive quantity
47 Part III/4: Substantive Rules – Buyer‘s obligations Art. 53 CISG: payment, taking deliveryArt : payment of purchase priceArt. 54: encompasses all arrangements, form of payment, letter of credit, compliance with public law regulations etc.Currency: agreement, place of sellerArt. 57(1): place of paymentJurisdiction?
48 Part III/4: Substantive Rules – Buyer‘s obligations Art. 58: time of paymentAgreementArt. 58(1)(2): subsidiarily: step by step-performanceArt. 58(3): reasonable opportunity to inspect the goodsArt. 60 CISG: duty to take deliveryNecessary preparatory steps, taking overOffer of non-conforming goods
49 Part III/4: Substantive Rules – Buyer‘s obligations Art CISG: passing of riskArt. 66: payment obligation if seller performed all of its obligations, even if goods destroyed or damagedWhich events are covered? Acts of states?Exception: loss or damage due to sellerPrimarily: agreement of parties (practice)Incoterms – who must insure the goods?
50 Part III/4: Substantive Rules – Buyer‘s obligations Art CISG: passing of riskArt. 67(1): handing over to first carrier, retention of documents irrelevantArt. 67(2): generic goods must be identified to contractGoods sold in transit: unclear when goods were destroyedArt. 68: conclusion of contract. Dating back to handing over in case of insurance (contract valid)
51 Part III/4: Substantive Rules – Buyer‘s obligations Art. 69: catch all provisionArt. 69(1): goods at seller‘s place of business: taking over of goods or failing to take deliveryArt. 69(2): other places of delivery (incl. buyer‘s place of business): when delivery is due, notification of buyer, identification to contract
52 Part III/5: Substantive Rules – Seller‘s remedies in case of breach Art. 61 CISG: overview of seller‘s remediesArt. 61(3): no period of grace as CCArt. 62: payment of purchase price, Art. 28 applicableCan Art. 77 be applied to specific performance of purchase price? Disputed.Art. 62: taking delivery and other dutiesArt. 63: fixing additional period of time
53 Part III/5: Substantive Rules – Seller‘s remedies in case of breach Art. 64: avoidance of contractArt. 64(1)(a): fundamental breachArt. 64(1)(b): lapse of „Nachfrist“Fundamentalility of breach very rare: discuss non-payment, taking delivery, other dutiesArt. 64(2): restriction where price has been paid in the meantime (price main interest)
54 Part III/5: Substantive Rules – Seller‘s remedies in case of breach Art. 61(1)(b), 74: damagesRights 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. 65Notice to buyer necessaryArt. 65 applicable to other duties?
55 Part III/6: Substantive Rules – Common provisions Art. 71: right to suspend performance and stoppageArt. 71(1)(a): deficiency in ability to perform (f.e. political situation, natural disaster), creditworthiness (buyer or seller)Art. 71(1)(b): debtor‘s conductRelevant time: after AND before conclusion of the contract (becomes apparent), domestic remedies for mistake
56 Part III/6: Substantive Rules – Common provisions Art. 71: right to suspend performance and stoppageEvidential threshold: reasonable personWeight of anticipated breach: „substantial part“ less than fundamental breach„suspension“ of performance as well as preparatory stepsArt. 71(2): right of stoppageArt. 71(3): duty to give notice, adequate assurance of performance
57 Part III/6: Substantive Rules – Common provisions Art. 71: right to suspend performance and stoppageEnd of in-between-state: Art. 72: no adequate assurance of performance, fundamental breach threateningArt. 72: anticipatory breachArt. 72(1): prior to date of performance, fundamental breach, „clear“
58 Part III/6: Substantive Rules – Common provisions Art. 72: anticipatory breachRepudiation by one party, demanding price adjustment, factual circumstancesArt. 72(2)(3): possibility to give adequate assurance of performance, reasonable noticeDuty to avoid contract before date of performance, Art. 77?
59 Part III/6: Substantive Rules – Common provisions Art. 73: installment contractsFaulty performance of one installment (non-delivery, late delivery, non-conformity)Art. 73(1): partial avoidance only if fundamentalArt. 73(2): future installments, anticipatory breach, lower threashold than Art. 72Art. 73(3): retrospective avoidanceOther remedies? Damages, price reduction
60 Part III/7: Substantive Rules – Damages Responsibility and dischargeAny breach of obligationNo fault requirement – strict liabilityExemption under Art. 79, 80Art. 79(1): impediment beyond control, not foreseeable, not avoidableCovers all contractual dutiesSubsequent and initial impediments
61 Part III/7: Substantive Rules – Damages Typically: force majeure situationsHardship? Threshold, consequences (duty to renegotiate?)Non-conformity of goods. Exemption rareLiability 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
62 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 performAll remedies excludedCausation by both parties (…to the extent)Apportionment of damages, avoidance?
63 Part III/7: Substantive Rules – Damages Extent of damages claim, Art. 74Principle of full compensationAll losses, causation requiredNon-performance loss, incl. Loss of use, costs of repairIncidental loss, additional costs etc. Legal costs?Consequential loss, f.e. penalty, liability, damage to propertyLoss of profit
64 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 lossConcrete and abstract calculationArt. 75: concrete: cover purchaseArt. 76: abstract: market-price-ruleAbstract calculation of other losses, esp. loss of use?
65 Part III/7: Substantive Rules – Damages BettermentDisgorgement of profits (performance principle)Art. 74: foreseeability rule (contemplation rule)Standard: „possible consequence“Examples: non-performance loss, incidental loss, consequential loss
66 Part III/7: Substantive Rules – Damages Contractual stipulations on liabilityFreedom of contract, Art. 6Agreed sums (liquidated damages, penalties)Limitations of liability – validity Art. 4(a)Art. 77: duty to mitigateScope: damagess, other remedies?Examples, substitute transactionsConsequences of breach
67 Part III/8: Substantive Rules – Interest Art. 78: price or any sum in arrearsHighly controversial, Islamic countriesPreconditions: sum dueInterest rate: CISG itself? PICC? Domestic law?Full compensation -> interest rate at creditor‘s place, currency of paymentCompound interest?
68 Part III/9: Substantive Rules – Effects of Avoidance Art. 81(1): release from primary obligations, arbitration clauses not affectedArt. 81(2): restitution of what has been performed, concurrentlyArt. 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
69 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 priceArt. 84(2): benefits from goods, surrogates, fruits, use (no abstract calculation)
70 Part III/10: Substantive Rules – Preservation of goods Breach of contract: problem: fate of the goods? ExamplesArt. 85: seller‘s duty if buyer does not take deliveryArt. 86: buyer‘s duty if it rejects the goodsArt. 86(2): duty to take possessionReasonable preservation measures, depend on nature of goodsArt. 87: storage in a warehouse
71 Part III/10: Substantive Rules – Preservation of goods Art. 88: self-help saleArt. 88(1): normal self-help sale („may), notice requiredArt. 88(2): emergency sale, perishable goods („must“), possible noticeArt. 88(3): proceeds: set-off against costs, account for balance
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