1. Obligations of the seller and the buyer - PART III 1. Whether a party has performed the contract - Whether the party has performed the legal obligations. 2. Whether a party has breached the contract - Whether the party has failed to perform any legal obligation.

2. Obligation of the seller In general, the seller must deliver the goods that conform to the contractual description, hand over documents relating to the goods and transfer the property in the goods. – Art 30 1. deliver the goods 2. goods must conform to the contractual description 3. hand over documents relating to the goods 4. transfer the property in the goods.

3. OBLIGATION 1 - Delivery of goods Actual delivery - transfer of possession from one person to another Constructive delivery – the goods themselves are not delivered, but the means of obtaining possession of the goods is delivered.

4. Place of Delivery – specified in the contract Express term Incoterm Implied term: The seller should be responsible for delivering and installing the machine for free. - Art 31

5. Place of Delivery – not specified in the contract a) The first carrier – WHEN INVOLVE CARRIAGE b) The place where the parties knew the goods were located or were to be manufactured or produced - in placing the goods at the buyer's disposal at that place; c) In all other cases, at the buyer’s disposal at the place where the seller has his place of business at the time the contract was made.

6. When deliver the goods to the carrier: The seller must, either: identify to the carrier both the goods and the buyer “by marking on the goods, by shipping documents or otherwise” or give the buyer notice of the consignment of the specifying goods

7. Time for Delivery: Art.33 The seller must deliver the goods: (a) if a date is fixed by or determinable from the contract, on that date; (b) if a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date; or (c) in any other case, within a reasonable time after the conclusion of the contract.

8. OBLIGATION 2 – the duty to hand over documents -Art 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. documents relating to the goods: bills of lading, dock receipts, warehouse receipts, insurance policies, commercial invoices, certificates of origin,etc

9. OBLIGATION 3 - Conformity of the goods Arts.35-44 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..

10. The seller ’ s assurance of the quality of goods (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.

11. WAIVER if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity

12. Seller ’ s right to remedy Article 37 - before the date for delivery The seller has the right to: deliver any missing part or make up any deficiency in the quantity of the goods delivered deliver goods in replacement of any non-conforming goods delivered remedy any lack of conformity in the goods delivered - Should not cause the buyer unreasonable inconvenience or unreasonable expense.

13. Buyer ’ s obligation of examination The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances. - If the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination. - If the goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at the time of the conclusion of the contract the seller knew or ought to have known of the possibility of such redirection or redispatch, examination may be deferred until after the goods have arrived at the new destination.

14. Method of examination? - COMPREHENSIVE - RANDOM

15. Buyer ’ s obligation of notifying the non- conformity Article 39 - The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it. - In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time- limit is inconsistent with a contractual period of guarantee.

16. Obligation 4 – Assurance of “ clean ” goods Article 41 – The goods should not subject to third-party claims of ownership Article 42 – The goods should not subject to third-party claims of rights in intellectual property

17. Article 38 – obligation of examination Article 39 - send notice to the seller Exception: The seller knew or could not have been unaware and which he did not disclose to the buyer.

18. Assurance of the ownership The third party brought an action against the buyer asserting he was the owner of the goods. The buyer notifies the seller, and the seller replied that the third party’s assertion were false. The buyer successfully defended the action. The buyer suffered loss of $50000 because the litigation prevented him from using the goods and the buyer had to pay $1000 for the litigation.

19. Claims of rights in intellectual property Article 42 (1) (a) under the law of the State where the goods will be resold or otherwise used (the parties knew when the contract was concluded (b) in any other case, under the law of the State where the buyer has his place of business. (2) The obligation of the seller under the preceding paragraph does not extend to cases where: (a) at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim; or (b) the right or claim results from the seller's compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer.

20. OBLIGATIONS OF THE BUYER Article 53 1. Pay the price 2. Take delivery

21. Remedies for breach of contract Breach of the contract - the non-performance of a duty under a contract Fundamental Breach Non- fundamental breach

22. Article 25 – Fundamental breach A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.

23. Fundamental Breach (1) A breach of contract results in detriment (2) The detriment must substantially deprives him of what he is entitled to expect under the contract (3) The violating party must have foreseen the result of breach. BURDEN OF PROOF 1),2) – the aggrieved party 3) – the violating party

24.  Seller – Australia  Buyer – U.S.  Goods – Turkey (for resell during Charismas)  Deliver the goods to Boston between 15 Dec – 19 Dec 2010  Actual deliver - 29 Dec 2010  Seller – Australia  Buyer – U.S.  Goods – chicken (for resell)  Deliver the goods to Boston between 15 Dec – 19 Dec 2010  Actual deliver - 29 Dec 2010  The market price of chicken did not fluctuate in Dec,2010

25. Remedies of the parties under the CISG: 1. Avoid the contract 2. Claim specific performance. 3. Compensation

26. Avoidance of the contract - Fundamental breach, or - The party gives the violating party the Nachfrist notice, the violating party rejects it or does not perform within the period it specifies The party may cancel the contract by notifying the violating party of the avoidance.

27. Avoidance of installment contracts Article 73 1) Fundamental breach with respect to a particular installment – the other party may declare the contract avoided with respect to that installment. 2) The breach of one installment gives the other party good grounds to believe that a fundamental breach of future installment will occur 3) If the installments are interdependent, a fundamental breach of one installment will allow a party to avoid the entire contract. (past and future installments included)

28. Anticipatory breach – suspension of performance Prior to the date of performance: It becomes apparent that the other party will not perform a substantial part of his obligations as a result of: (a) a serious deficiency in his ability to perform or in his creditworthiness; or (b) his conduct in preparing to perform or in performing the contract. - Suspension of performance  must immediately give notice of the suspension to the other party  must continue with performance if the other party provides adequate assurance of his performance.

29. Anticipatory breach – Avoidance of the contract Article 72 － If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach of contract, the other party may declare the contract avoided. The innocent party may choose to 1. Declare the contract avoided and claim compensation before the date of performance, or 2. Affirm the contract and demand performance. Then claim compensation after the date of performance

30. Anticipatory breach – Avoidance of the contract Date of performance – 1 March 2010 1 Feb 2010, the Seller notified the Buyer they would not perform the contract. 2 Feb. 2010, the Buyer replied and insisted the seller to deliver the goods 5 Feb 2010, the goods were destroyed during the storm. 1. On 2, Feb - the buyer could avoid the contract and claim compensation for breach 2. 30 Feb 2010 – the buyer lose the right to claim compensation for breach

31. Specific Performance & Damages In common law countries  Firstly: compensation are preferred (common law)  Then: specific performance (equity law) In civil law countries  Firstly: specific performance  Then: compensation

32. Specific Performance & Damages CISG  Article 28: if, in accordance with the provisions of this convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance China  Firstly: specific performance  Then: compensation

33. Claim compensation Art. 74: 1) Actual loss 2) Loss of profit - Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract,