CONTRACTS of International Trade sale of goods= contract 1. Mandatory norms 2. Terms of contract 3. Trade usages, practice between parties 4. Non-mandatory norm: e.g. Commercial Code, CISG Soili Nysten-Haarala, University of Lapland

Pluralisation of Norms in International Business international organizations (+ interpretations of specialists) (EU law) nation state legislation (s) NGO regulation f.ex. Certification and certificates, standards academic ”lex mercatoria” (PECL, UNIDROIT-principles standard contracts (Orgalime, NL…) Trade usages Practice of businesses (and their model contracts Public governance Private governance HOX: legislation on the sale of goods is non-mandatory

CONVENTION ON INTERNATIONAL SALE OF GOODS is signed by provides default rules 78 states for sale of goods (world standard) defines regulates jurisdiction obligations of the seller basic concept obligations of the buyer contract formation passing of risk interpretation common obligations for the form requirements seller and the buyer fundamental breach

Freedom of Contract freedom to choose Who to contract with The contents of contract, terms of contract The form and type of contract How freely can you choose? standard contract: ORGALIME S2012 (S2000), SE01 NL09 (01), NLM10 (02), ECE 188, ECE 188A etc..

Adhesion of (standard) contracts (general terms of contract) Battle of forms First shot Last shot Knock out CISG article 9; trade usages and established practices Adjustment of contracts? Finnish Law on Contracts 36§ adjustment of unfair contract terms – Only if Finnish law is applied (restricted or forbidden terms of contract e.g. France)

Do general terms exclude default rules? Not automatically Can both limit liabilities and add obligations Is the form of contract really free in international trade? offer and acceptance models of default rules, if nothing else has been agreed or contractual practice shows some other model written form? reservation of CISG article 96 trade with Russian partners

Filling of gaps legal rules and contracts are not applied in a vacuum sources of law guide court decisions interpretation of contracts CISG Article 8 legal principles e.g. good faith and fair dealing UNIDROIT –principles PECL – Principles of European Contract Law CESL – Common European Sales Law (2011) 636

How the CISG is applied? 1.By agreeing on applying the CISG 2.Agreeing that the CISG is not applied national law by a) own choice of law b) rules of conflict of laws (rules of private international law) 3. No agreement at all either the CISG or a national law through rules of private international law

CISG OR ANOTHER LAW Following questions have to be asked: 1. Are the places of business of the parties in a convention state? 2. Is CISG applied to the goods? (Articles 2-3) 3. Is CISG applied to the problem? (Articles 4-5) 4. Have the parties opted CISG out? (Article 6) Hox! CISG is part of national law of a convention state e.g. ”Finnish law applied” does not opt CISG out but: ”Finnish Commercial Code applied” does Hox! Article 92.2 reservation on the Part II of CISG will soon be abolished

APPLYING CISG - JURISDICTION OVER THE PARTIES Article 1. 1(a) both are from convention states seller buyer German Finnish Article 1. 1(b) The other party is not from convention state, but conflict of laws rules lead to a convention country seller buyer Swedish English CISG

RESERVATIONS Article (b) not applied e.g. U.S.A. seller buyer United States English CISG not applied Article 94 (Nordic reservation) seller buyer Swedish Danish CISG not applied

Nordic reservation on Part II (will be abolished except between Nordic countries) revocation of an offer seller buyer Finnish Swedish Part II excluded Seller buyer French Finnish CISG applied completely Reservation Article 96 written form required e.g. Russia

Which law is applied when the choice of law term is as follows: a) ”This contract shall be governed by the laws of Finland” b) ”This contract shall be governed by the laws of France” c) ”This contract shall be governed by the laws of Finland excluding the UN Convention on Contracts for the International Sale of Goods (CISG)”

JURISDICTION national law CISG opting out (Article 6) subject matter jurisdiction includes excludes everything not excluded 1. Consumer contracts 2. Auctions 3. Products of some character (Article 2 d-f) - stocks, shares, investment securities, negotiable instruments and money - ships, vessels, hovercraft or aircraft - electricity 4. Mixed goods and services 5. Certain elements of contract - validity (Art. 4(a) - property rights flowing from contract 6. Liability for personal injury/death Soili Nysten-Haarala, University of Lapland