Prof. Giorgio F. COLOMBO

Lesson n. 2

 CISG, Art. 1 ◦ This Convention applies to contracts for the sale of goods between parties whose place of business are in different States: (a) when the States are Contracting States (b) when the rules of private international law lead to the application of the law of a Contracting State [...]

 (1) Contract  (2) Sale  (3) Goods  (4) Parties  (5) a) different states b) private international law

 The nationality of the parties is irrelevant (Art. 1, (3) CISG)  The Contract must be relating to a sale of goods ◦ Simple sale – «one shot» ◦ Installment Sale – Conditional Sale? ◦ Barter Agreements? ◦ Commercial Leasing? ◦ Distribution/franchise?  Right to buy? ◦ Service?  prevalence of other elements?

 Business entities  Business entities acting outside their activity  Private party (as Seller)  State entities

 The places of business of the parties must be in different contracting States ◦ The State must be a member of the Convention at the time the parties enter into the contract  Duration contracts ◦ What does place of business mean?  Production?  Decisional power?  Legal entity?

 Criteria to be taken into account: ◦ Permanence/stability  For example, a market stand in a fair is not a place of business ◦ Autonomy from other parts of the structure

 Art. 10 CISG  In case of more places of business, the one which has the closest relationship to the contract is relevant  Example ◦ Contract ◦ Correspondence ◦ Orders ◦ Language?

 Through private international law. What does it mean? ◦ (b) when the rules of private international law lead to the application of the law of a Contracting State  When a State enters into the Convention, it becomes the law of that State  As such, it will regulate international contracts for the sale of goods

 Art. 95 CISG  Any State may declare at the time of the deposit of its instrument of ratification, acceptance, approval or accession that it will not be bound by subparagraph (1)(b) of article 1 of this Convention  Reservation  In this case, the CISG applies only if the other country is a member to the CISG

 In international commercial law, party autonomy is extremely important  Parties are generally free to choose which law applies to the contract  However, it is important to be conscious of the legal consequences of a choice

 A French company (purchaser) and a Japanese company (seller) enter into a contract for the sale of steel manufactures  Both France and Japan are parties to the CISG  The contract says: «This Contract shall be governed by Japanese Law»  What will be the main source of rules to the contract? ◦ A) The Japanese Civil/Commercial Code; or ◦ B) The CISG?  Are the parties free to exclude the CISG (Art. 12)?

 An Indian company (purchaser) and an Italian company (seller) enter into a contract for the sale of sport cars  Italy is a party to the CISG, and made no reservations. India is not a party to the CISG.  The contract says: «This Contract shall be governed by Italian Law»  What will be the main source of rules to the contract? ◦ A) The Japanese Civil Code; or ◦ B) The CISG?

 A Portoguese company (purchaser) and a Czech company (seller) enter into a contract for the sale of liquors  Portugal is not a member to the CISG. The Czech Republic has made a reservation under Art. 95  The contract says «This Contract shall be governed by Czech law»  What will be the main source of rules to the contract? ◦ A) The Czech Civil/Commercial Code; or ◦ B) The CISG?

 An American company (purchaser) and an Italian company (seller) enter into a contract for the sale of ceramic tiles  Both the USA and Italy are members to the CISG. The USA have made a reservation under Art. 95  The Contract is silent on the applicable law  Is the CISG applicable to the Contract?

 A USA company (purchaser) and a Slovak company (seller) enter into a contract for the sale of furs  Both the USA and Slovakia have made a reservation under Art. 95  The contract is silent about the applicable law  Is the CISG applicable to the Contract?

 Art. 2 CISG  This Convention does not apply to sales ◦ (a) of goods bought for personal use [...] unless the seller neither knew or ought to have known that the goods were bought for such use ◦ (b) by auction ◦ (c) on execution or otherwise by authority of law ◦ (d) of stocks, shares [etc.] ◦ (e) of ships, vessels, hovercraft or aircraft ◦ (f) of electricity

 The consumers were excluded for many reasons ◦ The Convention is not aimed at regulating consumer contracts, but business contracts ◦ National laws are specific and protective: the Convention is based on parties’ equality ◦ National laws are often mandatory  Exception ◦ Knew of ougth to have known ◦ Example?

 Finance, ect. ◦ Special markets ◦ Not a «good» (see next class)  Ships, vessels, aircrafts, hovercrafts ◦ Those goods are most of the times subject to registration in their countries and subject to special rules (eg. flag)

 As mentioned, the CISG does not cover every aspect of the international sale of goods  It mainly covers: ◦ The formation of the contract ◦ The respective rights and obligations of the seller and the buyer  It does not cover: ◦ The validity of the contract ◦ The effects on property

 Transfer of property is one of the most complex issues in comparative law: ◦ Agreement ◦ Possession ◦ Agreement and possession ◦ Freedom to agree about the moment