INTERNATIONAL SALES LAW - seminar 2004 ISL Contractual Risk Management in Transnational Sales Transactions ISL: objectives, functions and structure Management of information on ISL Management of risk of contractual disputes Management of risk of contract breach Management of risk of loss of or damage to the goods Management of risk of changed circumstances Case study Case studies I II V VI VII IX IV VIII III

Management of risk of loss of or damage to the goods ISC CONTRACT LAW CONTRACTING Default distribution of the risk in sales law CISG art. 67: (1) If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. If the seller bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. The fact that the seller is authorized to retain the documents controlling the disposition of the goods does not affect the passage of the risk. (2) Nevertheless, the risk does not pass to the buyer until the goods are clearly identified to the contract, whether by markings on the goods, by shipping documents, by notice given to the buyer or otherwise. CISG art. 68: The risk in respect of goods sold in transit passes to the buyer from the time of the conclusions of the of the contract. However, if the circum- stances so indicate, the risk is assumed by the buyer from the time the goods were handed over to the carrier who issued the documents embodying the contract of carriage. Nevertheless, if at the time of the conclusion of the contract of sale the seller knew or ought have known that the goods had been lost or damaged and did not disclose this to the buyer, the loss or damage is at the risk of the seller. ISL -CISG art , 79CISG I II V VI VII IX IV VIII III

CONTRACTING Management of risk of loss of or damage to the goods ISC -CISG art , 79 Default distribution of the risk in contract law -PECL chapters 7 to 9PECL -UPICC chapters 6 and 7UPICC -CENTRAL TLDB No. IV.4.6 and Ch. V to IXCENTRAL TLDB CENTRAL TCL database No. IV.4.6. Rights and Duties of the partied under ”FOB”, ”FAS”, ”CIF” and ”CF” ”If the parties have agreed on a sale "FOB", "FAS", "CIF" or "CF", the respective rights and duties of the parties under the contract are to be determined according to the latest version of the International Commercial Terms (INCOTERMS) issued by the International Chamber of Commerce (ICC) unless the parties have indicated that a different meaning is to be attributed to the term used.” ISL I II V VI VII IX IV VIII III

-CISG art , 79 Management of risk of loss of or damage to the goods ISC Contractual allocation of the risk in contracting practice -PECL chapters 7 to 9 -UPICC chapters 6 and 7 -CENTRAL TLDB No. IV.4.6 and Ch. V to IX ISL I II V VI VII IX IV VIII III CONTRACTING

Risk of loss of or damage to the goods: Management of risk of loss of or damage to the goods ISL A Brief Overview on Transfer of: I II V VI VII IX IV VIII III S B Property right: Goods: Payment: Documents: Sales Transport Finance Sales Finance Insurance

-CISG art , 79 Management of risk of loss of or damage to the goods ISC Contractual allocation of the risk in contracting practice -PECL chapters 7 to 9 -UPICC chapters 6 and 7 -CENTRAL TLDB No. IV.4.6 and Ch. V to IX ISL I II V VI VII IX IV VIII III - Incoterms & CombitermsIncoterms &Combiterms - Institute Cargo ClausesInstitute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses

TRADE TERMS CONCERNING CARRIAGE OF GOODS INCOTERMS 2000 Management of risk of loss of or damage to the goods ISL Contractual allocation of the risk in contracting practice I II V VI VII IX IV VIII III

c F-clauses F EXW S B C-clausesD-clauses BBBBBBBB Ins Division of costs:

S B F EXW F-clauses C-clauses FCA D-clauses c C-clauses BBBBBBS? Ins

c S B EXW F FAS FOB C-clauses D-clauses FCA C-clauses BBBBBSSS Ins BBBBBBSS

c S B EXW F FAS FOB C-clauses D-clauses FCA C-clauses

c S B EXW F FAS FOB CFR D-clauses CIF BBS/BS SSS Ins BBS/BSSSSS Ins FCA

c S B EXW F FAS FOB CPT D-clauses CIP S/B? S/BSSSSS Ins S/B? S/BS(B)SSS Ins FCA CIF CFR

c S B EXW F FAS FOB D-clauses FCA CIF CFR CPT CIP

c S B EXW DES F FAS FOB DEQ FCA CIF CFR CPT CIP BBBS(S)SSS Ins BBSS(S)SSS Ins

c S B EXW DES DEQ DDP F FAS FOB DDU DAF FCA CIF CFR CPT CIP SS+SS(S)SSS Ins BBSS(S)SSS Ins SSSS(S)SSS Ins

c S B EXW FAS FOB DES DAF F DEQ DDP DDU FCA CIF CFR CPT CIP

c S B EXW F-clauses F D-clauses C-clauses

Combiterms - Institute Cargo ClausesInstitute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses - Incoterms &Incoterms & -CISG art , 79 Management of risk of loss of or damage to the goods ISC Contractual allocation of the risk in contracting practice -PECL chapters 7 to 9 -UPICC chapters 6 and 7 -CENTRAL TLDB No. IV.4.6 and Ch. V to IX The ICC Model International Sale Contract ICC Publication No 556 B. GENERAL CONDITIONS Art. 8 Contractual term of delivery ”Unless otherwise agreed, delivery shall be ”Ex Works” (EXW).” ORGALIME S 2000 GENERAL CONDITIONS for the supply of mechanical, electrical and electronic products DELIVERY. PASSING OF RISK Clause 9. ”Any agreed trade term shall be constructed in accordance with the INCOTERMS in force at the formation of the contract. If no trade term is specifically agreed, the delivery shall be Ex Works (EXW). If in the case of delivery Ex works, the Supplier, at the request of the Purchaser, undertakes to send the Product to its destination, the risk will pass not later than when the Product is handed over to the first carrier. Partial shipments shall be permitted unless otherwise agreed.” The ICC Model International Sale Contract ICC Publication No 556 B. GENERAL CONDITIONS Art. 1 General Art. 1.3 ”Any referance made to trade terms (such as EXW, FCA, etc.) is deemed to be made to the relevant term of Incoterms published by the International Chamber of Commerce.” ISL I II V VI VII IX IV VIII III

- Incoterms & Management of risk of loss of or damage to the goods ISC -PECL chapters 7 to 9 -UPICC chapters 6 and 7 -CENTRAL TLDB No. IV.4.6 and Ch. V to IX -CISG art , 79 ORGALIME S 2000 GENERAL CONDITIONS for the supply of mechanical, electrical and electronic products Consequential Losses ”43. Save as elsewhere stated in these conditions there shall be no liability for either party towards the other party for loss of production, loss of profit, loss of use, loss of contracts or for any consequential or indirect loss whatsoever.” ISL Contractual allocation of the risk in contracting practice I II V VI VII IX IV VIII III Combiterms - Institute Cargo ClausesInstitute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses

Combiterms - Institute Cargo ClausesInstitute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses - Incoterms & Management of risk of loss of or damage to the goods ISC -PECL chapters 7 to 9 -UPICC chapters 6 and 7 -CENTRAL TLDB No. IV.4.6 and Ch. V to IX -CISG art , 79 ISL Contractual allocation of the risk in contracting practice ORGALIME S 2000 FORCE MAJEURE 39. Either party shall be entitled to suspend performance of his obligations under the contract to the extent that such performance is impeded or made unreasonably onerous by any of the following circumstances: industrial disputes and any other circumstance beyond the control of the parties such as fire, war, extensive military mobilization, insurrection, requisition, seizure, embargo, restrictions in the use of power and defects or delays in deliveries by sub-contractors caused by any such circumstance referred to in this Clause. A circumstance referred to in this Clause whether occurring prior to or after the formation of the contract shall give a right to suspension only if its effect on the performance of the contract could not be foreseen at the time of the formation of the contract. Similarly: NL 01 E Art. 36 Compare: ICC Model International Sale Contract B. General conditions Art. 13 Force majeure I II V VI VII IX IV VIII III ICC FORCE MAJEURE Clause Unless otherwise agreed in the contract between the parties expressly or impliedly, where a party to a contract fails to perform one or more of its contractual duties, the consequences set out in paragraphs 4 to 9 of this Clause will follow if and to the extent that that party proves... 2.Where a contracting party fails to perform one or more of its contractual duties because of default by a third party whom it has engaged A party invoking this Clause is under an obligation to take all reasonable means to limit the effect of the impediment or event invoked upon performance of its contractual duties... 8.(on termination due to substansially deprived expectations, within a reasonable period) where either contracting party has, by reason of anything done by another contracting party... derived a benifit before termination... duty to pay the other party... a sum... equivalent to the value of such benefit.

Combiterms - Institute Cargo ClausesInstitute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses - Incoterms & Management of risk of loss of or damage to the goods ISC -PECL chapters 7 to 9 -UPICC chapters 6 and 7 -CENTRAL TLDB No. IV.4.6 and Ch. V to IX -CISG art , 79 ISL Contractual allocation of the risk in contracting practice I II V VI VII IX IV VIII III ICC HARDSHIP Clause A party to a contract is bound to perform... even if... more onerous than could reasonably have been anticipated... 2.Notwithstanding paragraph 1... [a]... excessively onerous...beyond its reasonable control... could not reasonably have been expected to have taken into account... and... [b]... could not reasonably have avoided or overcome the event of its consequences, the parties are bound, within reasonable time... to negotiate alternative contractual terms not agreed...the Party invoking this Clause is entitled to termination of the contract.

Go to section VII Management of risk of changed circumstances