CHAPTER 1: INTRODUCTION TO THE CISG
1. The application scope of the CISG
This include: (1) Material scope and (2) Geographical scope
1.1. Material scope
- The nature of an international sale of goods contract is an agreement. Which means that
there has to be consideration between them. Therefore, a gift contract (hợp đồng quà tặng) or
trade of goods (hợp đồng trao đổi hàng hóa) are not sale of goods contract.
- Article 1.1 of the CISG: This Convention applies to contracts of sale of goods…
- The object of the contracts is legal goods. The legal status of the goods is determined by the
applicable law.
- Article 2 CISG:
This Convention does not apply to sales:
(a) of goods bought for personal, family or household use, unless the seller, at any
time before or at the conclusion of the contract, neither knew nor ought to have
known that the goods were bought for any such use;
(b) by auction;
(c) on execution or otherwise by authority of law;
(d) of stocks, shares, investment securities, negotiable instruments or money;
(e) of ships, vessels, hovercraft or aircraft;
(f) of electricity.
=> Only certain transactions are the object of CISG.
- Article 3 CISG:
(1) Contracts for the supply of goods to be manufactured or produced are to be
considered sales unless the party who orders the goods undertakes to supply a
substantial part of the materials necessary for such manufacture or production.
(2) This Convention does not apply to contracts in which the preponderant part of the
obligations of the party who furnishes the goods consists in the supply of labor or
other services.
=> CISG only governs sale of goods contracts. Cases where the buyer is also the supplier
(e.g. the buyer supplies a substantial part of the components for the seller to produce final
products) should be determined as a supply of labor or other services, rather than a supply of
goods. Therefore, CISG will not be applicable since CISG only governs sale of goods
contracts.
The material scope of CISG is determined by:
(i) The purpose of the parties.
(ii) Homogeneous characteristics of the goods.
Case:
Will it be any different when the seller sells 100 books and those books have been
published already?
=> Yes. According to (i) The purpose of the parties and (ii) Homogeneous characteristics
of the goods. The transaction of 100 books is clearly for commercial purposes. The
homogeneous characteristics show that the goods are used to serve many buyers in the
market. Which means it also didn’t fall into Article 2 CISG.
1.2. Geographical scope
Case: Astrazeneca
- In the contract, the European Commission used the Business Address instead of its Office
Address. Therefore, it gave up the immunity of the State.
- The contract stated that: “governed by the laws of Belgium”. “Laws” means the Belgian
legal system in general. Therefore, CISG is still applicable by Article 1.1(a) since the
agreement did not exclude the uses of CISG.
Notes: What if two members of CISG choose to use the law of another country that is not a
member of CISG?
- Traditional approach: when parties choose to use the law of another country that is not a
member of CISG, the implicit agreement is that they eliminate CISG.
- Nowadays approach: According to Article 1.1(b) CISG, when the rules of private
international law lead to the application of the law of a Contracting State, CISG can still be
applicable. The private international law of that third country has to be taken into account.
=> Except where the parties make reservations under Article 95 CISG, whatever law of the
country (seller or buyer) that the third party’ private international law leads to will be applied.
If the private international law of that third country does not lead to any country, then the law
of the country that has the most connection to the contract will be applied.
Notes: Two countries are both not members of CISG, but choose to apply CISG
- In this case, CISG is still applicable.
- Article 1.3 CISG:
Neither the nationality of the parties nor the civil or commercial character of the
parties or of the contract is to be taken into consideration in determining the
application of this Convention.
- Article 6 CISG:
The parties may exclude the application of this Convention or, subject to article 12,
derogate from or vary the effect of any of its provisions.
- Article 12 CISG:
Any provision of article 11, article 29 or Part II of this Convention that allows a
contract of sale or its modification or termination by agreement or any offer,
acceptance or other indication of intention to be made in any form other than in
writing does not apply where any party has his place of business in a Contracting
State which has made a declaration under article 96 of this Convention. The parties
may not derogate from or vary the effect of this article.
Notes: The scope of Article 6
Applying Article 6 of the CISG, the question arises here is whether Article 6 can be applied
to Article 1? Can parties amend the application scope of the CISG?
- Article 12 states that convention provisions (not contract provisions) can be amended. In
fact, some contracts in countries like China/UK do not have an international element (both
the seller and buyer have a place of business in one country) but they still agree to apply
CISG. Should we allow this?
- First approach: CISG history originates from lex mercatoria (trade usages and soft law).
CISG is written lex mercatoria. The characteristics of CISG show flexibility in application.
Party may amend the CISG.
- Second approach: The very name of the convention is CISG. The “I” stands for
international, so it must be applied to relationships with this element. The parties should not
do that. The amendment must still ensure respect for the nature of the convention.
CHAPTER 2: INTERPRETATION OF THE CISG AND SALE CONTRACTS
- Article 7 CISG:
(1) In the interpretation of this Convention, regard is to be had to its international
character and to the need to promote uniformity in its application and the observance
of good faith in international trade.
(2) Questions concerning matters governed by this Convention which are not expressly
settled in it are to be settled in conformity with the general principles on which it is
based or, in the absence of such principles, in conformity with the law applicable by
virtue of the rules of private international law.
1. International character and uniformity of application
- One should avoid being influenced by national law in interpreting the CISG. This means
that when interpreting the CISG, courts must interpret the terms and the wordings of CISG in
accordance with international law. The main mistake made by national courts is assuming
that the CISG means the same thing as in national law of contract.
- In order for the CISG to be applied uniformly around the world, courts need to consider
foreign decisions that have applied the CISG.
2. The need to promote good faith in international trade
- Good faith in international trade is much different than good faith in civil law countries. In
accordance with the CISG, good faith is the cooperation of the parties in assisting when
performing the contract.
- Article 7.1 CISG does not create a duty for the parties to a contract of sale to act in good
faith. All it does is that, if there are two ways to interpret the CISG, the court should choose
the one that promotes the observance of good faith in international trade.
3. Gap-filling with the CISG’ general principles
- The gaps in the CISG exist mainly because States could not agree on more precise
provisions and there is no evidence that States are now more likely to agree.
- There are many gap-filled for the CISG. The first step is to check whether there is any
general principle of the CISG which could settle the problem.
3.1. General principles derived from one single article:
+ Article 6 CISG (party autonomy):
The parties may exclude the application of this Convention or, subject to article 12,
derogate from or vary the effect of any of its provisions.
+ Article 7 CISG (principle of observance of good faith):
In the interpretation of this Convention, regard is to be had to its international
character and to the need to promote uniformity in its application and the observance
of good faith in international trade.
3.2. General principles identified from several articles:
+ Principle of preservation of the contract can be derived from Article 25, 49.2 and 82
CISG.
+ Article 25 CISG:
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.
+ Article 49.2 CISG:
However, in cases where the seller has delivered the goods, the buyer loses the right
to declare the contract avoided unless he does so:
(a) in respect of late delivery, within a reasonable time after he has become aware
that delivery has been made;
(b) in respect of any breach other than late delivery, within a reasonable time:
(i) after he knew or ought to have known of the breach;
(ii) after the expiration of any additional period of time fixed by the buyer in
accordance with paragraph (1) of article 47, or after the seller has declared that he
will not perform his obligations within such an additional period; or
(iii) after the expiration of any additional period of time indicated by the
seller in accordance with paragraph (2) of article 48, or after the buyer has declared
that he will not accept performance.
+ Article 82 CISG:
(1) The buyer loses the right to declare the contract avoided or to require the seller to
deliver substitute goods if it is impossible for him to make restitution of the goods
substantially in the condition in which he received them.
(2) The preceding paragraph does not apply:
(a) if the impossibility of making restitution of the goods or of making restitution of
the goods substantially in the condition in which the buyer received them is not due to
his act or omission;
(b) if the goods or part of the goods have perished or deteriorated as a result of the
examination provided for in article 38; or
(c) if the goods or part of the goods have been sold in the normal course of business
or have been consumed or transformed by the buyer in the course of normal use
before he discovered or ought to have discovered the lack of conformity.
3.3. General principles from a single provision where its ruling generalized to similar
situations
- Dispatch Principle
- Receipt Principle
- Interpretation of “Reasonable time”
- Maturity without Demand
- General Principle of full Compensation
Notes: Reasonable time.
Reasonable time in the CISG has become a principle and stated in a specific principle. But
we have to determine it according to the contractual agreement and a case by case basis.
3.4. Domestic law
- Recourse to Domestic law is only the last resort
- Normally, these matters will be determined by domestic law:
+ Capacity to sign the contract
+ Rate of Interest Payment
+ Limitation of Claims, Set-off and Representation
+ Penalty
3.5. CISG and other international legal documents
3.5.1. UNIDROIT
- UNIDROIT is not a gap-filled source of the CISG.
- Nowadays (2020 approach), UNIDROIT is not a supplement for the CISG because: (i)
UNIDROIT is just an instrument; (ii) Article 7 of the UNIDROIT does not state that it can be
used to be the gap-filled source; (iii) Separateness of UNIDROIT and CISG; (iv) There are
other instruments, e.g. PECL, which has the same nature as the UNIDROIT, and if we accept
UNIDROIT as a supplement for the CISG, we also have to accept others => this is wrong
with the nature of instruments.
3.5.2. INCOTERMS
- Incoterms are not designed to replace the entire contract for sale; they merely supplement it.
- Can parties amend INCOTERMS terms? Yes, but the amendment has to stick to the nature
of the INCOTERMS.
4. Interpreting contract under CISG
- Article 8 CISG:
(1) For the purposes of this Convention statements made by and other conduct of a
party are to be interpreted according to his intent where the other party knew or
could not have been unaware what that intent was.
(2) If the preceding paragraph is not applicable, statements made by and other
conduct of a party are to be interpreted according to the understanding that a
reasonable person of the same kind as the other party would have had in the same
circumstances.
(3) In determining the intent of a party or the understanding a reasonable person
would have had, due consideration is to be given to all relevant circumstances of the
case including the negotiations, any practices which the parties have established
between themselves, usages and any subsequent conduct of the parties.
=> 2 step:
(1) Intention of parties
(2) Reasonable person of the same kind as the other party would have had
=> Reasonable person method will be difficult to apply, since it will be very hard to find
suitable third parties: The third party must have many similarities with both the buyer and the
seller.
CHAPTER 3: CONTRACT FORMATION
1. Form of contract
- Article 11 CISG:
A contract of sale need not be concluded in or evidenced by writing and is not subject
to any other requirement as to form. It may be proved by any means, including
witnesses.
- Article 12 CISG and Article 96 CISG allow states to make a reservation regarding the form
of contract. So in some cases, Article 11 CISG will not apply.
2. Offer
- Article 14 CISG:
(1) A proposal for concluding a contract addressed to one or more specific persons
constitutes an offer if it is sufficiently definite and indicates the intention of the offeror
to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the
goods and expressly or implicitly fixes or makes provision for determining the
quantity and the price.
(2) A proposal other than one addressed to one or more specific persons is to be
considered merely as an invitation to make offers, unless the contrary is clearly
indicated by the person making the proposal.
- When determining whether a contract exists, we must first determine whether there is an
offer, and whether the offer is valid or not.
- The offer must contain the intention to be bound. In order to determine the offeror's
intention to bind himself in the event of acceptance of the offer, all relevant circumstances
must be taken into account, including but not limited to statements, documents, or oral
statements. or the conduct of the offeror.
- An offer has to be definite. CISG accepts the indirect method of determining prices. Cases
where parties agreed to use market price are acceptable, but they would have to agree on the
time of the market price to be determined for the offer to be valid.
- Specific person: must be specific. If not, it is not considered as an offer but an invitation
(proposal).
3. Acceptance
- Article 18 CISG:
(1) A statement made by or other conduct of the offeree indicating assent to an offer
is an acceptance. Silence or inactivity does not in itself amount to acceptance.
(2) An acceptance of an offer becomes effective at the moment the indication of assent
reaches the offeror. An acceptance is not effective if the indication of assent does not
reach the offeror within the time he has fixed or, if no time is fixed, within a
reasonable time, due account being taken of the circumstances of the transaction,
including the rapidity of the means of communication employed by the offeror. An
oral offer must be accepted immediately unless the circumstances indicate otherwise.
(3) However, if, by virtue of the offer or as a result of practices which the parties
have established between themselves or of usage, the offeree may indicate assent by
performing an act, such as one relating to the dispatch of the goods or payment of the
price, without notice to the offeror, the acceptance is effective at the moment the act
is performed, provided that the act is performed within the period of time laid down
in the preceding paragraph.
- Silence must be absolute silence. Because acceptance can also be determined through
behavior. If the buyer is silent but acts to show that he accepts the offer, the provisions on
silence in Article 18.1 will not apply.
=> We will have to go back to Article 8 to determine the intention of the parties.
- In order for a proposal for concluding a contract to constitute an offer, it must be addressed
to one or more specific persons and it must be sufficiently definite.
- Article 23 CISG:
A contract is concluded at the moment when an acceptance of an offer becomes
effective in accordance with the provisions of this Convention.
- The contract is concluded when the acceptance of the offer becomes effective.
- The offeree must communicate the acceptance to the offeror. But under Article 18.3, the
offeree may indicate assent by performing an act, without notice to the offeror.
Notes: Late acceptance
- Article 21 CISG:
(1) A late acceptance is nevertheless effective as an acceptance if without delay the
offeror orally so informs the offeree or dispatches a notice to that effect.
(2) If a letter or other writing containing a late acceptance shows that it has been sent
in such circumstances that if its transmission had been normal it would have reached
the offeror in due time, the late acceptance is effective as an acceptance unless,
without delay, the offeror orally informs the offeree that he considers his offer as
having lapsed or dispatches a notice to that effect.
- The offeror may decide to treat a late reply as having arrived on time. If the offeror wishes
to be bound by the late acceptance, he/she must notify the offeree without delay that the
acceptance is effective.
- If the acceptance has been dispatched in time but arrives late due to transmission problems,
a contract is formed upon the arrival of the late acceptance unless the offeree notifies the
offeror that he/she intends to treat the acceptance as ineffective.
- Điều 14 và điều 55 có khác không? Không. Điều 55 dùng để vớt Điều 14.
mistelis.pdf (un.org)
CHAPTER 4: CONTRACT PERFORMANCE AND REMEDIES
1. Basic obligations of the parties
- Seller’ obligation: Article 30 - 44
+ Goods delivery
+ Documentary handover
+ Ownership transfer
- Buyer’ obligation: Article 53 - 60
+ Shipment receiving
+ Goods inspection
+ Payment
1.2. Goods delivery
- Article 35 CISG:
(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.
(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 judgment;
(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.
(3) The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph
for any lack of conformity of the goods if at the time of the conclusion of the contract
the buyer knew or could not have been unaware of such lack of conformity.
- Goods delivery include: (1) Quality of the goods, (2) Delivery place, (3) Delivery time
- When there is an agreement between parties, we must respect it. But Article 35 of the CISG
lists out some circumstances where the goods may not conform to the contract.
- Article 33 CISG:
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.
- Article 31 CISG:
If the seller is not bound to deliver the goods at any other particular place, his
obligation to deliver consists:
(a) if the contract of sale involves carriage of the goods--in handing the goods over to
the first carrier for transmission to the buyer;
(b) if, in cases not within the preceding subparagraph, the contract relates to specific
goods, or unidentified goods to be drawn from a specific stock or to be manufactured
or produced, and at the time of the conclusion of the contract the parties knew that
the goods were at, or were to be manufactured or produced at, a particular place--in
placing the goods at the buyer's disposal at that place;
(c) in other cases--in placing the goods at the buyer's disposal at the place where the
seller had his place of business at the time of the conclusion of the contract.
miss bài ngày 13/10
