Transcript International Sales - Lectures: Section 6

INTERNATIONAL SALES LAW - seminar 2004
ISL
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ISL: objectives, functions and structure
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Management of information on ISL
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Contractual Risk Management in Transnational Sales Transactions
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Management of risk of contractual disputes
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Management of risk of contract breach
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Management of risk of loss of or damage to the goods
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Management of risk of changed circumstances
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Case study
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Case studies
Management of risk of changed circumstances
Default distribution of the risk in sales law
ISL
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CISG art. 79:
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(1) A party is not liable for a failure to perform any of his
obligations if he proves that the failure was due to an
impediment beyond his control and that he could not
reasonably be expected to have taken the impediment into
account at the time of the conclusion of the contract or to have
avoided or overcome it or its consequences.
(2) If the party's failure is due to the failure by a third person
whom he has engaged to perform the whole or a part of the
contract, that party is exempt from liability only if:
(a) he is exempt under the preceding paragraph; and
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(b) the person whom he has so engaged would be
so exempt if the provisions of that paragraph
were applied to him.
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(3) The exemption provided by this article has effect for the
CONTRACT LAW
CONTRACTING
period during which the impediment exists.
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- CISG art. 79 (and
74-78 and 80-88)
ISL
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Management of risk of changed circumstances
Default distribution of the risk in sales law
Scope of the management liability according to
CISG art. 79
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Liability for the
functioning
of one’s own
Performance
organisation
management
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EXCUSES
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Firm
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Liability
Lossfor
external
risks
management
Liability
Networkfor
subcontracting
management
ISL
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Management of risk of changed circumstances
Default distribution of the risk in sales law
Scale of the management liability according to
CISG art. 74-77
CISG art. 74:
CISG art. 77:
Damages for breach of contract by one party
consists of a sum equal to the loss, including
loss of profit, suffered by the other party as a
consequence of the breach. Such damages may
not exceed the loss which the other party in
breach foresaw or ought to have foreseen at
the time of the conclusion of the contract, in
the light of the facts and matters of which he
then knew or ought to have known, as a
possible consequence of the breach of contract.
A party who relies on a breach of
contract must take measures as are
reasonable in the circumstances to
mitigate the loss, including loss of
profit, resulting from the breach. If he
fails to take such measures, the party in
breach may claim a reduction in the
damages in the amount by which the
loss should have been mitigated.
CISG
art. 75: substitute transaction and damages for price difference
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art. 76: damages when no substitute transaction is made
ISL
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Management of risk of changed circumstances
Default distribution
of the risk in contract law
UPICC
ARTICLE 7.1.7 (Force majeure)
(1) Non-performance by a party is excused if that party proves that the
non-performance was due to an impediment beyond its control and that it
could not reasonably be expected to have taken the impediment into
account at the time of the conclusion of the contract or to have avoided or
overcome it or its consequences.
ISC
(2) When the impediment is only temporary, the excuse shall have effect
for such period as is reasonable having regard to the effect of the
impediment on the performance of the contract.
(3) The party who fails to perform must give notice to the other party of
the impediment and its effect on its ability to perform. If the notice is not
received by the other party within a reasonable time after the party who
fails to perform knew or ought to have known of the impediment, it is
liable for damages resulting from such non-receipt.
(4) Nothing in this article prevents a party from exercising a right to
- PECL art. 6:111, 8:108,
terminate the contract or to withhold performance or request interest
8:109 (and chapter 9)
on money due.
- UPICC art. 6.2.1-6.2.3,
SALES
CONTRACTING
7.1.6, 7.1.7 (and ch. 7)
- CENTRAL TLDB No.
IV.5.7, VI.3, VIII.1, IX.3
and IX.4
LAW
Management of risk of changed circumstances
Default distribution ofPECL
the risk in contract law
ISL
Article 6:111: Change of Circumstances
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(1) A party is bound to fulfil its obligations even if performance has become more onerous,
whether because the cost of performance has increased or because the value of the performance
it receives has diminished.
ISC
(2) If, however, performance of the contract becomes excessively onerous because of a change
of circumstances, the parties are bound to enter into negotiations with a view to adapting the
TCL database
contract or terminating CENTRAL
it, provided that:
(a) the change of circumstances occurred after the time of conclusion of the contract,
No. IX.3 - Nominal-value principle
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(b) the possibility of a change of circumstances was not one which could reasonably
have been taken into account at the time of conclusion of the contract, and
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the
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Unless otherwise agreed by the parties, each
(c) the riskparty
of the bears
changethe
of circumstances
is not one
which, according to the contract,
risk of currency
depreciation
party affected should be required to bear.
(nominal-value principle).
(3) If the parties fail to reach agreement within a reasonable period, the court may:
(a) end the contract at a date and on terms to be determined by the court ; or
- PECL art. 6:111, 8:108,
(b) adapt the contract in order to distribute
between
the9)parties in a just and equitable
8:109 (and
chapter
manner
the losses and gains resulting
fromart.
the6.2.1-6.2.3,
change of circumstances.
- UPICC
SALES LAW
CONTRACTING
7.1.6, 7.1.7 (and ch. 7)
In either case, the court may award damages for the loss suffered through a party refusing to
- CENTRAL TLDB No.
negotiate or breaking off negotiations contrary to good faith and fair dealing.
IV.5.7, VI.3, VIII.1, IX.3
and IX.4
ISL
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Management of risk of changed circumstances
Contractual allocation of the risk in contracting practice
The ICC Model
NL 01E
The ICC Model
International Sale Contract
International
Sale Contract
ICC Publication No 556
GENERAL
CONDITIONS
ICC and
Publication
No 556 electrical
for the supply of machinery
other mechanical,
B. GENERAL CONDITIONS
and electronic equipment.
B. GENERAL CONDITIONS
Art. 10.2
13(Force
Force Majeure)
majeure
Grounds for Art.
Relief
”If the parties have agreed upon a
Restating
in grounds
CISG) for
cancellation date in Box A-9, the
buyer
”36.
The following(13.1-13.2
circumstances
shall articles
constitute
may terminate the Contract
relief by
if they impede the performance of the contract or makes
”13.3
Without prejudice
to article
10.2,disputes
a groudand
for
notification to the Seller as regards
goods
performance
unreasonably
onerous:
industrial
relief under this
clausethe
relieves
theofparty
failing
which have not been delivered by
anysuch
other circumstance
beyond
control
the parties,
to war,
perform
from liability
in damages,
cancellation date for any such
reason
as fire,
mobilization
or military
call up from
of a
and other contractual
sanctions,
except
whatsoever (including a force majeure
comparable penalties
scope, requisition,
seizure, trade
and currency
duty to pay
on money owing
as long
event).”
restrictions, the
insurrection
andinterest
civil commotion,
shortage
of
as
and
to
the
extent
that
the
ground
subsists.
transport, general shortage of materials, restrictions in the
supply of power and defects or delays in deliveries by subIf the
ground
relief subsistsasfor
more to
than
caused
by any
suchofcircumstance
referred
in
- force majeure -clauses contractors13.4
this Clause. six months, either party shall be entitled to
- hardship-clauses
SALES
LAW
Contract.” shall
LAW
The CONTRACT
above terminate
described the
circumstances
constitute
grounds
- price adjustment -clauses for relief only if their effect on the performance of the contract
- currency clauses
could not be foreseen at the time of formation of the contract.”
ISC
ISL
INTERNATIONAL SALES LAW - seminar 2004
An example of an international sales contract
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ICC Rules of
Arbitration
ICC Model
International
Sale Contract
ADR?
Manufactured Goods
Intended for Resale
ICC Publication No 556
Lex Mercatoria?
PECL?
UPICC?
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VII
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CISG
ICC Uniform
Rules for
Demand
Guarantees
ICC Uniform
Rules for
Collections
ISC
Law
of the
Seller’s
country
A+B
Incoterms
UCP
500
Combiterms?
Go to
Case studies