Transcript International Sales - Lectures: Section 4

INTERNATIONAL SALES LAW - seminar 2004
ISL
I
ISL: objectives, functions and structure
II
Management of information on ISL
III
Contractual Risk Management in Transnational Sales Transactions
IV
Management of risk of contractual disputes
V
Management of risk of contract breach
VI
Management of risk of loss of or damage to the goods
VII
Management of risk of changed circumstances
VIII
Case study
IX
Case studies
ISL
I
II
III
IV
V
VI
VII
VIII
IX
Management of risk of contract breach
(risk of
non-performance,
delay
orinnon-conformity)
Default
distribution of
risks
sales law
CISG art. 71:
CISG art. 74:
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.
CISG art. 77:
…
(2) If the seller has already dispatched
A party
relies ondescribed
a breach of
the goods
beforewho
the grounds
mustparagraph
take measures
in thecontract
preceding
becomeas are
reasonable
in the the
circumstances
to
evident,
he may prevent
handing
loss of
over mitigate
the goodstheto loss,
the including
buyer even
profit,
resulting
froma the
breach. If he
though
the buyer
holds
document
to takehim
suchtomeasures,
the party in
whichfails
entitles
obtain them.
breach paragraph
may claimrelates
a reduction
The present
only toin the
damages
the amount
by which
the rights
in theingoods
as between
the the
have been mitigated.
buyerloss
andshould
the seller...
ISC
- duty to co-operate (art. 60)
- right/obligation to specific performance (art.
46.1 and 62)
- right to suspend performance (art.71)
- substitute performance (art. 46.2)
- repairment
(art. 46.3)
Contracting
Contract law
- price reduction (art. 50)
- avoidance (art. 49, 64, 72, 73)
- damages (art. 74-77, 79)
- CISG art. 25-26, 28,
45-52, 61-65, 71-88
ISL
Management of risk of contract breach
Default distribution of risks in contract law
I
II
III
IV
V
PECL
UPICC
ARTICLE 8:105: Assurance of Performance
ARTICLE 7.4.13 (AgreedUPICC
payment for non-performance)
(1) A party who reasonably believes that there will be a fundamental nonARTICLE
7.1.6that
(Exemption
clauses)
PECL
(1)
Where thebycontract
provides
ademand
party who
does not
performofisdue
to
performance
the other
party may
adequate
assurance
pay
a specified
summeanwhile
to8:107:
aggrieved
party
for
such
non-performance,
the
performance
and
may
performance
of his own
A
clause
which
limits
orthe
excludes
onewithhold
party’s
liability
for
non-performance
ARTICLE
Performance
Entrusted
to
Another)
aggrieved
party
is entitled
to reasonable
thatrender
sum irrespective
of substantially
its actual harm.
performance
so long
such
belief continues.
or which permits
oneasparty
to
performance
different
A
party
who
entrusts
performance
of
the
contract
to
another
person
from
what thenotwithstanding
other party reasonably
expected
maycontrary
not be invoked
if it
(2)
However,
any
agreement
to
the
the
specified
(2)
Where
this
assurance
is
not
provided
within
a
reasonable
time,
the
remains
responsible
for performance.
could
be
grossly
unfair
to
do
so,
having
regard
to
the
purpose
of
the
sum may
be reduced
a reasonable
where ifit is
excessive
party
demanding
it to
may
terminate amount
the contract
hegrossly
still reasonably
contract.
in
relationthat
to the
harm
from the non-performance
andbyto the
the other
believes
there
willresulting
be a fundamental
non-performance
other
circumstances.
party and gives notices of termination without delay.
ISC
VI
VII
VIII
IX
Contracting
- PECL art. 6:111 and
chapters 7 to 9
- UPICC chapters 6
and 7
- CENTRAL TLDB
chapters VI-IX
- CISG art. 25-26, 28,
45-52, 61-65, 71-88
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
ISC
III
IV
V
VI
VII
VIII
IX
(- bid bonds)
- performance bonds
- payment conditions
and securities
- liquidated damages and
other ”hostages”
- exemption clauses
- PECL art. 6:111 and
chapters 7 to 9
- UPICC chapters 6
and 7
- CENTRAL TLDB
chapters VI-IX
- CISG art. 25-26, 28,
45-52, 61-65, 71-88
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
Rules on International
ISC Standby
Practices
(ISP 98)
ICC Publication No 458
III
IV
V
VI
VII
VIII
IX
ICC Uniform Rules for
Demand Guarantees
(URDG)
ICC Publication No 458
(- bid bonds)
- performance bonds
- payment conditions
and securities
- liquidated damages and
other ”hostages”
- exemption clauses
ICC Uniform Rules for
Contract Guarantees
(URCG)
ICC Publication No 325
- PECL art. 6:111 and
chapters 7 to 9
- UPICC chapters 6
and 7
- CENTRAL TLDB
chapters VI-IX
- CISG art. 25-26, 28,
45-52, 61-65, 71-88
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
ISC
III
IV
V
VI
VII
VIII
IX
(- bid bonds)
- performance bonds
- payment conditions
and securities
- liquidated damages and
other ”hostages”
- exemption clauses
- PECL art. 6:111 and
chapters 7 to 9
- UPICC chapters 6
and 7
- CENTRAL TLDB
chapters VI-IX
- CISG art. 25-26, 28,
45-52, 61-65, 71-88
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
III
IV
PAYMENT
V
VI
VII
VIII
IX
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
III
IV
check/
draft
payment order
(SWIFT)
clean
payment
forms of
PAYMENT
V
VI
VII
VIII
IX
documentary
payment
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
check/
draft
III
IV
clean
payment
ICC Uniform Rules
for Collections
payment order
(URC)(SWIFT)
ICC Publication No 522
forms of
PAYMENT
V
collection
VI
VII
confirmed
VIII
unconfirmed
IX
documentary
payment
documentary credit/
letter of credit/
L/C
ICC Uniform
Customs and
irrevocable
Practice for Documentary
Credits (UCP 500),
revocable
ICC
Publication No 500
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
control over the goods
I
performance guarantee
II
in advance
repayment guarantee
III
IV
V
VI
VII
VIII
IX
ICC
ICCUniform
UniformRules
Rulesfor
for
The ICC Model
Contract
ContractGuarantees,
Guarantees,
International Sale
(URCG)
(URCG)
transport
documents:
ICCContract
Uniform
Rules
for
PAYMENT
ICC Publication No 556 ICC
ICCPublication
Publication
No325
325
ICC
Uniform
Rules
for No
Demand
Guarantees
terms
Rules
on
Demand
Guarantees
- bills of lading
(URDG)
B. GENERAL CONDITIONS
Rules
onNo
International
Standby
Practices
(URDG)
electronic
bills
ICC
Publication
458 of lading
Art.
5.2
International
Standby
Practices
(ISP
98)- without
ICCinPublication
sea
Nowaybills
458
”If the parties have agreed on payment
advance,
further
(ISP
98)
ICC
Publication
Nounless
458receipt
- mate’s
indication, it will be assumed that such
advance
payment,
otherwise
ICC
Nowaybill
458must be
agreed, refers to the full price, and that
thePublication
advance payment
- air
received by the Seller’s bank in immediately
available funds
least 30
- consignment
noteat(CIM/CMR)
days before the agreed date of delivery or the
earlist date within
the agreed
- multimodal
transport
document
delivery period. If advance payment has been agreed
only for a part
of the
- warehouse
warrant
contract price, the payment conditions for the remaining amount will be
determined according to the rules set forth in this article.”
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
control over the goods
I
performance guarantee
II
in advance
repayment guarantee
III
IV
V
VI
VII
VIII
IX
simultaneous
exchange for
goods/documents
PAYMENT
The ICC Model
terms
International Sale Contract
ICC Publication No 556
by parties themselves or
through representatives
through
a third party
COD
CAD
B. GENERAL
CONDITIONS
ICC Uniform
Rules for Collections
Art. 5.4 (URC)
”If the parties have
agreed
on payment
ICC
Publication
No by
522
documentary collection, then, unless otherwise
agreed, documents will be tendered against
payment (D/P) and the tender will in any case be
subject to the Uniform Rules for Collections
published by International Chamber of Commerce.”
ISL
S 2000
ManagementORGALIME
of risk of contract
breach
Contractual allocation of risks in contracting practice
GENERAL CONDITIONS
for the supply of mechanical, electrical and electronic
products
control
over the goods
I
II
III
IV
V
VI
in advance
PAYMENT
performance guarantee
Clause 18.
repayment guarantee
”Unless otherwise agreed, the purchase price shall be paidby
with
one third
at the or
parties
themselves
simultaneous
formation of the contract and one third when the Supplier notifies the Purchaser that
through representatives
exchange for
the Product, or the essential part of it, is ready for delivery. Final payment shall be made
goods/documents
when the Product is delievered.
PAYMENT Payments shall be made within 30 days of the date of the invoice.”
COD
terms
gradually
through
a third party
ORGALIME S 2000
Clause 19.
VII
VIII
IX
”Whatever the means of payment used, payment shall not be deemed to have been
effected before the Supplier’s amount has been fully and irrevocably credited.”
CAD
ISL
I
II
III
IV
V
VI
VII
VIII
IX
Management of risk of contract breach
Contractual allocation of risks in contracting practice
The The
ICCICC
Model
control over the goods
Model
International
SaleSale
Contract
International
Contract
performance guarantee
ICC ICC
Publication
No
556
Publication No 556
in advance
repayment guarantee
B. GENERAL
CONDITIONS
B. GENERAL
CONDITIONS
Art. 5.3
Art. 5.1 setting payment
on open account
theby
default
parties
themselves
ICCas
Uniform
Customs
and or
simultaneous
solution,
representatives
foron payment
Practice
for Documentary
”If the parties exchange
have agreed
by through
goods/documents
Credits
(UCP
500),
documentary
credit,
then,have
unless
otherwise
To
the
extent
that
the
parties
agreed
that
payment
is
to
PAYMENT
agreed,
the
buyer
must arrange
forICC
ais toPublication
No 500 COD
through
be
backed
by
a
bank
guarantee,
the
Buyer
provide,
at
terms documentary credit in favour of the Seller to be
least 30 days before the
gradually
agreed date of delivery
or at least
a third
party
issued
by
reputable
bank,
subject
to
the
Rules
on
30 days before the earliest date within the argeed
delivery
Uniform CustomsArt.
and5.5:
Practice
for
CAD
International
Standby Practices
credit
Documentary
Credits
published
by the
” period,
a first demand
bank
guarantee
subject
to the
(ISP
98)
documentary
credit
International
Chamber
of
Commerce,
and
to
be
Uniform Rules for Demand Guarantees
published
by No 458
ICC
Publication
notified at least
30 days
before the agreed
date letter of
International
Chamber
of Commerce,
or a standby
ofcredit
delivery
or ateither
least 30
days Rules
beforeor
thetoearliest
subject
to
such
the Uniform
demandand
guarantee
ICC
Uniform
Customs
ICC Uniform
Rules
open account
date
within
the
argeed
delivery
period.
Unless
Customs and Practice for Documentary
Credits
Practice
for published
Documentary
for Demand
Guarantees
otherwise
agreed,
the
documentary
credit
shall
standby letter
by the International Chamber of Commerce,
in either
case
Credits
(UCP
500),
(URDG)
be
payable atissued
sight and
partialbank.”
shipments
of credit
by aallow
reputable
ICC
Publication
No
500
ICC Publication Noand
458transhipments.”
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
III
IV
V
VI
PAYMENT
terms
ORGALIME S 2000
control over the goods
GENERAL CONDITIONS
performance
for the supply of mechanical, electrical and
electronic guarantee
products
in advance
repayment guarantee
RESERVATION
OF TITLE
- warehouse
warrant
Clause
21.
bills
of
lading
by parties themselves or
simultaneous
-exchange
electronic
bills of lading through representatives
for
”The product shall remain the property of the Supplier until
- sea waybills
paid forgoods/documents
in full to the extent that such retention of property
- mate’s
receipt
COD
is valid
under
the applicable
law.
through
- air
waybill
The Purchasergradually
shall
at the
request of the Supplier assist him in
a third party
- consignment
(CIM/CMR)
taking
any measuresnote
necessary
to protect the Supplier’s
- title
multimodal
transport
document
to the Product
in the
country concerned.
CAD
credit
The retention of title shall not affect the passing of risk under
documentary
credit
Clause
9.”
transport documents:
VII
open account
VIII
IX
control over the goods
security
demand guarantee
standby letter
of credit
retention
of title
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
control over the goods
I
performance guarantee
II
in advance
repayment guarantee
III
IV
V
PAYMENT
terms
VIII
IX
through
a third party
gradually
project
financing
financial
leasing
COD
CAD
credit
VI
VII
by parties themselves or
through representatives
simultaneous
exchange for
goods/documents
documentary credit
factoring/
forfaiting
control over the goods
open account
security
demand guarantee
standby letter
of credit
retention
of title
ISL
Management of risk of contract breach
ORGALIME
S 2000
Contractual allocation of risks
in contracting
practice
I
GENERAL CONDITIONS
for the supply of mechanical,
electrical
The ICC
Model and electronic products
II
International Sale Contract
TIME
DELIVERY.
DELAY
ICCFOR
Publication
No 556
III
IV
V
VI
VII
VIII
IX
ISC
Clause
13.
B. GENERAL
CONDITIONS
Art. 10
”If the Product
is
not
delivered
at
the timeand
forremedies
delivery (as
defined in Clauses
Late delivery, non-delivery
thereof
10 and 12), the Purchaser is entitled to liquidated damages from the date on
taken
place.is entitled to claim
”10.1 When there is which
delay indelivery
deliveryshould
of any have
goods,
the Buyer
The liquidated
damages
shallor
besuch
payable
at apercentage
rate of 0.5 as
permay
centbe
of agreed
the
liquidated
damages egual
to 0,5%
other
purchase
price
forgoods
each completed
week of week
delay.of
The
liquidated
of the
price of
those
for each complete
delay.
Wheredamages
the Buyer
shall
not
exceed
7.5
per
cent
of
the
purchace
price.
so notifies the Seller within 15 days from the agreed date of delivery, damages
If only
part
the Product
is delayed,
liquidated
bethe
will run
from
theofagreed
date of
delivery the
or from
the thedamages
last day shall
within
calculated
ondelivery.
that part
of purchase
price
which isthe
attributable
to 15
such
partof
agreed
period of
Where
the Buyer
so notifies
Seller after
days
of the
Product
in consequence
delay
bedate
usedofasthe
intended
the
agreed
dateas
ofcannot
delivery,
damages will of
runthefrom
the
notice.by
(- bid bonds)Liquidated damages shall
the 6:111
parties...”
- PECL
art.
not exceed
5 % ofand
the price of the delayed goods or
- performance bonds
such otherchapters
maximum7amount
to 9 as may be agreed.”
Clause
14.
- payment conditions
- CISG art. 25-26, 28,
- UPICC chapters 6
and securities
”10.4 In case of termination of the Contract under article
10.2 or61-65,
10.3 then
in
45-52,
71-88
and
7
ThetoPurchaser
shallpaid
forfeit
his right
to liquidated
damages
if he
has not to
any
amount
or payable
under
article 10.1,
the Buyer
is entitled
- liquidatedaddition
damages
and
lodged aclaim
claimdamages
in-writing
such
damages loss
within
months after the
CENTRAL
TLDB
forfor
any
additional
notsix
exceeding
other ”hostages”
when
delivery
should
have taken
place.
10time
% of
the price
of
the
non-delivered
goods.”
chapters
VI-IX
- exemption clauses
ISL
Management of risk of contract breach
Contractual allocation of risks in contracting practice
I
II
III
IV
V
VI
VII
VIII
IX
NL 01 E
ORGALIME S 2000
ISC
GENERAL CONDITIONS
for the supply of machinery and other
mechanical, electrical and electronic equipment.
GENERAL CONDITIONS
for the supply of mechanical, electrical
and electronic products
Liability for Defects
Consequential Losses
”34. The Seller shall have no liability for defects
save as stipulated in Clauses 21–33. This applies
to any loss the defect may cause, such as loss of
production, loss of profit and other consequential
economic loss. This limitation of the Seller’s
liability shall not apply, however, if he has been
(- bidofbonds)
guilty
gross negligence.”
- PECL art.
- performance bonds
- payment conditions
and securities
- liquidated damages and
other ”hostages”
- exemption clauses
”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.”
6:111
and
chapters 7 to 9
- UPICC chapters 6
and 7
- CENTRAL TLDB
chapters VI-IX
- CISG art. 25-26, 28,
45-52, 61-65, 71-88
Go to section
VI Management of risk of loss of or damage to the goods