International business involves a lot greeater

risk and uncertainty than business within

ones states.

Sale

Contract

Sale of Goods Law of

Contract and UN Convention
Classification of Contracts

Importance of Contract
Responsibilities for buyer and seller, defines parameters
in which states/companies can negotiate and minimses
risk free. Impor

Formation
Contracts for international
sale of goods
International sale of goods refers to the
transfer, or agreement to transfer,
property in goods from a seller in one
country to a buyer in another for a
price: Islam

Varied national approaches to

contract for sales may well impede
global trade

Formal
Simple
Expressed
Implied
Unilateral
Bilateral

Validity

Valid
Voidable
Void
Illegal

Unenforceable

Each favours self-interest choice

of law, choice of forum

Drafting suitable contracts by compromising

expectations is difficult and therefore time consuming

parties

The practice of choosing certain laws and forums in advance in order

to avoid potential future conflicts led to the development of varied and
inconsistent rules with regard to contracts for international sale.
*Such contracts normally fall outside the scope of public international
law because, parties may lack international legal personality.
International efforts
for uniform law
UN: to achieve consistency and predictability in international sale
United Nations Convention on Contracts for the International Sale of
Goods 1980 (CISG)

CISG
Objectives:

Scope Jurisdiction

Scope Goods

Enhancing certainty
Providing text
Harmonising and
unifying both the
substantive and
procedural laws
Accommodate the
diverse commercial

Intl sale of goods

and services
States may or may
not be contracting
parties
Business places may
or may not be within
the contracting states

ExcludedConsumer
Auction
Execution by authority
Securities
Negotiable Instruments
Money
Ships vessels-aircraft
Electricity But IP

interests

CISG - Covers
formation of contracts,
performance
remedies available to the
parties

CISG Omits

the legality of contracts,

the competency of the parties
the rights of third parties, and
liability for death or personal

Freedom protected
Opting in and out
Choice of law
Choice of forum

injury

Formation- Valid offer

Addressed to specific persons otherwise invitation to make offer
Effective when it reaches the offeree
Can be withdrawn before they reach the offeree
Revocation- may be revoked until a contract is concluded.
- an offer may be revoked if the revocation reaches the offeree before the
offeree has dispatched an acceptance
-

- an offer cannot be revoked:

(a) if it indicates, whether by stating a fixed time for acceptance or otherwise,
that it is irrevocable; or
(b) if it was reasonable for the offeree to rely on the offer as being irrevocable
and the offeree has acted in reliance on the offer: Art 16(2)

CISG-Contract Formation- Valid acceptance (Arts 17-24)

* Acceptance communicated postal rule reasonable time if not specified oral
offer be accepted immediately
CISG applies:
The receipt rule- responsibility to insure that the acceptance gets to the offeror
*Counter-offer rule- acceptance proposes additional or materially different contract
terms
*The mirror image rule- must reflect the terms of the offer (important terms include
price, payment, quality, quantity, delivery, dispute settlement)
*Withdrawal rule- may be withdrawn before communicated to the offeror

CISG- Contract Performance

Compliance
with the terms

Express
warranties

Implied
warranties

Nonconformity

Seller not liable if buyer

knew or ought to have known

Notification after
discovery to get remedy

Nonconforming Goods- Sellers Right to Cure Defects in Goods before or after

the due delivery date - Buyers retain any right to claim damages- under CISG

CISG- Excuse for Non-performance

Legal excuse for certain compelling reasons - Doctrine of Frustration/force majeure
-Performance impeded by unforeseeable supervening events

Remedies for Breach

Fundamental
breach
substantially
deprived of
what entitled

Damages
flown
directly
from the
breach

Specific
performance

Unilateral
reduction
nonconformi
ng goods but
accepted

Formula reduced by a ratio of the value of the goods

delivered OR value the conforming goods would have had at
the time of delivery

Avoidance
by either
party
either
fundamental
failure or
failure after
German
Nachfirst
Notice

Application of the CISG in Australia

Acceded to CISG on 17 March 1988
*Implemented through domestic legislation called Sale of Goods (Vienna
Convention) Act 1986 (NSW, Qld, SA, WA)
Sale of Goods (Vienna Convention) Act 1987 (Vic, Tas, NT and ACT)