Chapter 3. Formation of the Contract 147 results (showing 5 best matches)
- The CISG’s formation rules appear in Part II, in Articles 14–23. Article 92(1) allows a Contracting State to make a reservation excluding application of Part II. Article 94(1) allows a Contracting State to declare that the CISG will not apply under specified conditions. The effect of both Articles is to exclude the CISG’s formation rules from application to a contract of sale otherwise within the CISG’s scope. Their operation is easily illustrated. Assume that Seller’s place of business is in State A and Buyer’s place of business is in State B and that the CISG otherwise applies to their sales contract. Also assume that State A has made a reservation under Article 92(1) and State B has not. The consequence of State A’s reservation is stated in Article 92(2): State A is not considered a Contracting State with respect to issues concerning the formation of Seller and Buyer’s sales contract. Suppose now the issue arises as to whether a contract has been concluded by Seller and Buyer....
- The following is a simple illustration of the point. Suppose Seller’s place of business is in Chile and Buyer’s place of business is in the United States. After concluding a sales contract governed by the CISG, Seller and Buyer orally agree to reduce the contract price. Still later, Seller insists on the higher, initial contract price. Buyer claims that price was modified downward, and Seller resists. Is the reduced contract price enforceable? It depends on applicable domestic law. Chile has made an Article 96 reservation requiring that all modifications be in writing, and one of the contracting parties (Seller) has its place of business there. Therefore, according to Article 12, Article 29(1)’s allowance that a modification is effective by the “mere agreement” of the parties does not apply. This means that there is an issue of the rights and obligations of Buyer and Seller which the CISG does not govern. The enforceability of an oral modification reducing the contract price. The...
- Article 2 follows civil law and takes the second, “agreement,” approach. At the same time it preserves elements of the first, “offer and acceptance,” approach. A short series of interconnected UCC provisions shows the presence of the “agreement” approach. Section 2–204 provides general formation requirements, as its heading makes clear (“Formation in General”). (Section 1–107 makes headings to sections of the UCC part of the sections themselves.) Subsection (1) of § 2–204 provides that “a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct of the parties which recognizes the existence of such a contract.” “Agreement” in turn is defined by § 1–201(b)(3): “… the bargain of the parties in fact as found in their language or by implication from other circumstances….” Hence § 2–204(1) treats the agreement of the parties as sufficient to create a contract for sale. Notice that “agreement” does not require an acceptance of an offer to...
- The formation rules applicable to contracts governed by Article 2 are a mixture of UCC-supplied and common law rules. Common law formation rules are incorporated by § 1–103(b), which provides that, “unless displaced by particular provisions of this Act [i.e., the UCC],” principles of law and equity “supplement its provisions.” In general, UCC provisions either replicate, supplement, or displace non-UCC law. Replication occurs when the UCC just reproduces in statute what decisional law otherwise provides. Elimination of the effect of contracts under seal and the regulatory effect of unconscionability on contracts are two examples. Other UCC provisions are consistent with non-UCC law on particular matters. They simply supplement the relevant non-UCC law. Two examples are the treatment of commercial impracticability and the good faith requirement on performance. Some provisions of the UCC displace application of inconsistent rules underwritten by non-UCC principles of law and equity....
- In principle, Article 2’s different approaches are not inconsistent. Article 2’s “agreement” approach allows, but does not require, contracts to be concluded without an offer and acceptance. Article 2’s “offer and acceptance” approach simply states some of the rules for contract formation by offer and acceptance when this avenue is used to form a contract. Other rules are provided by common law formation rules, supplemented by § 1–103(b). Section 2–206, for example, requires an acceptance to conclude a contract only when an offer invites it. Section 2–204 allows a contract to be formed by other means absent an offer. In practice, Article 2’s different approaches to contract formation usually yield the same result. To see this, realize that there are four sorts of possible cases. Only in one is there a possible conflict in the result yielded by the two approaches to formation. (1) ...partly or fully perform. There also is an acceptance of an offer operating to conclude a contract....
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Chapter 2. Governing Law 140 results (showing 5 best matches)
- Article 4 therefore implicates a principle of issue-displacement: When the CISG defines an issue and resolves it, domestic law addressing the issue is displaced. When the CISG either does not address the issue or leaves its resolution to domestic law, domestic law continues to govern. Given the CISG’s limited scope, there must be some way to determine when it addresses an issue concerning the sales contract and when it does not. Often it is easy to tell when the CISG speaks to an issue. For example, assume that a party to a contract governed by the CISG contends that it is not bound because the parties’ agreement was never put in writing and relevant domestic law refuses to enforce contracts not memorialized by a writing. Article 11 provides explicitly that the sales contract need not be concluded or evidenced by a writing. Thus, CISG resolves the issue and, according to the principle of issue-displacement, contrary domestic law is inapplicable. This is true even if domestic law...
- These definitional omissions must be filled by reference to the CISG provisions that govern contractual gaps generally. Article 7 provides that questions concerning matters governed by the CISG, but not expressly settled in it, are to be settled in conformity with that document’s general principles and in conformity with the law applicable under the rules of private international law. Presumably, this latter provision directs courts to resolve definitional issues under the law of the jurisdiction that governs the contract as selected by conflict of laws principles. At the same time, Article 7(1) dictates that the CISG’s provisions are to be interpreted with regard to its international character and to the need to promote uniformity in its application. Once courts have filled gaps in the CISG in a particular way such as by articulating factors that distinguish between a sale and a lease, the admonition to ensure uniformity would appear to require subsequent courts to follow those...
- The second position is that if the forum is a Contracting State, it should apply the CISG without first applying conflict of law principles. Those principles may come into play later in the analysis, since the CISG itself sometimes requires appeal to them. This position is typically justified by considering both the preference for the application of uniform international commercial law and the obligation of nations to enforce treaties, of which the CISG is one, over domestic law. In the hypothetical above, the second position would lead the French court initially to apply the CISG without appeal to conflict of laws principles. In doing so, as we discuss below, the court would ultimately have to consider those principles in applying Article 1(1)(b). But that determination would be made within the application of the CISG rather than prior to it.
- Commentary on the Draft Convention on Contracts for the International Sale of Goods, Prepared by the Secretariat, Doc.A/CONF.97/5 (1979), reprinted in Documentary History of the Uniform Law for International Sales 405, at para. 8 (J.O. Honnold ed., 1989); see also First Committee Deliberations, 3d Meeting, A/Conf.97/C.1/SR.4 (1980), reprinted in id. at 473 (paras. 60–61) (former German Democratic Republic proposal to expressly allow opting in rejected as unnecessary; “principles of autonomy of the will of the parties” already allow it).
- Some exclusions avoid difficult questions of whether something is or is not a good. For instance, Article 2(f) excludes sales of electricity, and thus eludes the debate that has surrounded the classification of electricity under the UCC. Other exclusions, such as sales by auction or by authority of law relate to the manner of the sale rather than the subject of the sale. The moving force between inclusion and exclusion therefore is more complicated than the simple division into tangible and intangible. As in the case of consumer goods, which are clearly “goods,” exclusion in many cases reveals the desire to achieve consensus on a general law of sales among various nations from different legal cultures. Excluded transactions tend to be those that are the subject of substantial domestic regulations, many of which are inconsistent with the regulations of other jurisdictions. For instance, sales of ships, vessels, hovercraft, or aircraft (excluded in Article 2(e)) are often subject to...
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Preface 6 results (showing 5 best matches)
- In this book, we analyze and critique sales law by reference to those principles that have been the subject of current debates about the proper direction of commercial law. These include such principles as allocating risks to parties in the best position to avoid them, respecting the autonomy of commercial parties, and minimizing social waste by allowing parties who value goods most highly the possibility of obtaining them. We believe that it is only through familiarity with these modes of analysis that the student of commercial law can make appropriate choices among competing legal rules and appropriate interpretations of existing rules. At bottom, however, our arguments are based on a belief that the primary function of commercial law is to provide a series of default rules that reflect the bargains that most knowledgeable and non-needy parties would have reached had they negotiated explicitly about the subject matter of the rule. Our position, in short, is that commercial law...
- The second feature of our approach that is worth emphasizing is our simultaneous treatment of international and domestic commercial law. The dramatic increase in international commerce makes this effort necessary. Improvements in transportation, communication, and payment devices have made international sales of merchandise more common, and the open world economy has made such transactions economically feasible. Increasingly, as more trading nations have ratified the CISG, it potentially governs more international sales contracts. The attorney who is unfamiliar with legal principles that apply to international transactions will be ill-prepared to face the inevitable surge in global commerce. She will be unable to advise her client knowledgeably about the client’s entitlements under an existing contract or recommend the law that best serves the client’s interests under a prospective contract. We therefore attempt to compare domestic commercial law principles with those generated...
- We are admittedly normative in this approach. We ask what legal rules should be adopted and how existing rules should be interpreted and applied. Commercial law does not comprise an abstract, arbitrary set of principles. Rather, the drafter and applier of relevant rules act against some framework of what commercial law is intended to achieve. The UCC speaks of interpretive principles in very broad strokes, such as the admonition in § 1-103(a)(1) to liberally construe its provisions to promote purposes and policies such as “to simplify, clarify and modernize the law governing commercial transactions.” Our assumption is that a more frank confrontation with the theory of commercial law is necessary. We could simplify and clarify commercial law with rules such as “buyer always wins,” or “all disputes will be resolved by coin flips.” Obviously, no one would think that such rules were preferable to a law predicated on some normative basis. But what should that normative basis be?
- This book describes and analyzes the law and theory of sales under Article 2 of the Uniform Commercial Code (“UCC”) and under the United Nations Convention on Contracts for the International Sale of Goods (the “CISG”). There already exist several excellent works on these bodies of law. One might reasonably inquire what is different about this effort.
- We believe that our approach adds to the existing work in two ways. First, we do not attempt to describe all the provisions under these bodies of law. Our assumption is that many of the provisions of the relevant law are self-explanatory and that restating them or citing to cases that apply them does little to provide additional understanding. We therefore concentrate on those provisions that have been most problematic and try to provide an analytical framework that students can apply even to provisions that we do not discuss explicitly. Thus, we intend to offer a theoretical treatment of Sales Law rather than merely a descriptive one.
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Chapter 5. Formal Requirements 151 results (showing 5 best matches)
- Honnold suggests that Article 11 “probably” does not displace domestic law on matters of validity where domestic law imposes special formal requirements on an entity, such as a government agency. See John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention on Contracts for the International of Goods 135–37 (4th ed., Harry M. Flechtner ed. 2004). The principle of issue-displacement, described in Chapter 2.II.F, rejects the suggestion, and Honnold does not justify it. If a government agency’s contract is governed by the CISG and Article 11 applies, domestic law which insists on formal writing requirements is displaced. There is no room in the principle to qualify it according to the type of entity regulated by domestic law, and Honnold does not describe an alternative principle.
- The question is illustrated by the following example. Suppose a Mexican buyer and an Argentinian seller orally agree to a sale of widgets. The agreement is negotiated in Argentina; delivery of the widgets is to be made by the seller in Mexico City. Later, when the buyer repudiates the agreement and the seller sues, the buyer raises the lack of a writing as a defense. Is the defense good? Since Argentina and Mexico are Contracting States and the sale is otherwise governed by the CISG, the CISG applies to the contract under Article 1(1)(a). Argentina, however, has made a reservation to Article 11 in accordance with Article 96. The reservation states that “any provision of Art. 11 … that allows a contract of sale … 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 had his place of business in the Argentine Republic.” ...to Article 11 under Article 96. If the effect of Argentina’s Article 96... ...law...
- The continued application of the domestic law of unconscionability has two drawbacks. One is that the different countries’ courts might interpret Article 4(a) differently, so that unconscionability sometimes is and sometimes is not considered a matter of validity. The second drawback is that the domestic law of unconscionability can differ, so that whether a sales contract governed by the CISG is enforceable depends on the applicable domestic law. For instance, some legal systems might consider a particular sort of warranty disclaimer or damage exclusion unconscionable, and others not. In other words, there is a risk of non-uniformity in the result of applying Article 4(a). The first drawback is inevitable, given UNCITRAL’s decision to leave validity undefined. Without a definition, the risk of inconsistent application of Article 4 cannot be avoided, even heeding Article 7’s injunction to interpret the CISG’s provisions so as to achieve uniformity. The second drawback is a simple...
- See Article 7(2) (“Questions concerning matters governed by the 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 rules of private international law.”).
- The better view is that the contract is enforceable, even if domestic law describes formal writing requirements as presenting issues of “validity.” The principle of issue-displacement, discussed in Chapter 2, justifies the result. According to the principle, if the CISG defines an issue and addresses it under the CISG by creating contractual entitlements, domestic law addressing the same issue is displaced, however domestic law describes the issue. If the CISG either does not define an issue and addresses it or leaves its resolution to domestic law, domestic law is not displaced. Applying the principle here, Article 11 of the CISG defines the issue—is a contract enforceable without a writing?—and addresses it by saying that a writing is not needed. A contract need not satisfy any “requirement as to form,” according to Article 11, to be concluded. Domestic law therefore is displaced even if domestic law describes a writing requirement as a matter of “validity.”
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Chapter 8. Warranties 168 results (showing 5 best matches)
- In testing the effectiveness of the disclaimer by § 2–316(2), the court assumed that Pennsylvania’s version of the UCC’s disclaimer provision or Alberta’s Sale of Goods Act provision applied to a contract governed by the CISG. This may not be the case. Article 2’s disclaimer provisions apply to sales contracts governed by the UCC. However, because the CISG as treaty law displaces Article 2 of the UCC, Article 2’s disclaimer provision did not govern the contract at issue. Thus, general contract principles governing disclaimers under Pennsylvania common law instead might apply. The selection of different Pennsylvania law matters because Pennsylvania’s common law might enforce a disclaimer that does not mention “merchantability” or meet the other requirements of § 2–316(2) or (3). The same, we speculate, could be true under Alberta law.
- In determining which part of domestic law governs the sales contract, the court applied a counterfactual test: If the sales contract were governed by domestic law, not the CISG, which part of that law would control it? In the case the answer is Pennsylvania’s version of Article 2 of the UCC or the Alberta Sale of Goods Act. But the court could have applied an alternative, non-counterfactual test that asked: Given that the sales contract is governed by the CISG, which part of domestic law that the CISG does not displace governs it? If the court had asked this question, the answer could be Pennsylvania or Alberta’s general common law of contracts, including the common law of disclaimers.
- See Alberta Sale of Goods Act, R.S.A 2000., Ch. S-2, sec. 54 (“Where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties or by usage if the usage is such as to bind both parties to the contract.”) (2015).
- Purchasers of goods want to know that they are receiving valid title to the goods they buy. As we will see, a buyer of a good that has passed through the hands of a thief will not have good title, even though it has purchased from its immediate seller in good faith. Thus, the original owner from whom the good was stolen will be able to recover the property from the buyer. The buyer, however, need not suffer the ultimate loss. Section 2–312 of the UCC provides that sellers of goods warrant that the title they convey is good and the transfer rightful. Thus, the buyer of a good that must be returned to the victim of a theft has an action against her seller for breach of the warranty of title. The same theory applies to a buyer who purchases a good that is subject to a security interest or other lien of which the buyer was ignorant at the time of contracting. If the lienholder is able to foreclose on the property, the buyer will be able to recover damages from her seller. The warranty...
- Given the traditional principle of , one might wonder why sales law has imposed warranty liability on non-blameworthy sellers. A major explanation for warranty liability depends on theories of asymmetric information. As repeat players with respect to the goods they sell, sellers will have better information than their buyers about the quality of the goods that are the subject of the contract. Indeed, the seller can frequently control the quality of the goods sold, either because it controls the manufacturing process or has the capacity to bargain effectively with the manufacturer over product quality. Buyers, on the other hand, may only purchase the same products occasionally. As a result, sellers are likely to have superior information about “failure” rates, that is, the frequency of defects even in the presence of reasonable care to prevent them. Armed with this information, sellers are better able than buyers to take the probability that any good will be defective into account in...
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Chapter 1. Introduction to Sales Law 54 results (showing 5 best matches)
- Sales law involves legal doctrines that regulate the relationship between parties involved in an exchange of goods for a price. As a general matter, sales law only addresses transfers of tangible personal property, not real estate or intangibles such as intellectual property rights. Sales law, therefore, is a subset of contract law. Unlike general contract law doctrine, which has evolved primarily through the common law process of judicial decision, sales law is found in statutory law. For domestic transactions, the primary statute is Article 2 of the Uniform Commercial Code (“UCC”), which has been enacted as part of the statutory law of every state other than Louisiana, as well as the District of Columbia and the Virgin Islands. As we will see, state law has been augmented by certain provisions of federal law, particularly in the area of consumer sales. For international transactions in goods, the United Nations Convention on Contracts for the International Sale of Goods (the “CISG...
- Of course, the presence of uniform law does no harm if commercial parties can easily opt out of it, as Article 6 allows, by selecting another body of law to govern their transactions. But since the CISG governs transactions within the scope of its application unless the parties have opted for an alternative, the parties’ knowledge of the underlying law may matter. If we believe that parties will be unaware that uniform law will be imposed on them if they fail expressly to select a specific domestic law, then perhaps the uniform law becomes a trap for the unwary. That is likely to be the case with respect to commercial parties who only occasionally enter into an international sales transaction, and who therefore have little expertise in the vagaries of international sales law. This does not necessarily mean that there should be no uniform law; after all, if uniform law competes with domestic law, then each may strive to reflect the needs of commercial parties. The only question is...law
- II. Principles of Sales Contracts—Herein of Default Rules
- Our mention of freedom of contract principles in the UCC and the CISG reveals a particular understanding of the function of commercial law. After all, if parties are permitted to deviate from legislatively created legal doctrine, then why have that doctrine in the first place? Why wouldn’t parties simply draft their agreements according to their preferences without any background rules of law?
- As the international sale of goods has increased, so have the pressures to bring to international trade the same level of legal uniformity and certainty that the UCC has made possible for domestic transactions. Efforts to create greater uniformity in international sales date back to the 1930s, when the International Institute for the Unification of Private Law (“UNIDROIT”) began work on treaties that would govern international commercial transactions. UNIDROIT ceased its efforts during and immediately after World War II, but ultimately submitted a draft to a diplomatic conference in The Hague in 1964. The conference adopted two conventions, one on the international sale of goods and the other on the formation of contracts for the international sale of goods. These conventions were criticized as insufficiently international in scope and too tied to the legal traditions of continental Western Europe. Neither convention was widely adopted.
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Chapter 11. Documentary Sales 142 results (showing 5 best matches)
- With one exception, the issuer must pay if the documentary presentation strictly complies with the terms of the credit. The issuer’s obligation derives from a legal rule commonly called the independence (or autonomy) principle. The principle holds that the issuer’s obligation to the beneficiary is independent of the reimbursement agreement or the underlying sales contract, or facts pertaining to them. This means that the issuer’s performance of its obligation does not require performance of obligations created by the underlying sales or reimbursement agreements. Hence, the independence principle provides that the issuer must pay regardless of whether the documents or performance conform to the underlying contract, as long as they comply with the requirements of the letter of credit undertaking.
- Letter of credit law would be simpler if it did not protect some transferees from the fraud exception to the independence principle. Things would be yet simpler if the law did not recognize the fraud exception at all. It is not self-evident why there should be a fraud exception to the independence principle. Even if a fraud exception is justified, it does not follow that anyone should be protected from its operation. Thus, both § 5–109(a)(1)’s protection and the fraud exception itself require some explanation. We believe that the case for § 5–109(a)(1)’s protections is inconclusive. The case for the fraud exception, we think, is stronger although not overwhelming.
- The most important source of letter of credit custom is the Uniform Customs and Practices for Documentary Credits (“UCP”), compiled by the International Chamber of Commerce. UCP 600, the most recent version of the UCP, has been in effect since 2007. It replaced the version of the UCP known by its publication number, “UCP 500.” We refer to respective versions of the UCP below by their publication numbers. The International Chamber of Commerce’s International Standby Practices (ISP98), a summary of standby letter of credit practices, is applicable when incorporated by the letter of credit. The ISP98 is more frequently incorporated into standby credits than the UCP. While the UCP has not been adopted as statutory law in any country, it is frequently incorporated by reference by commercial parties as the source for guiding principles of law in international letter of credit transactions. Almost all letters of credit issued in New York, for instance, are made subject to the UCP. Where...
- Section 5–103(d) states a version of the principle: “Rights and obligations of the issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance or nonperformance of a contract … out of which the letter of credit arises or which underlies it …” If the documentary presentation strictly complies, the issuer must pay even if the underlying sales contract has been breached or the documents falsely state that its performance is conforming. This is why courts and commentators (and the UCP
- In both hypotheticals, the beneficiary knowingly has breached the underlying sales contract. (A breach of an express warranty occurs in Hypothetical 1; a breach of a duty to deliver occurs in Hypothetical 2.) However, in Hypothetical 1 nonconforming goods have been shipped while in Hypothetical 2 nothing has been shipped. Letter of credit law considers the beneficiary to have committed fraud only in Hypothetical 2. Hypothetical 1 involves a breach of warranty, not fraud. Since a breach occurs in both hypotheticals, while fraud occurs only in one of them, a standard is needed to distinguish fraud from mere breach of contract.
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Chapter 9. Rights to Goods: Bona Fide Purchase and Reclamation 59 results (showing 5 best matches)
- None of these principles affects the rights of third parties. Should the buyer transfer the goods prior to the time that the seller exercises his right of restitution, nothing in the CISG permits the seller to pursue the goods into the hands of that purchaser. Article 4’s limitation on the CISG’s scope is clear on this point. According to the Article, the CISG governs only the rights and obligations of the contracting parties arising from the sales contract. By implication, the CISG’s provisions do not control rights to the goods against third parties, such as purchasers from the buyer. Domestic law therefore controls the seller’s rights to recover goods in the hands of these purchasers. The Secretariat Commentary to Article 81 also makes this clear by stating: “the right of either party to require restitution as recognized by article 66 [the draft counterpart of CISG article 81] may be thwarted by other rules which fall outside the scope of the international sale of goods.” ...law....
- One of the risks that attend a sale is the possibility that the seller does not have good title to the goods. The prototypical contest in which that risk creates a legal issue occurs when the original owner of the goods finds them in the hands of a subsequent purchaser and demands their return. The principles that determine whether the original owner or the purchaser is entitled to the goods are derived more from property concepts than from the contracts concepts that we have been discussing to this point. Those principles have been incorporated into the UCC in a way that makes the question of recovery depend on the rights of the buyer’s transferor and the buyer’s good faith. The CISG does not address the issue of rights to goods. Article 4 states explicitly that the CISG is not concerned with the effect that the contract may have “on the property in the goods sold.” Article 30, however, does require the seller to “transfer the property in the goods.” Thus, the failure of the seller...
- Commentary on the Draft Convention on Contracts for the International Sale of Goods, Prepared by the Secretariat, Document A/CONF. 97/5 (1979), reprinted in Diplomatic History of the Uniform Law for International Sales 447 (at para. 8) (John O. Honnold ed., 1989) (commentary on then-Article 66, draft counterpart to Article 81) [hereinafter Diplomatic History].
- We don’t think any of these cases is susceptible to an easy solution, either as a normative matter or as a matter of interpretation of § 2–403. We note, however, that the Restatement (Second) of Contracts makes contracts generally voidable (not void) where assent is induced by an improper threat by the other party to the contract. The Restatement makes contracts voidable for duress where a party’s assent is induced by a third party, unless the other party to the transaction did not have reason to know of the duress and either gave value or relied on the transaction. If one interprets these principles as granting voidable title to the German auction house that benefitted from Stern’s forced sale, then perhaps it had the ability to pass good title to a good faith purchaser for value.
- In that case, we are dealing with two innocents, the original owner and the purchaser, one of whom must suffer a loss. We might select any of a number of principles to resolve this contest. Under corrective justice principles, we might contend that the state should protect individuals’ rights and interests in property against unconsented-to interference. This principle might initially suggest that the original owner should be able to reclaim the goods. But such a principle assumes the conclusion by assuming that an original owner has “rights” in property even after the owner has been dispossessed of the good and it has been transferred to a good faith purchaser. One might with equal force claim that corrective justice principles protect the “right” of the good faith purchaser for value not to have its property subjected to an unconsented interference by requiring return of the goods to the original owner. For instance, a notion of corrective justice that allows a victim redress...
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Chapter 10. Remedies 238 results (showing 5 best matches)
- The regulation of liquidated damages, remedy limitations and damage exclusions is not addressed by the CISG. It is left instead to applicable domestic law. The CISG simply allows parties to opt-out of its terms and allocate the risks of liability and damages for themselves. However, it says nothing about the validity of the terms set by the parties. Because regulation of liquidated damages, remedy limitation and damage exclusions is unaddressed, the principle of issue-displacement we have invoked elsewhere leaves the matter to applicable domestic law. The CISG considers such regulation a matter of “validity,” left to domestic law under Article 4(a). Enforcement of liquidated damages clauses is an example. Whether stipulated damages are enforced as liquidated damages or not enforced as a penalty depends on whether and how applicable domestic law recognizes the doctrine of penalties. In general, legal systems take one of three approaches to stipulated damages. ...A third sort of...
- Two obviously key phrases in Article 28 are vague and require clarification: “its own law” and “similar contracts of sale not governed by this Convention.” As to “its own law,” the phrase probably refers to the substantive domestic law of the forum. For example, suppose the forum is a state court in New York and the sales contract governed by the CISG is between a United States seller and a German buyer. Suppose too that German domestic law would grant specific relief but that New York state law would not. The seller seeks the price from the buyer. New York state’s “own law” includes its conflict of law rules, and these rules might lead to the application of the domestic law of Germany. If so, Article 28 would require the state court to order specific relief. If New York’s “own law” referred only to its substantive domestic law, Article 28 would not require the court to allow the seller to recover the price from the buyer under Article 2 of the UCC. A defensible reading of “its own law
- “Similar contracts of sale not governed by this Convention” is more difficult to interpret. The phrase refers to contracts governed by substantive domestic law that share some of the same relevant features as a contract governed by the CISG. Put simply, the comparison is between a domestic sales contract having features relevantly similar to those of international sales contracts governed by the CISG. Of course, all sorts of different sales contracts are governed by domestic law and the CISG. There is no indelible set of features either sort of contract need possess, so some generalizations are needed. In general, we believe that international sales occur between geographically removed parties buying and selling goods in geographically distant markets. Otherwise, each party would transact with a domestic partner, and the sales contract would be governed by domestic law, not the CISG. Again, this is a rough generalization, but we think it holds. If so, determining the relevant...
- The case law is summarized in UNCITRAL Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods: 2012 Edition, available at http://www.cisg.law.pace.edu/cisg/text/digest-art–78.html (Article 78 case law); commentary representing the majority view is collected in Schlechtriem & Schwenzer: Commentary on the UN Convention on the International Sale of Goods (CISG) 1055 n.33 (3d ed., Ingeborg Schwenzer ed. 2010).
- The case favoring election of remedies, we think, must go back to first principles. One central principle is that damage measures are to give the injured party the economic value of full performance: its profit. So it needs to be asked what full performance amounts to. As Robert Scott remarks, the notion of full performance has no inherent meaning. Performance of a sales contract does not involve just delivery of goods, acceptance, and payment. Contractual performance also involves the payment of a sum in damages in the event goods are not exchanged for the contract price. The question is the amount of that sum agreed upon. A damages formula measures the sum. Thus, properly considered, the contract-resale and contract-market price measures are explicit or implicit terms of the parties’ contract.
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Chapter 6. Performance 274 results (showing 5 best matches)
- Some courts and commentators, relying on Article 7(2), find that the CISG implicitly assigns burdens of proof to a wide range of issues. Article 7(2) in relevant part provides that questions not explicitly settled by the CISG are to be settled by the “general principles” underlying it. Applicable domestic law settles the questions when these “general principles” do not settle them. Some courts and commentators believe that the CISG’s underlying general principles are broad and detailed enough to implicitly assign burdens of proof.principles for that assignment. Because the choice of principle can have an effect on which party bears the burden of proof on a particular issue, even the purported reliance on underlying principles can have the same adverse effect on uniformity as reliance on domestic law. For example, different commentators discover the following principles for allocating the burden of proof: (1) a party that seeks to derive beneficial legal consequences from a legal...
- In construing “received” under § 509(b)(9) according to the Incoterms definition of “delivery,” made applicable to the sales contract law by the CISG, the court assumes that non-bankruptcy law defines the term. The assumption arguably is wrong. In general, an undefined term in the Bankruptcy Code can be construed either by a bankruptcy-specific, uniform rule (which might be based on non-bankruptcy law) or by a rule established by applicable non-bankruptcy law. Which of these constructions is appropriate depends on the purpose of the particular Bankruptcy Code provision in question. Taking into account § 509(b)(9)’s purpose, the former, bankruptcy-specific construction is appropriate. ...an administrative expense priority, the subsection assures that the seller recovers the value of the goods received (except when the debtor is administratively insolvent). As an alternative to reclamation, § 509(b)(9) states the conditions for an administrative priority that are not determined...
- See, John O. Honnold, Uniform Law for International Sales 477–79 (4th ed., Harry M. Flechtner ed. 2004); Joseph M. Lookofsky,
- Prior to the UCC, these cases were decided under principles of “impossibility” or “frustration of purpose.” The UCC integrates these principles into excuse under § 2–613 and “commercial impracticability” under § 2–615. Section 2–615 states that “[e]xcept so far as a seller may have assumed a greater obligation … [d]elay in delivery or non-delivery … by a seller … is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made….” Before analyzing this test, note that, by its terms, it applies only to sellers. The negative implication is that buyers have no parallel claim to relief. If, for instance, market prices drop precipitously after a buyer has agreed to enter a long-term contract with a fixed price, the literal language of § 2–615 does not give the buyer any claim for relief. In addition, Official Comment 1 speaks... ...of...
- See Secretariat Commentary on the 1978 Draft Convention on Contracts for the International Sale of Goods, Doc.A/CONF.97/5 (1979), reprinted in Documentary History of the Uniform Law for International Sales 445 (at para. 7) (John O. Honnold ed., 1989) (commentary on then-Article 65).
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Table of Contents 84 results (showing 5 best matches)
Summary of Contents 23 results (showing 5 best matches)
Chapter 4. Implied Terms 104 results (showing 5 best matches)
- Good faith would be determined under either of two standards. Either the standard would be one articulated in Article 7(1) or under domestic law selected by conflicts principles of the forum.
- See 11th Meeting, First Committee Deliberations, Documentary History of the Uniform Law for International Sales para. 49 at 513 (John O. Honnold ed., 1989) [hereinafter, “Documentary History”]; id., 24th Meeting, First Committee Deliberations, para. 38 at 585 (statement of Soviet representative). See also Peter Schlechtriem, Uniform Sales Law 50 (1986); Helen Elizabeth Hartnell, supra note 27, at 69 (1993) (Articles 14(1) and 55 inconsistent; Article 14(1) controlling); but cf. Enderlein & Maskow, supra note 15, at 208 (“total solution” found at the diplomatic conference).
- There are a couple of possible interpretations of what a “validly concluded” contract lacking a price term under Article 55 amounts to. One interpretation has “validity” referring to validity under applicable domestic law. This fits with Article 4(a)’s exclusion of matters of validity from the CISG. See Helen Elizabeth Hartnell,
- See John O. Honnold, Uniform Law for International Sales Under the 1980 United Nations Convention 152–53 (4th ed., Harry M. Flechtner ed. 2009); cf. Gyula Eorsi, in Commentary on the International Sales Convention 407 (Cesare M. Bianca & Michael J. Bonell eds., 1987) (Article 14 deals with offers; Article 55 deals with contracts).
- UCC- and CISG-supplied terms have a couple of consequences. One is that otherwise unenforceable bargains can be enforceable. This is because the presence of provided terms can make an otherwise indefinite agreement definite in terms. For instance, at common law an agreement lacking essential terms is not enforceable. Section 2–204(3) alters the rule by allowing enforcement of a sales contract which leaves terms open as long as the parties intend to contract and “there is a reasonably certain basis for giving an appropriate remedy.” Article 2’s provision of price, delivery, payment terms and the like can allow such a remedial basis. The question then is only whether the parties’ omission of particular terms indicates that they did not intend to contract. The absence of UCC-provided terms by itself shows that there was no contractual intent.
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Chapter 7. Risk of Loss 76 results (showing 5 best matches)
- Both the UCC and the CISG allocate the loss in each of these cases. The principles that apply vary from those that existed under pre-UCC law, in which risk of loss was closely linked to title. A seller who parted with goods, but who had not yet passed title to the buyer, retained the risk that the goods would be damaged. A moment’s thought reveals that this arrangement appears inconsistent with an efficiency rationale. If the objective of commercial law is to reduce the costs associated with transactions, including the risk that goods will be damaged, lost, or stolen, then that risk should be placed on the party who is in the best position to avoid the loss from materializing or to insure against risks that do materialize, that is, the party who can perform these functions at lowest cost. By allocating the loss in this manner, that party will have an incentive to take advantage of its position by caring for or insuring the goods. Typically, the party who possesses or controls access...
- Shipment terms, therefore, not only allocate the risk of loss; they also determine other obligations of the parties, including the obligation to pay for particular services. Assume, for instance, that a New York seller of heavy equipment offers a Norfolk, Virginia buyer three separate terms of sale. The first is “F.O.B. New York” with a sales price of $1000. The second is “F.O.B. Norfolk” with a sales price of $1075. The third is “C.I.F. Norfolk” with a sales price $1100. Assume that Buyer could insure the goods during transit for $50 and that the carriage from New York to Norfolk would cost buyer $75. Under the first term, Buyer would pay $1000 for the goods, but would also have to pay for carriage ($75) and insure against loss during transit ($50) for a total of $1125. Under the second term, Seller bears the cost and risk of transporting the goods to Norfolk. Thus, Buyer does not have to purchase transportation or insurance and the stated price of $1075 is also Buyer’s total cost....
- which we discuss in Chapter 6.V.C., muddied the analysis in its discussion of the burden of proof where ribs that had been sold were found to be spoiled, but it was unclear at what point the spoilage occurred. The court first contended that the burden of proof issue was itself governed by the CISG and thus should be interpreted under the “general principles” on which it is based under Article 7(2). This is itself a controversial position; as we indicate above, the burden of proof can be readily be determined to be an issue outside the CISG and thus subject to the law of the contract as determined by private international law or the procedural rules of the forum. Then the court, rather than identifying any applicable “general principles,” committed the heresy of calling the CISG “the international analogue to Article 2 of the Uniform Commercial Code,” which suggested that the latter could serve as the basis for the former. Finally, the court noted that under the UCC the buyer bears...
- During the period between the formation of a contract and its successful completion, the goods that are the subject of the contract may be lost, damaged, or stolen. Commercial law principles allocate the risk of loss when one of these events materializes. There are four scenarios that create risk of loss problems. In the first, the loss occurs while the goods are in the seller’s possession. In the second, the goods are in the possession of a third-party bailee when the loss occurs. The buyer is expected either to obtain the goods from the bailee or to resell the goods without ever receiving physical possession of them from the bailee. In the third scenario, the loss materializes while the goods are in transit from the seller to the buyer. In the final scenario, the loss occurs after the goods have reached the buyer, but prior to the time when the buyer has accepted them.
- There is a strong commercial presumption that contracts of carriage fall under the category of shipment contracts. Thus, in cases of doubt, courts should construe contracts as placing the risk of loss on the buyer during transit. Indeed, some courts indicate that the presumption can only be rebutted by an explicit agreement that imposes on the seller an obligation to deliver at a particular destination; a mere agreement to ship “to” a particular city will not suffice. Parties can avoid ambiguity, however, by using a shipping term that is understood either as a matter of law or trade usage to mandate a shipment or destination contract. Several shipping terms are specifically defined within Article 2 to coincide with the risk of loss terms of § 2–509. As we will see, these terms may be inconsistent with the definition of the same terms in international sales.
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Index 514 results (showing 5 best matches)
Title Page 3 results
Advisory Board 10 results (showing 5 best matches)
- Barbara Nachtrieb Armstrong Professor of Law and Former Dean of the School of LawUniversity of California at Berkeley
- William B. Graham Distinguished Service Professor of Law and Former Dean of the Law School University of Chicago
- Professor of Law and Former Dean of the Law School
- Sho Sato Professor of Law and Director, Environmental Law Program University of California at Berkeley
- Sterling Professor of International Law and Former Dean of the Law School
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Table of Cases 68 results (showing 5 best matches)
- Frigaliment Importing Co. v. B.N.S. International Sales Corp. ................................... 116
- Hankins v. American Pacific Sales Corp. ......................... 163
- Heinrich v. Titus-Will Sales, Inc. ...................................... 391
- Itoh v. Kimi Sales, Ltd. ......... 432
- King Aircraft Sales, Inc. v. Lane .................................... 457
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Copyright Page 2 results
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- Printed in the United States of America
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- Publication Date: November 20th, 2015
- ISBN: 9781628101454
- Subject: Commercial Law
- Series: Concepts and Insights
- Type: Hornbook Treatises
- Description: Authoritative coverage describes and analyzes the law of sales under Article 2 of the Uniform Commercial Code, as well as under the United Nations Convention on Contracts for the International Sale of Goods. Text provides the framework for sales and governing law, contract formation, implied terms, formal requirements, performance, and risk of loss. Also covers remedies, the rights to goods, and documentary sales.