Essay sample

National and International Sales of Goods

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Stylish Corporation is a manufacturing company that produces apparel and is currently located in the United States

The company is interested in expanding the business globally and are considering Mexico as the new location for a factory. The company would like to know the benefits and the obstacles they will encounter in this expansion. Do the benefits outweigh the obstacles? Facts and Laws: Aspects of U.S. laws that will affect the company in dealing with Mexico: 1. North American Free Trade Agreement (NAFTA), was signed in 1994, is a trade agreement between Canada, Mexico, and United States. NAFTA eliminated all trade barriers and created investment opportunity for businesses between these countries.

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Article 66 of the Convention briefly mentions the implications of the risk on the parties of a contract by saying that damage or loss of goods does not give the right to the buyer not to fulfil his obligations of payment. In other words, the buyer to whom risk has passed is still obliged to accept damage goods and make the payment for them. As above mentioned as long as the loss or damage is accidental the buyer has to fulfil his obligations without having the right to claim that it is seller’s non-performance. It seems to be helpful to see reflection of this Article to case law. An Italian wine manufacturer (plaintiff) sued the German buyer (defendant) for payment of the price of bottles of wine since the defendant avoided paying for them

The German buyer claimed that the goods were not suitable for use because of deterioration during the shipment. The goods were subject to “ex factory” delivery. The Regional Court held that the buyer had declared its refusal to pay on contract; therefore, the plaintiff was not entitled to ask for payment. Upon the appeal of the seller, the Higher Regional Court affirmed the decision of Court of First Instance by stating that it was non-performance of the seller in accordance with the Article 35(2) (d) CISG. Indeed, although the risk passed to the buyer, the Court considered that the seller was still responsible for the damage due to lack of preserving under Article 36(2) and 66 CISG. The above case should be interpreted in a way with regard to the seller obligations under the CISG, which are providing the goods, preserving them and properly bringing them to the point of delivery. In this respect, it can be said that Article 66(2) of the CISG brings an exception to obligations of the buyer which is indeed that if the damage or loss occurs as a result of the seller’s mistake, omission or act, he will remain responsible for this loss or damage until successfully handing over the goods. Consequently, the buyer obligation to pay for the goods will be delayed when this exception applies. There are different approaches to explain the phrase of “act or omission of the seller”. According to one of those, it is a breach of seller’s obligations under the CISG or their contract. Proponents of another approach argue that it could be any behaviour of the seller which caused the damage or loss; therefore, it is difficult to say that such acts of the seller should be regarded as a breach of the CISG. Schlechtriem and Honnold, as supporters of this second view, state that any behaviours of the seller which resulted in the loss or damage should not be interpreted as a breach of obligations of the seller, it also might be unlawful behaviours under the tort law. “If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for Transmission to the buyer in accordance with the contract of sale. If the seller is bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. The fact that the seller is authorized to retain documents controlling the disposition of the goods does not affect the passage of the risk.”

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A final provision, Article 24, defines when a communication "reaches" a party. A reader trained in the common law and the Uniform Commercial Code will find some surprises in both the style and the scope of these provisions. In style the articles in Part II follow the civilian model of a comprehensive collection of brief, general rules rather than the more detailed and convoluted statements found in common law legislation.[R. Schlesinger, 1968] In scope Part II omits several matters the common lawyer would expect to find among formation rules. There is no statute of frauds; there is no reference to modification of a contract; and there is no requirement that there be consideration in order to have an enforceable contract. Several of these omissions are filled by provisions found elsewhere in the CISG. An article in Part I provides that an enforceable sales contract may be concluded without a writing (CISG art. 11) and a provision in Part III states that a contract may be modified by agreement of the parties in any form unless the original contract requires the modification to be in writing (CISG art. 29). The CISG, however, contains no provision for consideration. Of course this will rarely be a problem in the context of sale where exchange of goods for money is the object of the transaction

Notwithstanding these differences in style and scope the CISG provisions constitute a comprehensive codification which provides many of the same answers found in the common law and the Uniform Commercial Code. This is illustrated by the answers set out below to questions arising in the following hypothetical case. Seller, a manufacturer of equipment, has his place of business in France. Buyer, an equipment dealer, has his place of business in New York. In the following questions Buyer (the offeror) seeks to enter into a contract with Seller (the offeree) for the purchase of equipment. Assume that the CISG is in force and that both France and the United States have ratified the 1980 convention.

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Summing up, CISG holds a great value in respect of international sales law because of which 76 states have ratified CISG. CISG mainly covers the international sphere of the sales law but also has been applied in many, of the domestic law, of the states which have ratified CISG. By the fact that ratifying states regard CISG for the international transactions and many of the ratifying states have formulated their domestic sales law on the basis of CISG, therefore, it has influenced, up to a reasonable extent, the international sales law, as well as the domestic sales law. Though, there are many reservations over CISG by many of the states because of their self interests but in general it has been appreciated

Hence, CISG is a success in an endeavour towards the unification of sales law on an international level.

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A.B.A. Section of International Law, Report to the House of Delegates 13-14 (April 1981).

R. Schlesinger, Formation of Contracts, A Study of the Common Core of Legal Systems (1968).

Cigoj, International Sales: Formation of Contracts, 23 Neth. Int'l L. Rev. 257 (1976).

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