International Business Transactions

International Business Transactions - INTERNATIONAL...

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INTERNATIONAL BUSINESS TRANSACTIONS Fall 2005
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I. SALES A. Convention on Contracts for International Sales of Goods (CISG) 1. Transactions Covered : (a) Article 1 – CISG applies to contracts for the international sales of goods between parties whose places of business are in different states (i) when both states signed the CISG; or (ii) rules of private international law lead to the application of the law of a state who is party to the CISG (b) Article 10 – if a party has more than one place of business, the place of business is that which has the closest relationship to the contract 2. Opting In and Out : (a) Article 6 – parties may opt out of or modify the application of the CISG by an express choice of law clause (b) Asante Technologies v. PMC-Sierra (U.S. 2001) – in the absence of express language indicating intent to opt out of or modify CISG (i.e. “the UN CISG will not apply”), a choice of law clause will not preclude CISG 3. Goods : (a) Article 2 – CISG only covers the sale of goods that are movable and tangible, but does not cover the sale of: (i) consumer goods (ii) auction goods (iii) securities or negotiable instruments (iv)vessels (v) electricity (vi)assembly/development contracts 4. Contractual Issues : (a) Article 4 – CISG covers: (i) formation of contract (gap-filling) (ii) remedies available to the buyer and seller (b) Article 4 – CISG does not cover: (i) legality of contract (ii) competency of the parties (iii) rights of third parties (iv)liability for death or personal injury 5. Preemption : (a) Article 7 – if the CISG applies, then it preempts domestic law 6. CISG Interpretation : (a) Article 7 – interpretation of CISG should favor international good faith, not local interests, by looking to: (i) CISG (plain meaning) (ii) general principles on which CISG based (international uniformity) (iii) rules of private international law (last resort) B. Contract Interpretation 1. Intent : requires an inquiry into a party’s subjective intent as long as other party to contract was aware, or should have been aware, of such intent, 1
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but if either party is unaware of the other’s subjective intent, then look to objective intent of parties per reasonable person standard 2. Parol Evidence : may look to parol evidence to determine subjective intent, unless parties include an integration/merger clause (Article 96 permits states with statutes of frauds to opt out) 3. Trade Practices : parties bound by any practices they have established between themselves as well as prevalent trade practices 4. Form : contracts of sale need not be in writing (Article 96 permits states with statutes of frauds to opt out) C. Contract Formation 1. Offer : offer is a proposal to specific persons indicating an intention by offeror to be bound to the sale or purchase of particular goods for a price 2. Definiteness : offer must describe the goods with sufficient clarity that parties know what is offered for sale, and it must state quantity and price, or some manner of determining quantity and price (a) United Tech. v. Malev Airlines (Hun. 1992) – proposal that includes a unilateral
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