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Unformatted text preview: Chapter 5 I NTERNATIONAL C ONTRACTS LEARNING OBJECTIVES At the end of this chapter, the student should: 1 Know about international sales contracts and the United Nations Convention on Contracts for the International Sale of Goods (CISG). 2 Know about legal issues regarding agency vs. distributorships. 3 Know elements of an agency or distributor contract. 4 Be able to determine the rights, responsibilities, and hazards of terminating foreign agents or distributors. PREVIEW As will be seen throughout the course, there are complexities relating to international commerce. One of these is in the area of contracts. Given the misunderstandings that can result over wording of and traditions surrounding domestic contracts, the problems can increase exponentially on an international basis when the potential for confusion is aggravated by different languages and legal systems and by discrepancies between the Uniform Commercial Code (UCC) of the United States and the United Nations Convention on Contracts for the International Sale of Goods (CISG). Chapter 5 International Contracts 5-2 CHAPTER OUTLINE 5-1 Introduction I. Firms in international business are involved in contracts. II. Contracts in a country governed by laws of that country III. No specific law governing contracts between parties from two or more different countries except Lex Mercatoria , trade law. a. Lex Mercatoria is complex. b. Includes varied international agreements, treaties 5-2 International Sales Contracts and the CISG I. Sometimes difficult to tell when a contract is international. II. Courts look at two criteria to see if a contract is international. a. Economic criterion: i. Transfer of goods from one country to another ii. Transfer of funds back to first country b. Judicial criterion: is the transaction linked to laws of different countries? i. Is then no longer under domestic law ii. Is under the Vienna Convention also known as the United Nations Convention on Contracts for the International Sale of Goods (CISG) 1. Ratified by more than 60 countries (80% of all world trade). 2. United States has not ratified all of the convention. 3. CISG is substantially different than U.S. Uniform Commercial Code (UCC). 5-2a Contract Formation I. UCC and CISG differ on terms. a. Although there may be minor disagreement over terms of the sale (schedule of delivery or payment), the UCC says that when a seller makes an offer , and the buyer agrees to it, that is considered to be an acceptance , despite the minor differences. b. The CIGS says that when there are such minor differences between the seller and potential buyer, it results in a rejection of the offer and a counter-offer by the buyer. II. UCC and CISG differ on use of business forms....
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This note was uploaded on 04/15/2011 for the course LSCM 4360 taught by Professor Staff during the Spring '08 term at North Texas.
- Spring '08