INTERNATIONAL SALE OF GOODS Winter 17

International contracts Harmonisation desirable International body of jurisprudence building Express provisions agreed by the parties Treaties-United Nations Convention on the International Sale of Goods (CISG) (reference most used internationally)/Sale of Goods (Vienna Convention) Act of NSW application Incoterms Dispute resolution Unidroit principles

International Contracts When does CISG/ Vienna Convention Act apply? Direct application by virtue of Article 1 Conflict of laws rules-if proper law of an international sales contract is Australian, CISG applies as part of that law. By agreement between the parties Deemed appropriate by arbitral tribunal either as law or as evidence of international usage.

Terminology The Vienna Convention as implemented by local legislation is referred to either as the Vienna Convention or the Convention for the International Sale of Goods (CISG). Most foreign references are to the CISG. Either is acceptable when used by students, but in lecture materials CISG will mostly be used.

CISG/Vienna Convention Considerable ignorance amongst lawyers, including courts. Why should Australian lawyers be more familiar with it? Part of our law We are an export/import country Large number of signatories, including main trading partners and other Asia Pacific nations Competitiveness/reputation of legal profession in international disputes and arbitration

Issues in international contracts Mutual understanding and agreement National interests and trade Conceptual differences Cultural differences Choice of law Dispute resolution

Vienna Convention Seller to deliver goods and any documents (Arts 31-34) of the quantity, quality, description, packaging required by contract (Art 35). Partial and excessive delivery (Art 51,52). Goods must conform. If seller does not meet obligations, buyer may compel performance, claim damages or reduce price. Buyer may fix additional time (Art 47) or declare contract avoided (Art 49) Buyer may reduce price for non conformity (Art 50). Buyer obliged to pay price and take delivery (Arts 53,60). Arts 54-59 deal with determining price when not fixed. Seller may compel buyer to pay price or take delivery (Art 62) or fix additional period for performance (Art 63). Seller can avoid contract for fundamental breach (Art 64). Anticipatory breach and instalment contracts dealt with in Arts 71-73. Damages covered by Arts 74-77. See Ginza Pte v. Vista Corp Pty Ltd

Other references See article:The last Outpost: Automatic CISG opt outs, misapplications and the costs of ignoring the Vienna Sales Convention for Australian Lawyers. Lisa Spagnolo, available on http://www.austlii.edu.au See Pace University database at http://cisgw3.law.pace.edu

International Sale of Goods (Import to Australia) Ginza Pte Ltd v. Vista Corporation Pty Ltd (2003) WASC 11 Ginza, Singaporean Co supplied contact lens solution (goods) to Vista, a wholesaler, in Australia. Part of action concerned a similar transaction with Kontack. Ginza sued for invoiced cost of goods. Or, if liable,Vienna Convention displaces SOGA and liability limited…to reduced price of batches actually tested and found not sterile. Vista claimed breach of warranty in extinction of price plus damages. (Note s.52SOGA and Articles 50 & 74 Vienna) Vista pleaded express term of agreement that goods be manufactured according to requirements of Australian Therapeutic Goods Administration (TGA) and be sterile and claimed breach of implied terms as to merchantable quality and fitness for the purpose, under either SOGA (WA) s.14 or Vienna Convention. Also, in the alternative, negligence.

Ginza See discussion of case pp 184-188 inclusive in Article by Lisa Spagnolo. Although Vienna Convention seen to apply, much confusion about interpretation, use of common law cases instead of VC cases, reference to concepts outside, ignored some provisions.

Sale of Goods (Vienna Convention) Act 1986 Article 35 The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.Except where the parties have agreed otherwise, the goods do not conform with the contract unless they: (a) are fit for the purposes for which goods of the same description would ordinarily be used; (b) are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement; (c) possess the qualities of goods which the seller has held out to the buyer as a sample or model;(d) are contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods. The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph for any lack of conformity of the goods if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity.

International Institute for the Unification of Private Law UNIDROIT International Institute for the Unification of Private Law

UNIDROIT Principles of International Commercial Contracts Purpose These Principles set forth general rules for international commercial contracts They shall be applied when the parties have agreed that their contract be governed by them They may be applied when the parties have agreed that their contracts be governed by general principles of law, the lex mercatoria or the like They may be applied when the parties have not chosen any law to govern their contract They may be used to interpret or supplement international uniform law instruments They may be used to interparet or supplement domestic law They may serve a s model for national and international legislators.

UNIDROIT Principles Freedom of Contract No form required Binding character of Contract Mandatory rules Exclusion or modification by the parties Interpretation Good faith and fair dealing Inconsistent behaviour Usages and practices Notice See text and www.unidroit.org for details.

Exam QA2 March 09 Samar Valley Orchards Pty Ltd Ltd (Samar”) is a large apricot grower in the Riverina. It regularly sells apricots into both the domestic Australian and overseas markets. Farmsales Pty Ltd (“,Farmsales), is an experienced exporter of Australian produce. It offers to find markets, arrange sales, export, and delivery, and to discharge all associated accounting and administrative functions. In January 2008, there was a vague and casual oral agreement between Samar and Farmsales that Farmsales would sell $200,000 worth of Samar apricots "as per sample", at the agreed price, to Freshfood Supermarket in Singapore. No other conditions were specified or discussed. The apricots were picked, stored appropriately, packaged suitably by Samar, and delivered to Farmsales; who shipped them to Freshfood a week later without opening them. Instead of receiving $200,000 as expected, Samar received $120,000. Farmsales explained that Freshfood had deducted $80,000 as a "purchase discount" for a quality deficiency. Samar is unhappy with this situation and has consulted you to see whether they can recover the $80,000. Advise Samar on whether and on what legal bases it may be able to do so in each of the following situations: Farmsales is an agent for sale for Samar Farmsales is a buyer who resells to Freshfood

Exam QA2 March 09 Tips for answering this question: Students are expected to undertake some research when this Q was an assignment-in this case, the Vienna convention remedies of a buyer/seller. When an exam question, application and basics of the Convention terms required to answer question. Students should be aware that their examiner sometimes uses cases (both NSW and elsewhere) for inspiration for facts for examination questions. As the complexity of real situations is sometimes inappropriate for exams and assignments, facts are usually not identical to such cases. Sometimes they are taken from other jurisdictions, so the result in NSW may be different. In other words, students should be cautious when applying any of them. For this question, students may find Hannaford (trading as Torrens Valley Orchards) v. Australian Farmlink Pty Ltd (2008) FCA 1591 useful.