United Technologies International, Inc. International Business Law Case Study United Technologies International, Inc. v. Magyar Légi Közlekedési Vállalat (Málev Hungarian Airline) 0969027 Jeong Yun Park 0969042 Elena Shuppe 0969012 Sei Youn Kim

INDEX Facts Issues Issue #1 Was There An Offer? Issue #2 Was There An Acceptance Issue #3 Was There A Binding Contract under CISG? Conclusion Appeal

VS Plaintiff: Pratt & Whitney division of United Technologies International Made an offer to the defendant on 14th December 1990 Got acceptance letter on 21st December 1990 After Defendant’s reneged to purchase the goods offered, sued the defendant. To obtain a declaratory judgment To prove that valid contract existed between the plaintiff and the defendant Defendant: Magyar Légi Közlekedési Vállalat (Málev Hungarian Airline) Received offer from the plaintiff on 14th December 1990 Sent acceptance letter on 21st December 1990 (due date set by the plaintiff) Later on refuse to purchase the product Argues that there was no binding contract (Offer did not existed: No definite price and quantity mentioned) FACTS ISSUE VS ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

FACTS ISSUE ISSUE #1 ISSUE #2 ISSUE #3 APPEAL 14th Dec 1990 OFFER 1 OFFER 2(Extension) Goods (engine for aircraft) PW4056 (for Boeing 767-200ER) PW4152 or PW4156/A (for Airbus A310-300) Price $5,847,675 $5,552,675 Quantity Total of 5 (2 for each aircraft. Min. # of aircraft: 2 With 1 spare engine) (Can purchase more for extra aircraft) Time To be delivered as stated in Attachment 1 ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

5 Part Test for Contract CISG FACTS OFFER - “sufficiently definite” ACCEPTANCE Consideration Legality Capacity FACTS ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CISG CISG Applies to Contracts for the International Sale of Goods Basic principle: The goal of the CISG is the creation of a uniform body of International commercial sales law CONCLUSION APPEAL

ISSUES Was There an OFFER? 2. Was There an ACCEPTANCE? FACTS Was There an OFFER? 2. Was There an ACCEPTANCE? 3. Can Government Approval be a Limitation to Contract Under CISG? ISSUE ISSUE #1 ISSUE #2 ISSUE #3 여기서 넘어가기 전에 we are going to explain each issue in IRAC form, applying CISG rules CONCLUSION APPEAL

ISSUE #1Was There an OFFER? FACTS Rule of Law General Rule For a validly binding contract to exist all five elements of contract has to be satisfied Five elements: offer, acceptance, consideration, legality, capacity Offer CISG, Article 14 (1) “a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance” “[a] proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.” CISG, Article 3(1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production. ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

VS ISSUE #1Was There an OFFER? Application FACTS Plaintiff Defendant GOODS - PW4056 (Boeing) - PW4152 OR PW4156/A (Airbus) PRICE - Specifically mentioned (PW4056 $5,552,675 PW4152 & PW4156/A $5,847,675) QUANTITY: - 2 engines & 1 spare engine per aircraft. (min aircraft: 2) TIME - Specified the deadline for acceptance(1990.12.21) - Attachment 1 specify the delivery date Art. 14 (1)CISG (Sufficiently Definite) ‘Unilateral Power' for defendant to chose is commonly practiced in legal and commercial practice FACTS Defendant GOODS - 2 parallel offers for goods PRICE - No explicitly stated price, only base price is mentioned QUANTITY - Dependent on other contract (buying the aircraft) TIME: - Continued negotiations after 1990.12.21 - Provisions for counter-offer Ambiguous “goods” & “ quantity “(not “sufficiently definite” ) Insufficient data “make provisions for determining price”(Art. 14 (1)CISG) ISSUE ISSUE #1 VS ISSUE #2 ISSUE #3 CONCLUSION APPEAL

ISSUE #2 Was There an ACCEPTANCE? FACTS Rule of Law Acceptance CISG, Article 18 (1) An acceptance is “[a] statement made by, or other conduct of, the offeree indicating assent to an offer is an acceptance.” CISG, Article 19(1) “[a] reply to an offer which purports to be an acceptance but contains additions, limitations, or other modifications is a rejection of the offer and constitutes a counter-offer” CISG, Article 23 “[a] contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention” ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

VS ISSUE #2 Was There an ACCEPTANCE? Application FACTS Plaintiff Intent to Accept - letter of acceptance unambiguously states that it accepts the offer (CISG, Article 14(1)) Time of Acceptance letter of acceptance sent to plaintiff by the defendant on 1990.12.21 (due date set by the offeror) - the acceptance came into force upon receiving the defendant's letter of acceptance (CISG, Article 23) Limitation - keeping acceptance confidential does not constitute "additions, limitations, or other modifications" (CISG, Article 19(1) FACTS Defendant Intent to Accept - intent to make a future contract, premium was not transferred yet (CISG, article 14 (1)) Time of Acceptance - discuss finalization of the contract(CISG, article 23) Limitation neither of the government signed the contract yet, provisions for new offer (CISG, article 19(1) ISSUE ISSUE #1 VS ISSUE #2 ISSUE #3 CONCLUSION APPEAL

ISSUE #3 Can Government Approval be a Limitation to Contract Under CISG? FACTS Rule of Law CISG: 1. The sale must be international 2. The buyer and seller must have their places of business in different states. 3. Additionally, either: Both of the states must be contracting parties to the convention, or b) The rules of private international law must lead to the application of the law of a Contracting State. *Preempt: To take precedence over. To determine if CISG applies to a particular contractual issue, one must look to the convention itself, not domestic law *Choice-of-Law Clause: Contractual provision that identifies the law to be applied in the event of a dispute over the terms or performance of the contract ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

ISSUE #3 Can Government Approval be a Limitation to Contract Under CISG? FACTS Rule of Law Section 215 of Civil Code : “ if the conclusion of the contract requires the approval of the third party, the contract will not come into force until approval is obtained”. Section 228 (1) of Hungarian Civil Code : “ if the parties agree to terms that makes a contract’s entry into force dependent on the uncertain event in the future, the agreement will not come into force until the event occurs”. Section 228 (2) of Hungarian Civil Code : “ if parties provide termination of a contract upon the occurrence of an uncertain event, the contract will terminate upon the occurrence of that event. “ ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

VS ISSUE #3 Can Government Approval be a Limitation to Contract Under CISG? FACTS Application Plaintiff - Both the U.S. and Hungary are parties to CISG - Nothing in CISG that forbids from parties agreeing to the convention HOWEVER, Domestic Law is preempted by CISG ISSUE Defendant Plaintiff was notified of the condition to make the contract come into force (both governments’ signature) (Section 215, 228(1), 228(2)) - Provision for Choice-of-Law Clause to be made in the final Contract ISSUE #1 VS ISSUE #2 ISSUE #3 CONCLUSION APPEAL

CONCLUSION YES - NO Was There an OFFER? 2. Was There an ACCEPTANCE? FACTS Was There an OFFER? YES 2. Was There an ACCEPTANCE? 3. Can Government Approval be a Limitation to Contract Under CISG? - NO ISSUE ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION APPEAL

APPEAL Appealed to Hungarian Supreme Court (25 September 1992) Ruling FACTS ISSUE Appealed to Hungarian Supreme Court (25 September 1992) Ruling : Amended the Judgment of the Previous Court ISSUE #1 ISSUE #2 ISSUE #3 CONCLUSION Thank You!  APPEAL