A Workshop on the CISG The LL.M. in Business Laws (English Program) Faculty of Law Thammasat University Prachan Road Bangkok Assoc Prof Anan Chantara-opakorn, Program Director

Drafting CISG Contract Art. 1: Generally, the CISG applies only to contracts for the sale of goods between parties whose relevant places of business are in different Contracting States or when the rules of private international law lead to the application of the law of a Contracting State. Nations adhering to the Convention may exclude the latter basis of applicability, so you will have to check for declarations and reservations. Anan Chantara-opakorn

Under the Convention, the fact that the parties to the contract have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract. Consequently, you should consider identifying the parties' places of business in the contract in a way that makes evident the applicability or non-applicability of the Convention. Anan Chantara-opakorn

Parties part: –This contract is made and entered into on this____day of ________,____by and between: "XYZ Corp. of ________________ [insert address, including country] and ABC S.A. of __________________ [insert address, including country] agree as follows:"

choice of law clauses To incorporate CISG as part of your sale contract: "Issues concerning the formation of this contract and the rights and obligations of Seller and Buyer that are not settled by the terms set out in this document shall be governed and controlled by those provisions of the United Nations Convention on Contracts for the International Sale of Goods that do not conflict with the terms agreed by the parties." "This contract shall be governed by and construed in accordance with those provisions of United Nations Convention on Contracts for the International Sale of Goods that do not conflict with the terms set forth in this document." Anan Chantara-opakorn

If you do not want to adopt some provisions of the CISG "Issues concerning the formation of this contract and the rights and obligations of Seller and Buyer that are not settled by the terms set out in this document shall be governed and controlled by those provisions of the United Nations Convention on Contracts for the International Sale of Goods that do not conflict with the terms agreed by the parties. Article(s)... [insert Article number(s) of the Convention]... is (are) excluded." "This contract shall be governed by and construed in accordance with those provisions of United Nations Convention on Contracts for the International Sale of Goods that do not conflict with the terms agreed by the parties in this document. Article(s)... [insert Article number(s) of the Convention]... of the Convention is (are) excluded. Anan Chantara-opakorn

Exclusion of CISG The exclusion should be explicit because some commentators question whether the Convention may be excluded by implication; and the contract term should both exclude application of the Convention and state what law is to govern. Anan Chantara-opakorn

“The rights and obligations of the parties under this agreement shall not be governed by the provisions of the 1980 United Nations Convention on Contracts for the International Sale of Goods; rather, these rights and obligations shall be governed by the law of ….[country/state].” Anan Chantara-opakorn

“This Agreement shall be construed and governed in accordance with the Laws of ____[country/state] applicable to agreements entered into in ____ between residents of ____, [insert if international] and without reference to the U.N. Convention on Contracts for the International Sale of Goods.” Anan Chantara-opakorn

Arts. 8 & 11 : Dealing with External Evidence of Intent Under Article 11, a contract of sale need not be concluded in or evidenced by a writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses. Article 8 provides that, in determining intent or reasonable understanding, due consideration is to be given to all relevant circumstances of the case, including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties. Anan Chantara-opakorn

Art. 8 & 11 create the potential for overriding the clear words of a signed written contract by testimony and other evidence showing that the written contract is not consistent with what is purportedly the real agreement between the seller and buyer.Art. 8 & 11 create the potential for overriding the clear words of a signed written contract by testimony and other evidence showing that the written contract is not consistent with what is purportedly the real agreement between the seller and buyer. This situation suggests the use of a merger or integration clause suited to contracts falling under the Convention.This situation suggests the use of a merger or integration clause suited to contracts falling under the Convention. Anan Chantara-opakorn

"The parties agree and declare that it is their intention that this document contains their entire agreement; that there are no agreements, understandings or arrangements that are not set out in it; that there is nothing contained in it that has not been agreed; that evidence of prior expressions of intent, understandings or agreements may not be used to explain what is said in this document and that evidence contradicting what is said in this clause is inadmissible." "This document contains the entire agreement of the parties. There is nothing contained in it that has not been agreed. The parties intend and agree that evidence of other or different terms may not be considered." Anan Chantara-opakorn

Dealing with the Applicability of Trade Usages. Under Article 9, the parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned. Article 8(3) requires consideration of usages to determine intent or the understanding a reasonable person would have had. When there is a dispute, parties tend to discover trade usages and "experts" who will vouch for their existence, as the need arises. Should they apply when you may not have considered them at the time you entered into your contract? Anan Chantara-opakorn

"Article 8(3) and Article 9 (2) of the Convention on Contracts for the International Sale of Goods do not apply to this Contract. The parties have not agreed to any usage or made any usage applicable to their contract. When the terms stated in this document are unclear, evidence of practices which the parties have established between themselves may be considered in determining their understanding, their intent or their rights and obligations." Anan Chantara-opakorn

Requiring a Written Contract Under Article 11, unless Article 12 applies, a contract of sale need not be concluded in or evidenced by a writing and is not subject to any other requirement as to form. This opens the door to assertions that mere negotiations have ripened into an enforceable contract. You should consider whether it would be appropriate to include a requirement for a signed writing when you communicate terms that could be treated as an offer capable of acceptance or a response to an offer that could be treated as an acceptance. Anan Chantara-opakorn

"There shall be no contract until each of us has accepted and signed a writing stating that it contains all of the terms or incorporates by reference to another writing all of the terms of a binding contract between us." Anan Chantara-opakorn

Specifying the Form of Notices and Writings for Purposes of the Contract and the CISG. Art. 13:…… “For the purpose of this Agreement and the Convention on Contracts for the International Sale of Goods, unless otherwise specified in this Contract, "writing" includes telegram, telex, fax and .“ "For the purpose of this Agreement and the Convention on Contracts for the International Sale of Goods, unless otherwise specified in this Contract, "writing" excludes fax and ." Anan Chantara-opakorn

Formation of Contract Preventing an Indication from Constituting an Offer. Article14: A proposal for concluding 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 provisions for determining the quantity and the price. To avoid ambiguity, if you do not intend to make an offer you should say so. Anan Chantara-opakorn

"This is an indication of interest, not an offer to buy." "This is an indication of interest, not an offer to sell." "There shall be no contract concluded until each of us has accepted and signed a writing stating that it contains all of the terms or incorporates by reference to another writing all of the terms of a binding contract between us." Anan Chantara-opakorn

Revocable and Irrevocable Offers Art. 16 Under the Convention, generally, until a contract is concluded, an offer may be revoked if the revocation reaches the offeree before it has dispatched an acceptance. Under Article 16(2), however, an offer cannot be revoked if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable or if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer. If an offeror wishes to maintain control of its offer, it should consider stating expressly that the offer is revocable. Anan Chantara-opakorn

"This offer is open for acceptance until... [insert time and date]... We reserve the right to revoke the offer before then. Article 16(2) of the United Nations Convention on Contracts for the International Sale of Goods does not apply to this Contract." Anan Chantara-opakorn

Dealing with Acceptance by Performance of an Act Art. 18 Under certain circumstances, the offeree may accept an offer by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice of acceptance to the offeror. The acceptance is effective at the moment the act is performed. You should consider whether it is advisable to be bound by an acceptance without notice. Anan Chantara-opakorn

“This offer shall be deemed to have been rejected unless we receive your notice of acceptance in writing on or before... [insert date]...." "This offer shall be deemed to have been rejected unless you accept by a notice in writing. Article 18(3) of the Convention on Contracts for the International Sale of Goods does not apply to this offer." Anan Chantara-opakorn

"This offer shall be deemed to have been rejected unless you accept by a notice in writing received by us no later than the 5:00 P. M. on... [insert date].... Article 18(3) of the Convention on Contracts for the International Sale of Goods is excluded." Anan Chantara-opakorn

Dealing with Acceptances Containing Additional and/or Different Terms Art. 19 Generally, under the Convention 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. Under Article 19(2), however, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If the offeror does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance. Anan Chantara-opakorn

"A reply to this offer which purports to be an acceptance but contains additional or different terms shall be deemed to be a rejection. Article 19(2) of the Convention on Contracts for the Sale of Goods shall not apply to this offer." Anan Chantara-opakorn

"Notice of Objection to Additional [and/or Different] Terms Your reply to our offer of... [insert date]... purports to be an acceptance, but contains additional [and/or different] terms. Please accept this as our notice under Article 19(2) of the United Nations Convention on Contracts for the International Sale of Goods that we object to the discrepancy and regard your reply as a rejection of our offer and a counteroffer, which we reject." Anan Chantara-opakorn

"Notice of Objection to Additional [and/or Different] Terms Your reply to our offer of... [insert date]... purports to be an acceptance, but contains additional [and/or different] terms. We object to the discrepancy and regard your reply as a rejection of our offer and a counteroffer, which we reject." Date: _______________" Anan Chantara-opakorn

Offeror's Notice that Late Acceptance is Effective or Ineffective Art. 21 Under the CISG, an acceptance of an offer is not effective if it does not reach the offeror within the time fixed by the offeror. This could mean that when an acceptance is late, neither party is bound, even though the offeree intended to accept. Article 21 deals with two versions of this situation. Anan Chantara-opakorn

Article 21(1) deals with an acceptance which is dispatched late. Such an acceptance becomes effective if without delay the offeror orally so informs the offeree or dispatches a notice to that effect. Consider sending a written notice, even if you inform the offeree orally. Anan Chantara-opakorn

NOTICE THAT ACCEPTANCE IS EFFECTIVE Date: To: On... [date]... we received your acceptance of our offer of... [date]... Although the acceptance is late, please take notice that, pursuant to Article 21(1) of the Convention on Contracts for the International Sale of Goods, your acceptance is effective." Anan Chantara-opakorn

"NOTICE THAT LATE ACCEPTANCE IS EFFECTIVE Date: To: On... [date]... we received your acceptance of our offer of... [date]... Please take notice; although it arrived late, it is effective as an acceptance." Anan Chantara-opakorn

Article 21(2) deals with delays in delivery of a timely acceptance. It says that, if a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offeror orally informs the offeree that it considers its offer as having lapsed or dispatches a notice to that effect. Anan Chantara-opakorn

"NOTICE THAT OFFER LAPSED BEFORE RECEIPT OF ACCEPTANCE Date: To: On... [date]... we received your acceptance of our offer of... [date]... Your acceptance arrived late. Please take notice that, pursuant to Article 21(2) of the Convention on Contracts for the International Sale of Goods, we consider our offer to have lapsed and regard your acceptance to be ineffective." Anan Chantara-opakorn

"NOTICE THAT OFFER LAPSED BEFORE RECEIPT OF ACCEPTANCE Date: To: On... [date]... we received your acceptance of our offer of... [date]... Your acceptance arrived late. We regard our offer as having lapsed and your acceptance to be ineffective." Anan Chantara-opakorn