CHAPTER 1 CONTRACT FOR THE INTERNATIOAL SALE OFGOODS第一章国际货物买卖合同法[Aims and Requirements] The students are supposed to know the commercial terms,the formation of a sales contract, the obligations of the parties, the remedies to the breach of contract and the passing of risks after the study of this chapter. They are also supposedto have the ability to draft a sales contract both in Chinese and English.[Time Allocation] 8 hoursSection A. Introduction第一节导论[Main Content]I. Sources of the law of contract for the international sale of goods1. Domestic contract law for the sale of goods（1）Uniform Commercial Code (UCC)(2) Sale and Supply of Goods Act of 1994(3) Contract Law of People’s Republic of China2. International treaties concerning sale of goods(1) Convention on Uniform Law for the International Sale of Goods(2)Convention on Uniform Law for the Formation of Contracts for the InternationalSale of Goods(3)United Nations Convention on Contracts for the International Sale of Goods(CISG)3. International commercial usages(1) International Rules for the Interpretation of Trade Terms (Incoterms)(2)Warsaw --Oxford Rules 1932(3) Revised American Foreign Trade Definitions 1941II. Application of law to the contract for the international sale of goods1. Party autonomy2. Choice of law in accordance with the conflict rules of the forum country3. Application of international treaties[Key Points and Difficult Points]Application of law to the contract for the international sale of goods[Questions]pare the legal characteristics of international treaties concerning sale of goodsand those of international commercial usages.2.Are Incoterms binding upon the parties without their consent?Section B. International Commercial Terms第二节国际贸易术语[Main Content]I.Definition of Incoterms“Incoterms” is the abbreviation of International Commercial Terms, representing a set of international rules for the interpretation of commonly used trade terms. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices.II. The history of Incoterms“Incoterms” was first published in 1936 by the International Chamber of Commerce (ICC). Since that time there have been six different revisions and updates to the Incoterms. The current version of Incoterms is Incoterms 2000.III. The main terms used in international trade•Departure (E)EXW. Ex Works (named place): the seller makes the goods available at his premises. •Main Carriage Unpaid (F)FCA. Free Carrier (named place): the seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerized / multi-modal transport.FAS. Free Alongside Ship (named loading port): free Alongside Ship: the seller must place the goods alongside the ship at the named port. The seller must clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for maritime transport only.FOB. Free On Board (named loading port): the classic maritime trade term, Free On Board: seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export. Maritime transport only.•Main Carraige Paid (C)CFR. Cost and Freight (named destination port): seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail. Maritime transport only.CIF. Cost, Insurance and Freight (named destination port): exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only.CPT. Carriage Paid To (named place of destination):the general/containerized/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier.CIP. Carriage and Insurance Paid to (named place of destination): the containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.•Arrival (D)DAF. Delivered At Frontier (named place)DES. Delivered Ex Ship (named port)DEQ. Delivered Ex Quay (named port)DDU. Delivered Duty Unpaid (named destination place)DDP. Delivered Duty Paid (named destination place)[Key Points and Difficult Points]1.Definition of Incoterms2.Obligations of the seller and buyer under trade terms: FOB, FCA, CFR and CIF [Questions]1.What are the main obligations of the seller under the trade term CIF?2.When will the risk pass to the buyer under the trade term FOB?Section C. Introduction to CISG第三节CISG导论[Main Content]I.General information on CISGThe 1980 Convention on Contracts for the International Sale of Goods (CISG) was drawn up in collaboration between scholars from many countries around the globe, and can be said to be a product of a largely global scholarly juris consultorium.The CISG entered into effect in the first 11 States to adopt it on 1st January 1988.Since then the rate of ratification has been astounding and record breaking. As of 2 December 2006, the United Nations reports that 70 States have adopted the CISG.II. The structure of CISGCISG has 101 articles in total, which fall into four parts:Part one: Sphere of application and general provisions (1-13);Part two: Formation of the contract (14-24);Part three: Sale of Goods (25-88);Part four: Final provisions (89-101).III. The application of CISGFor parties with their relevant places of business in different Contracting States, where their contract falls within the scope of the CISG, the contract is automatically governed by the CISG, unless the parties indicate otherwise. The above conclusion and recommendation can also apply when only one of the parties has his relevant place of business in a Contracting State if the applicable domestic law regards the law of that Contracting State as the governing law. This is subject to Article 95 of the CISG.There are also cases in which principles of the CISG can apply to transactions between parties neither of whom has his relevant place of business in a Contracting State.[Key Points and Difficult Points]Sphere of application of CISG[Questions]1.What are the reasons that CISG prevails over its precedent conventions concerninginternational sale of goods?2. Under what circumstances will CISG applicable to the contract if the places of business of the parties of the contract are not in different contracting states?Section D. Formation of International Sales Contract第四节国际货物买卖合同的订立[Main Content]I. Offer1．Definition of the offerAn offer is a proposal for concluding a contract addressed to one or more specific persons, which 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.2．The effectiveness of an offerAn offer becomes effective when it reaches the offeree.3．The withdrawal of an offerAn offer could be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.4．The revocation of an offerUntil a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance.However, an offer cannot be revoked:(1) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or(2) if it was reasonable for the offeree to rely on the offer as being irrevocable and theofferee has acted in reliance on the offer.5. The termination of an offerAn offer is terminated when a rejection reaches the offeror.II. Acceptance1. Definition of acceptanceAn acceptance is a statement or other conduct of the offeree indicating assent to the offer.2. Forms of acceptance(1) written form(2) oral form(3) conduct3. Late Acceptance(1) A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect.(2) 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 he considers his offer as having lapsed or dispatches a notice to that effect.4. Acceptance modifying the conditions in the offerA 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 acounter-offer.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 he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance.Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.5. Effectiveness of Acceptance(1) Mailbox Principle(2) Principle of Arrival(3) Principle of UnderstandingIII. Form of the contractA contract of sale need not be concluded in or evidenced by writing and is not subjectto any other requirement as to form. It may be proved by any means, including witnesses.[Key Points and Difficult Points]1.Definition of offer, withdrawal and revocation of offer2.Definition of acceptance, late acceptance and acceptance modifying theconditions of the offer3.Effectiveness of acceptance[Questions]1. S sent a letter to B offering to sell to B 1,000 widgets for 30$ a piece and B sent Sa reply stating: I accept your offer to buy 1,000 widgets for 25$ a piece. Do youthink B’s reply to S constitutes an acceptance and why?2. S sent an offer to B and T knew the content of the offer. T sent S a reply to acceptthe offer. Do you think there is a contract between T and S and why?Section E. Obligations of the Seller and the Buyer第五节买卖双方的义务[Main Content]I. Obligations of the seller1. Delivery of Goods(1) Place of Delivery(2) Time of Delivery2. Conformity of Goods with the contract3. Warranty of related rights(1) Warranty of Ownership(2) Warranty of IP rightsII. Obligations of the Buyer1. Payment of the price(1) Place of payment(2) Time of payment2. Receipt of the goods delivered[Key Points and Difficult Points]1.Conformity of goods with the contract2.Warranty of rights[Questions]1.S and B made a contract without stipulation of the time of delivery, accordingto CISG, how can we decide the time of delivery of this contract?pare Article 41 and Article 42 of CISG.Section F. Breach of Contract第六节违约[Main Content]I. Fundamental breach of contract and Anticipatory breach of contract1. Fundamental breach of contractA breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.2. Anticipatory breach of contractA party may suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of:(a) a serious deficiency in his ability to perform or in his creditworthiness; or(b) his conduct in preparing to perform or in performing the contract.II. Exemptions1. Impediment beyond the control of the party2. Failure to perform one’s obligation due to the act or omission of the other partyIII. Remedies for breach of contract by the seller1. Performance by the seller;2. Additional period of time for the seller to perform his obligation;3. Delivery of substitute goods;4. Repair;5. Reduction of price;6. Damages;7. Avoidance of contract.IV. Remedies for breach of contract by the buyer1. Performance by the buyer;2. Additional period of time for the buyer to perform his obligation;3. Damages;4. Avoidance of contract.[Key Points and Difficult Points]1.Fundamental breach of contract2.Anticipatory breach of contract3.Avoidance of contract[Questions]1.Under what circumstances will CISG allow a party to be exempted from failureto perform his obligations?2.What is fundamental breach of contract?Section G. Passing of Risks第七节风险转移[Main Content]I.Definition of RiskII. Legal consequences of passing of riskLoss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price, unless the loss or damage is due to an act or omission of the seller.III. Guiding principle of passing of risk1. The autonomy of the parties in the decision of passing of risk;2. The principle stipulated in CISG(1) Identification of goods;(2) Contracts involving carriage of goods;(3) Goods sold in transit;(4) Other cases.[Key Points and Difficult Points]1.Identification of goods2.Principle of passing of risk in CISG[Questions]1.When will the risk of the goods pass to the buyer if the seller sells goods in transitto him?2.What are the legal consequences of passing of risk to the buyer?。
