International Sale of Goods (sgs 8/9)

Delivery cl’s

Date	Make sure not “estimated” - precision wanted
Remedy for late delivery	Make sure ‘time is of the essence’ If time is of the essence then late delivery is breach of cond If time isn’t of the essence then late delivery is breach of W
Place of delivery	B will want it to be their premises, S will want it to be theirs
Acceptance of goods	B will want time specified and right to inspect goods

Liquidated Damages cl’s:

Liquidated Damages cl’s (‘LDC’)

Advs:

When it comes to enforcement, all cl needs to prove is the date of actual delivery and if this was after the agreed Delivery Date. LDCs obviate the need to prove damage, remoteness and mitigation. Commercial advantage is that it puts pressure on the other party to deliver in time
For the other party, the benefit may be certainty and the ability to insure vs potential liability for fixed amount

Key legal issues

purpose of damage for breach of contract under English law is compensatory
A cl will be deemed unenforceable if it is deemed to impose a penalty which acts as a deterrent (or would over-compensate innocent party).
A distinction has been made between a penalty and a liability to pay a specified genuine pre estimate of loss, the latter being enforceable
Apply these principles in exam - is purpose to punish or to avoid/minimise loss

Accrual in LCDs

accruing weekly - probably ok as easy-ish to administer
Accruing by the week/part week - ie. One day extra into a second week = another whole wk of damages is probably overcompensation and will render the LCD vulnerable
Accruing by the working day: a daily fraction could be commercially accurate and as long as it’s r’able would be allowed

Force Majeure Cl’s (‘FMCs’)

Definition	Suspense/delay commercial cl for when something happens outside S and B’s control -> usually protects S
Legal issues	Check if the subject matter of the ag are governed by special laws
Negotiated topics	notice periods Period of suspension Termination if event continues - when? B wants S to mitigate delay ‘take every step possible’ Notification ‘immediately’ or ‘r’ably becoming aware of’

ISCs

Exclusions and limitations of liab in an ‘ISC’ - do not apply s.26 UCTA

ISC’ defined in ss.26(3) and (4) UCTA. 2 x elements:

it involves a sale of goods between parties whose place of business is in different countries; and
One or more of the following applies:

the goods are to be carried from 1 country to another
The contractual offer and acceptance have taken place in different countries and/or
The goods are to be contractually delivered to a country other than that in which offer or acceptance took place

Significantly, under s.26 UCTA, the limitations on a party seeking to limit/exclude liab (including r’abless requirements) will not apply to an ISC

W/ISC - 2 x areas of uncertainty:

Jurisdiction - Brussels I

Does B1 apply?	Yes - if “civil and commercial matter”
Which courts have J?	Basically parties should be sued in their home courts, list which courts this could be
Will courts accept J?	Where courts of 2 different MSs have equal jurisdiction, the cl will have a choice of forum. See following key provisions:
GR - Art 2	persons domiciled in a MC, shall, whatever their nationality, be sued in the courts of that MS’ Domicile individual = self explanatory Domicile company = where co has its stat seat (aka reg’d office in UK) or its place of central admin or principle place of business (Art 60) GR is subject to certain exceptions:
Exclusive J - Art 22	Art 22 gives excl J (regardless of domicile) to courts of an MS in which immoveable property is situated and in certain proceedings relating to cos, entries in public registers, registration or validity of IPRs or enforcement of judgings. This will override any other rules.
Express choice of the parties - Art 23	Ie. Expressly in the contract
Contracts w/a ‘weaker party’ - Arts 8-14, 16 and 18-21	Protect weaker parties to certain types of contract
Place of contractual performance - Art 5	Art 5 gives J to the courts of the place of performance of contractual obligation which gives rise to dispute. In sale of goods contract, the place of performance is presumed to be the place of contractual delivery (art 5(1)(b)). Rule subject to ‘express choice’ provision of Art 23
Submission	Subject to Art 22, if a D voluntarily submits to the J of a court other than his home court, that court will have J under Art 24. This rule overrides Art 23 express choice rule.

governing law Rome I (‘R1’)

Scope - Art 1	all cases involving a ‘conflict of laws’ To contractual obligations Applies to ‘civil and commercial matters’
GR: freedom of choice - Art 3	“a contract shall be governed by the law chosen by the parties” Not every contract contains an express law provision If there is no (express or implied) choice ....
Art.4(1)(a) Sale of goods	Sale of goods Law of country where S has habitual residence; OR
Art.4(1)(a) provision of services	Provision of services Law of country where service provider has its habitual residence
Art.4(1)(f) distribution contract	Distribution contracts Law of the place where distributor has its habitual residence

Price and delivery terms (delivery here = transfer of possession)

Terms of a contract should reflect:

agreed price and whether the costs of delivery and insurance have been factored into the price
Who is assuming the risk of loss or damage to the goods until actual receipt by B; and
Who is bearing all the associated obligations for and costs of transport, insurance, customs clearance and import duties

Customary trade terms @ CL

over yrs, traders have developed standard practices as to how they allocate risks and costs between parties re delivery of goods
These standard provisions have become known by their acronyms
CL allows these terms to be implied into contracts by custom and practice of trade
Implied terms can be overridden by express terms of contract

International Chamber of Commerce (ICC) - Incoterms 2010

What are incoterms?

standardised form of trade terms
Not law or specific to Js
Drafted by ICC to assist international trading community to adopt a common language
There to use if you want them

Incoterms categories

Broadly:

F terms - B is responsible for paying the cost of main carriage after loading
C terms - like F, require S to load goods but contracts for main carriage and insurance paid for by S
D terms - S assume both risk and cost of transport all the way to an agreed place of destination of goods

(according to Caroline learn boxes (1) and (3) for MCQs)

	Strict c.i.f (CIF incoterm)	FOB incoterm
Responsibilities of S (@ S’s expense) [Learn this!!]	transport conforming goods to port of dept Clear for export Load on board Procure contract of carriage to named port of destination Take out marine insurance policy to port of destination (for B’s benefit)	transport conforming goods to named port of departure Clear for export Loan on board Notify B of loading
Docs (to be tendered S to B)	bill of lading Commercial invoice Marine insurance (tender may be via B’s agent, eg bank)
Responsibilities of B (@ B’s expense) Learn this!!	accept conforming docs Clear for import (inc. Any import licence, taxes/duties) Unload @ port of arrival Onwards transport from port of arrival Pay	effect contract of carriage Notify S of ship Take out marine insurance Clear for import (inc any import licence, taxes/duties) Unload @ port of arrival Onward transport from port of arrival Pay
When is title presumed to pass?	Presumed intention that title passes on delivery to, and acceptance by, B of shipping docs (bill of lading = doc of title)
When does risk pass?	On loading (S is reponsible for procuring marine insurance in B’s name)
When/where does delivery take place?	On loading plus tender of the Bill of Lading, representing the goods. (this is implied by custom)
When is the price payable?	On tender of conforming docs to the B

Payment of price

Dilemma:

if S delivers goods before payment, how will S ensure pays price? Or
If B pays in advnce, how will B make sure S deliver?

To eliminate risk of delivery of delivering goods and not being paid by B, the S may consider one of the following possibilities:

inserting retention of title (ROT) cl into the contract
Requiring full payment in advance for the goods
Requiring payment by using a particular types of payment mechanism [common in commercial contracts]

Eg.

Bankers’ Documentary Credits - Letters of Credit (LOC)

nature of an undertaking given on B’s instructions and usually carried out by B’s bank to pay a specified sum to a named beneficiary (usually S)
Undertaking will be subject to certain conditions
B --> issuing bank -undertaking-> S

Nature and contents

autonomous
Irrevocable
Payment conds ‘Doctrine of Strict Compliance’

Usual payment conds

transportation docs
Commercial invoice
Insurance policy or cert
Any other docs contractually required

Performance bonds/guarantees

Another method used.

#8608 - International Sale Of Goods - Commercial and IP

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