INTERNATIONAL SALES LAW — seminar 2004 ISL I

INTERNATIONAL SALES LAW - seminar 2004 ISL I ISL: objectives, functions and structure II Management of information on ISL III Contractual Risk Management in Transnational Sales Transactions IV Management of risk of contractual disputes V Management of risk of contract breach VI Management of risk of loss of or damage to the goods VII Management of risk of changed circumstances VIII Case study IX Case studies

ISL Management of risk of loss of or damage to the goods Default distribution of the risk in sales law I II IV V VI VIII IX CISG art. 67: ISC (1) If the contract of sale involves carriage of the goods and the seller is not bound to hand them CISG art. 68: over at a particular place, the risk passes to the buyer whenrespect of goods sold in transit passes The risk in the goods are handed over to the first carrierfor transmission to the buyer in accordance to the buyer from the time of the conclusions of with of the contract. sale. If the seller bound to the contract of However, if the circumhand theso indicate, the a carrier at a particular stances goods over to risk is assumed by the place, fromrisk does the goods were buyer until the buyer the time not pass to the handed over to goods are handed over thethe carrier atembodying the carrier who issued to documents that place. Thecontract ofthe seller Nevertheless, if at the time the fact that carriage. is authorized to retain the documents controlling the disposition of the goods of the conclusion of the contract of sale the seller does not affect the passage of the risk. goods had knew or ought have known that the (2) Nevertheless, the and did notnot pass thisthe been lost or damaged risk does disclose to to buyer untilthe loss or are clearly at the risk of the buyer, the goods damage is identified to the contract, whether by on the goods, by CONTRACTING markings CONTRACT LAW seller. shipping documents, by notice given to the buyer or otherwise. - CISG art. 66 -70, 79

ISL I II IV V VI VIII IX Management of risk of loss of or damage to the goods Default distribution of the risk in contract law CENTRAL TCL database No. IV. 4. 6. ISC Rights and Duties of the partied under ”FOB”, ”FAS”, ”CIF” and ”CF” ”If the parties have agreed on a sale "FOB", "FAS", "CIF" or "CF", the respective rights and duties of the parties under the contract are to be determined according to the latest version of the International Commercial Terms (INCOTERMS) issued by the International Chamber of Commerce (ICC) unless the parties have indicated that a different meaning is to be attributed to the term used. ” - PECL chapters 7 to 9 - UPICC chapters 6 and 7 CONTRACTING - CENTRAL TLDB No. IV. 4. 6 and Ch. V to IX - CISG art. 66 -70, 79

ISL Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice I II ISC III IV V VI VIII IX CONTRACTING - PECL chapters 7 to 9 - UPICC chapters 6 and 7 - CENTRAL TLDB No. IV. 4. 6 and Ch. V to IX - CISG art. 66 -70, 79

Management of risk of loss of or damage to the goods A Brief Overview on Transfer of: ISL I Goods: II Sales Documents: III IV V Finance Sales Property right: S B Finance Sales VI Payment: Sales VII Finance Risk of loss of or damage to the goods: VIII IX Transport Sales Insurance

ISL Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice I II ISC III IV V VI VIII IX - Incoterms & Combiterms - Institute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses - PECL chapters 7 to 9 - UPICC chapters 6 and 7 - CENTRAL TLDB No. IV. 4. 6 and Ch. V to IX - CISG art. 66 -70, 79

ISL Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice I II III V TRADE TERMS CONCERNING CARRIAGE OF GOODS VI INCOTERMS 2000 IV VIII IX

D-clauses Division of costs: B B B B Ins C-clauses F-clauses EXW S c F B

D-clauses S? B B B C-clauses ns I F-clauses FCA EXW S c F B

D-clauses S S B B B C-clauses s In FOB FAS FCA EXW S c F B

D-clauses C-clauses FOB FAS FCA EXW S c F B

S S S D-clauses S/B S S S/B B B Ins CIF CFR FOB FAS FCA EXW S c F B

S S S (B) S Ins S S/B? D-clauses CIP CPT CIF CFR FOB FAS FCA EXW S c F B

D-clauses CIP CPT CIF CFR FOB FAS FCA EXW S c F B

DEQ DES CIP S S (S) CIF CPT S S B B Ins CFR FOB FAS FCA EXW S c F B

DDP DDU DAF DEQ DES S CIP S S (S) CIF S S S+ B S Ins CPT CFR FOB FAS FCA EXW S c F B

DDP DDU DAF DEQ DES CIP CPT CIF CFR FOB FAS FCA EXW S c F B

D-clauses C-clauses F-clauses EXW S c F B

ISL I II III Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice The ICC Model International Sale Contract ICC Publication No 556 ORGALIME S 2000 GENERAL CONDITIONS for the supply of mechanical, electrical and electronic products ISC B. GENERAL CONDITIONS Art. 8 Contractual term of delivery DELIVERY. PASSING OF RISK IV V VI VIII IX ”Unless otherwise agreed, delivery shall be ”Ex Works” (EXW). ” The ICC Model International Sale Contract ICC Publication No 556 Clause 9. ”Any agreed trade term shall be constructed in accordance with the INCOTERMS in force at the formation of the contract. If no trade term is specifically agreed, the delivery shall B. GENERAL CONDITIONS be Ex Works (EXW). If in the case of delivery Art. 1 General Ex works, the Supplier, at the request of the - Incoterms & Combiterms - PECL chapters 7 to 9 Art. 1. 3 Purchaser, undertakes to send the Product to its - UPICC chapters 6 the risk will pass not later than destination, - Institute Cargo Clauses CISG art. 66 -70, 79 and 7 -”Any referance made to trade terms (such as when the Product is- handed over to the first Exemption-clauses EXW, FCA, etc. ) is deemed to be made to - CENTRAL TLDB -the relevant term -clauses Force majeure of Incoterms published carrier. Partial shipments shall be permitted unless Ch. V No. IV. 4. 6 andotherwise agreed. ” -by the International Chamber of Commerce. ” Hardship-clauses to IX

ISL Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice I II ISC III ORGALIME S 2000 GENERAL CONDITIONS for the supply of mechanical, electrical and electronic products IV V Consequential Losses VI VIII IX - Incoterms & Combiterms - Institute Cargo Clauses - Exemption-clauses - Force majeure -clauses - Hardship-clauses ” 43. Save as elsewhere stated in these conditions there shall be no liability for either - party towards 7 to 9 other party for loss of PECL chapters the - production, loss of profit, loss of use, loss of UPICC chapters 6 - CISG art. 66 -70, and 7 contracts or for any consequential or indirect 79 - loss whatsoever. ” CENTRAL TLDB No. IV. 4. 6 and Ch. V to IX

ISL I II IV V VI VIII IX Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice Similarly: ICC ORGALIME S 2000 FORCE MAJEURE Clause 2003 FORCE MAJEURE NL 01 E 39. Either ISC shall be entitled to suspend party Art. 36 1. Unless otherwise agreed in the contract between the parties expressly performance of his obligations under the contract to or impliedly, where a party to a contract fails to perform one or more of the extent that such performance is impeded or its contractual duties, the consequences set out in paragraphs 4 to 9 of made unreasonably onerous by any of the Compare: this Clause will follow if and to the extent that party proves. . . following circumstances: industrial disputes and any 2. Where a contracting party fails to perform one or more of its other circumstance beyond the control of the ICC Model International contractual duties because of default by a third party whom it has parties such as fire, war, extensive military Sale Contract engaged. . . mobilization, insurrection, requisition, seizure, B. General conditions 3. 3. -6. . embargo, restrictions in the use of power and defects Art. 13 Force majeure 7. A party invoking this Clause is under an obligation to take all or delays in deliveries by sub-contractors caused by reasonable means to limit the effect of the impediment or event any such circumstance referred to in this Clause. invoked upon performance of its contractual duties. . . A circumstance referred to in this Clause whether PECL chapters deprived expectations, within a 8. & termination - Incoterms(on. Combiterms due- to substansially 7 to 9 occurring prior to or after the formation of the reasonable period) - UPICC chapters 6 - Institute Cargo Clauses contract shall give a right to suspension only if its - of anything done and 7 9. 9. . where either contracting party has, by reason. CISG art. 66 -70, 79 - Exemption-clauses effect on the performance of the contract could not by another contracting party. . . derived a benifit - Force majeure -clauses be CENTRAL TLDBtime of before termination. . . foreseen at the formation of the No. IV. 4. 6 and Ch. equivalent to the value of duty to pay the other party. . . a sum. . . V - Hardship-clauses contract. to IX such benefit.

Management of risk of loss of or damage to the goods Contractual allocation of the risk in contracting practice ISL I ICC II HARDSHIP Clause 2003 ISC III 1. A party to a contract is bound to perform. . . even if. . . more onerous than could reasonably have been anticipated. . . IV 2. Notwithstanding paragraph 1. . . V 3. [a]. . . excessively onerous. . . beyond its reasonable control. . . could not reasonably have been expected to have taken into account. . . and. . . [b]. . . could not reasonably have avoided or overcome the event of its consequences, VI VIII IX 4. - Incoterms &the parties are bound, within reasonable time. . . to negotiate Combiterms - PECL chapters 7 to 9 5. - UPICC - Institutealternative contractual terms. . . chapters 6 Cargo Clauses - CISG art. 66 -70, 79 and 7 - Exemption-clauses - invoking this Clause 3. . not agreed. . . the - Force majeure -clauses Party CENTRAL TLDB is entitled to No. IV. 4. 6 and Ch. V termination - Hardship-clauses of the contract. to IX

Go to section VII Management of risk of changed circumstances