INTERNATIONAL SALES LAW - seminar 2004ISL

Contractual Risk Management in Transnational Sales Transactions

ISL: objectives, functions and structure

Management of information on ISL

Management of risk of contractual disputes

Management of risk of contract breach

Management of risk of loss of or damage to the goods

Management of risk of changed circumstances

Case study

Case studies

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Management of risk of loss of or damage to the goods

ISC

CONTRACT LAWCONTRACTING

Default distribution of the risk in sales law

CISG art. 67:

(1) If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. If the seller bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. The fact that the seller is authorized to retain the documents controlling the disposition of the goods does not affect the passage of the risk.(2) Nevertheless, the risk does not pass to the buyer until the goods are clearly identified to the contract, whether by markings on the goods, by shipping documents, by notice given to the buyer or otherwise.

CISG art. 68:

The risk in respect of goods sold in transit passes to the buyer from the time of the conclusions of the of the contract. However, if the circum-stances so indicate, the risk is assumed by the buyer from the time the goods were handed over to the carrier who issued the documents embodying the contract of carriage. Nevertheless, if at the time of the conclusion of the contract of sale the seller knew or ought have known that the goods had been lost or damaged and did not disclose this to the buyer, the loss or damage is at the risk of the seller.

ISL

- CISG art. 66-70, 79

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CONTRACTING

Management of risk of loss of or damage to the goods

ISC

- CISG art. 66-70, 79

Default distribution of the risk in contract law

- PECL chapters 7 to 9- UPICC chapters 6

and 7- CENTRAL TLDB

No. IV.4.6 and Ch. V to IX

CENTRAL TCL database

No. IV.4.6.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.”

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- CISG art. 66-70, 79

Management of risk of loss of or damage to the goods

ISC

Contractual allocation of the risk in contracting practice

- PECL chapters 7 to 9- UPICC chapters 6

and 7- CENTRAL TLDB

No. IV.4.6 and Ch. V to IX

ISL

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CONTRACTING

Risk of loss of or damage to the goods:

Management of risk of loss of or damage to the goodsISL A Brief Overview on Transfer of:

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S BProperty right:

Goods:

Payment:

Documents:

Sales

Transport

Finance

Sales

Sales

Sales

Sales

Finance

Finance

Insurance

- CISG art. 66-70, 79

Management of risk of loss of or damage to the goods

ISC

Contractual allocation of the risk in contracting practice

- PECL chapters 7 to 9- UPICC chapters 6

and 7- CENTRAL TLDB

No. IV.4.6 and Ch. V to IX

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- Incoterms & Combiterms- Institute Cargo Clauses- Exemption-clauses- Force majeure -clauses- Hardship-clauses

TRADE TERMS CONCERNING

CARRIAGE OF GOODS

INCOTERMS 2000

Management of risk of loss of or damage to the goodsISL Contractual allocation of the risk in contracting practice

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c

F-clauses

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EXW

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C-clauses

D-clauses

BBBBBBBB

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Division of costs:

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EXW

F-clauses

C-clauses

FCA

D-clauses

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C-clauses

BBBBBBS?S?

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EXW

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C-clauses

D-clauses

FCA

C-clauses

BBBBBSSS

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BBBBBBSS

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cS B

EXW

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C-clauses

D-clauses

FCA

C-clauses

cS B

EXW

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CFR

D-clauses

CIF

BBS/BSS/BSSS

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BBS/BSSSSS

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cS B

EXW

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CPT

D-clauses

CIP

S/B?S/B?S/BSSSSS

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S/B?S/B?S/BS(B)SSS

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FCA

CIF

CFR

cS B

EXW

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D-clauses

FCA

CIF

CFR

CPT

CIP

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EXW

DES

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DEQ

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DDUDAF

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CIP SS+SS(S)SSS

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DDPDDU

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Combiterms- Institute Cargo Clauses- Exemption-clauses- Force majeure -clauses- Hardship-clauses

- Incoterms &

- CISG art. 66-70, 79

Management of risk of loss of or damage to the goods

ISC

Contractual allocation of the risk in contracting practice

- PECL chapters 7 to 9- UPICC chapters 6

and 7- CENTRAL TLDB

No. IV.4.6 and Ch. V to IX

The ICC Model International Sale Contract

ICC Publication No 556

B. GENERAL CONDITIONSArt. 8

Contractual term of delivery

”Unless otherwise agreed, delivery shall be ”Ex Works” (EXW).”

ORGALIME S 2000

GENERAL CONDITIONSfor the supply of mechanical, electrical and

electronic products

DELIVERY. PASSING OF RISK

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 be Ex Works (EXW). If in the case of delivery Ex works, the Supplier, at the request of the Purchaser, undertakes to send the Product to its destination, the risk will pass not later than when the Product is handed over to the first carrier. Partial shipments shall be permitted unless otherwise agreed.”

The ICC Model International Sale Contract

ICC Publication No 556

B. GENERAL CONDITIONSArt. 1 General

Art. 1.3

”Any referance made to trade terms (such as EXW, FCA, etc.) is deemed to be made to the relevant term of Incoterms published by the International Chamber of Commerce.”

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- Incoterms &

Management of risk of loss of or damage to the goods

ISC

- 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

ORGALIME S 2000

GENERAL CONDITIONSfor the supply of mechanical, electrical and

electronic products

Consequential Losses

”43. Save as elsewhere stated in these conditions there shall be no liability for either party towards the other party for loss of production, loss of profit, loss of use, loss of contracts or for any consequential or indirect loss whatsoever.”

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Combiterms- Institute Cargo Clauses- Exemption-clauses- Force majeure -clauses- Hardship-clauses

Combiterms- Institute Cargo Clauses- Exemption-clauses- Force majeure -clauses- Hardship-clauses

- Incoterms &

Management of risk of loss of or damage to the goods

ISC

- 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 Contractual allocation of the risk in contracting practice

ORGALIME S 2000

FORCE MAJEURE39. Either party shall be entitled to suspend performance of his obligations under the contract to the extent that such performance is impeded or made unreasonably onerous by any of the following circumstances: industrial disputes and any other circumstance beyond the control of the parties such as fire, war, extensive military mobilization, insurrection, requisition, seizure, embargo, restrictions in the use of power and defects or delays in deliveries by sub-contractors caused by any such circumstance referred to in this Clause.A circumstance referred to in this Clause whether occurring prior to or after the formation of the contract shall give a right to suspension only if its effect on the performance of the contract could not be foreseen at the time of the formation of the contract.

Similarly:

NL 01 EArt. 36

Compare:

ICC Model International Sale Contract

B. General conditionsArt. 13 Force majeure

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ICC

FORCE MAJEURE Clause 2003

1. Unless otherwise agreed in the contract between the parties expressly or impliedly, where a party to a contract fails to perform one or more of its contractual duties, the consequences set out in paragraphs 4 to 9 of this Clause will follow if and to the extent that that party proves...

2. Where a contracting party fails to perform one or more of its contractual duties because of default by a third party whom it has engaged...

3.-6. ...7. A party invoking this Clause is under an obligation to take all

reasonable means to limit the effect of the impediment or event invoked upon performance of its contractual duties...

8. (on termination due to substansially deprived expectations, within a reasonable period)

9. ... where either contracting party has, by reason of anything done by another contracting party... derived a benifit before termination... duty to pay the other party... a sum... equivalent to the value of such benefit.

Combiterms- Institute Cargo Clauses- Exemption-clauses- Force majeure -clauses- Hardship-clauses

- Incoterms &

Management of risk of loss of or damage to the goods

ISC

- 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 Contractual allocation of the risk in contracting practice

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ICC

HARDSHIP Clause 2003

1. A party to a contract is bound to perform... even if... more onerous than could reasonably have been anticipated...

2. Notwithstanding paragraph 1...

[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,

the parties are bound, within reasonable time... to negotiate alternative contractual terms...

3. ... not agreed...the Party invoking this Clause is entitled to termination of the contract.

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VII Management of risk of changed circumstances