Business Contracts

UNIT 6 INTERNATIONAL CONTRACTS OF

SALE

Objectives

After studying this unit you should be able to:

Explain the meaning and relevance of the Contracts for International Sale of
Goods
Understand the historical background of the Contracts for International Sale
of Goods
Discuss the Applicable Law And Rules for International Sale of Goods
Describe the different Model Contracts And Clauses Contracts for
International Sale of Goods
Structure
6.1 Introduction
6.2 Historical Background
6.3 Applicable Law and Rules
6.4 Model Contracts and Clauses
6.5 Assessment of Sale of Goods by Transfer of Property with Certainty and
Flexibility
6.6 CISG Influence on Individual National Systems
6.7 Regional Efforts
6.8 Covid-19 Pandemic and its Impact on the Performance of International
Sale of Goods Contract
6.9 Summary
6.10 Self Assessment Questions
6.11 Further Readings/References

6.1 INTRODUCTION
The Liberalisation, Privatisation and Globalisation (LPG) wiped out the
boundaries amongst countries and made the world as a global village. There
were different substantive laws relating to contracts in different legal systems
which will conflict in legal scenario. It paves the way for thinking of uniform
laws comfortable to both the parties from different countries when they enter
into contract with flexibility and without bias.

The transactions of sale at the international level are considered to be the backbone
of international trade through international contracts. The contracts are regarded
as international contracts when the parties to the contract are coming from two
different States (Countries).1 More flexible definitions are possible, such as
contracts with “significant connections with more than one State,’’ ‘involving a
choice between the laws of different States’, or ‘affecting the interests of
international trade.’2 As described in the Hague Principles, one approach to
identifying a contract as “commercial” may be where “each party is acting in the
132
exercise of its trade or profession.” (Hague Principles, Article 1(1)). Another International Contracts of
Sale
approach is found in the United Nations Convention on Contracts for the
International Sale of Goods (CISG), which limits its scope to commercial matters
by excluding, for example, consumer contracts, such as those for “goods bought
for personal, family or household use” (CISG, Article 2(a)).3

There were two important questions which are vital to be answered when a dispute
arises between two parties in an international commercial contract. They are:
1) Where the dispute of the parties is to be heard i.e., seat of settlement of
dispute?
2) What are the law or rules that govern the contract i.e., choice of law by the
parties?
Answers to the above questions are to be made by the parties to an international
contract where they opted an ‘arbitration Clause’ in their contract with an intention
to avoid the litigation in the local legal system and the application of the
substantive law of countries to which the parties belonging. International
commercial arbitration may be particularly popular because, unlike court
proceedings, there is a single nearly comprehensive regime for enforcement of
foreign arbitral awards. 4

6.2 HISTORICAL BACKGROUND

The differences in laws are the by –products of different histories, philosophies
and worldviews, uniformity is often difficult to achieve. One of the major
challenges faced by an international contract of sale is the diversity of legal
systems. The conflict of laws exacerbated world-wide because of the global supply
chains and contractual networks which operates across the globe. The 20th century
focuses on uniform framework to tackle the situation of the diversified legal
system. Before the Second world war Ernst Rabel suggested the possibility of
uniform sales law to the Institute for the Harmonisation of Private Law. In 1930,
the UNIDROIT initiated the project to prepare a law unifying the substantive
rules governing international sales contracts under the auspices of the League of
Nations. In 1935, the Commission of European Scholars under the leadership of
Rabel prepared a preliminary Report. Though the Second world war interrupted
the work, it was resumed in 1951 in the Hague Conference. In 1964, two
conventions namely Uniform Law on the International Sale of Goods (ULIS)
and Uniform Law on the Formation of Contracts (ULF) unifying the law of
international sale of goods were adopted and came into force in 1972. These are
still not widely recognised outside Western Europe as instruments of international
harmonisation. The establishment of UN Commission for International Trade
Law in 1968 paved the way to draft a new unified sales law. The final draft of the
Convention on the International Sale of Goods (CISG) approved by the General
Assembly of UN in 1980 and came into operation on 1st January 1988.
The CISG is now supported by number of Conventions like the UN Convention
on the Limitation Period in the International Sale of goods, the 1983 Geneva
Convention on Agency in the International Sale of Goods, the 2005 Convention
on the Use of Electronic communications in International Contracts, the
1983Uniform Rule on Contract Clauses for an Agreed Sum Due upon Failure of
Performance. 94 countries ratified and acceded to the Convention as of 2020.
The CISG is the best example of unification of private law till date. 133
Business Contracts There are no statistics available to prove the success of the CISG in developing
international trade. The ratification does not mean the unification of international
sales law effectively; it provides the contractual parties with a useful or efficient
regulatory framework.

The CISG is based on the principle of party autonomy. The parties are at liberty
to adopt or exclude the applicability of the principles laid down thereon in the
CISG. The ratifying State may ratify in total or with certain restrictions which
creates un-certainty to the fact that the Convention is a unifying law on
international sale of goods. This creates gaps in the provisions of the Convention.

In interpretational disputes, the national courts and arbitral tribunals have to take
the international character and the uniformity in its application and the observance
of good faith in international trade into consideration. The CISG does not specify
or state a list what these principles are and, consequently, they have to be deduced
from the other provisions of the Convention through a process of analogy. The
judge may venture outside the four corners of the CISG and settle the matter in
conformity with the applicable law. It is clear that the CISG does not unify the
law of international sales in an exhaustive manner but instead operates in a
supplementary and symbolic relationship with national law, trade usage, party
autonomy and other international instruments of harmonisation.

6.3 APPLICABLE LAW AND RULES

I) Conventions
In some international sale contracts, the law applicable to a contract will be
provided for in a Treaty. The United Nations Commission on International Trade
Law (UNCITRAL) has created three treaties that provide the applicable rules
governing certain contracts.

a) United Nations Convention on Contracts for the International Sale of

Goods (CISG):
The United Nations Convention on Contracts for the International Sale of
Goods is the most widely adopted treaty providing substantive contract
rules.5 The CISG’s scope is limited to commercial contracts for the cross-
border sale of goods6 Successful implementation of the CISG requires more
countries to adopt it and parties to use it. Courts and arbitral tribunals must
interpret the CISG in a uniform manner and not through the lens of domestic
laws.7

b) The Convention on the Limitation Period in the International Sale of

Goods:
The Convention on the Limitation Period in the International Sale of
Goods (the “Limitation Convention”) is a sister treaty to the CISG. Originally
adopted in 1974, it was amended in 1980 in order to operate seamlessly with
the CISG.8 The Limitation Convention applies to the same types of
international sales contracts as the CISG with the same scope of application,9
but its substantive provisions deal solely with limitation or prescription,
providing a sort of statute of limitations for international sales disputes. The
general period of limitation provided in the Limitation Convention is four
years.10
134
 Till date, there are 30 State parties to the Limitation Convention whereas 84 International Contracts of
Sale
State parties in the CISG’s. As is the case with the CISG, parties may opt out
of its provisions.11 The rules of uniform interpretation for the Limitation
Convention generally mirror those found in the CISG.12

c) United Nations Convention on the Use of Electronic Communications

Convention in International Contracts:

The United Nations Convention on the Use of Electronic Communications

in International Contracts 13 is a much more recent Treaty than the CISG or
Limitation Convention. Adopted in 2005, it currently has seven State parties.
The purpose of the treaty is to remove any legal obstacles to the use of
electronic communications in international contracting, creating certainty
for contractual parties that contracts and other communications exchanged
electronically are as valid and enforceable as their traditional paper-based
equivalents.

The scope of the Electronic Communications Convention is broader than

that of the other UNCITRAL Treaties in that it is not limited to sales contracts,
although it is still aimed at only commercial contracts. Contractual parties
may, of course, opt out of its provisions.14 Like the Limitation Convention,
the rules of uniform interpretation for the Electronic Communications
Convention mirror those found in the CISG,15 making the same general
categories of research resources relevant.

II) National Laws

Parties may also choose national laws to apply to their international commercial
contracts. The party with greater bargaining power may insist on its national
laws, or parties may instead choose the law of a third State, usually one considered
to have a well-developed law with regards to commercial transactions.

English law is frequently used in international transactions, in particular with

reference to reinsurance, charter parties, and sea trade, among other areas.16 Parties
may select Swiss law because of the perception that Switzerland’s political
neutrality makes this a neutral law. Nonetheless, political neutrality may not
always be the best guide as to the suitability of a chosen law for a specific
transaction.17 The ICC International Court of Arbitration 2013 Statistical Report
mirrors the 201018 survey and also indicates frequent choice of German and
French law.19 When considering these types of surveys, it is important to recall
that, generally, the choice of law of any CISG State will also include the CISG
unless the Convention’s application is clearly excluded by the parties.20

Soft Law and Trade Usages

There are many international texts and standards that may be chosen by traders
to govern their contracts. These rules may be referred to variably as “rules of
law,” “soft law” or “trade usages,” 21 but they are connected by their use in
international contracting and potential direct application by arbitral tribunals.
Even otherwise binding texts, such as the CISG, may fall into this category when
chosen by parties to apply to their contracts without reference to a specific State
law22. Like arbitral tribunals23, State courts may recognize and apply these rules,
but, depending on the relevant domestic law, they may do so simply as a set of
rules that are considered to be part of the contract and not overriding any
135
Business Contracts mandatory law.24 The Hague Principles, where followed, may serve to further
legitimize some of these sources. The Hague Principles, in Article 3, allow for
the law chosen by contracting parties to be “rules of law that are generally accepted
on an international, supranational or regional level as a neutral and balanced set
of rules, unless the law of the forum provides otherwise,” specifically naming
the CISG, the UNIDROIT Principles, and the Principles of European Contract
Law (PECL) in the accompanying commentary. A few of the more prominent
texts and standards generally discussed in this category of “rules of law,” “soft
law” or “trade usages” are as follows:

UNIDROIT Principles
The UNIDROIT Principles of International Commercial Contracts (the
“UNIDROIT Principles”) were first finalized by UNIDROIT in 1994 and revised
in 2004 and 2010. UNIDROIT continues to revise the Principles as appropriate,
currently considering revisions meant to deal with specific aspects of long-term
contracts. While following the CISG’s approach in many instances, the
UNIDROIT Principles are a set of general rules for international commercial ,
addition, they are able to cover areas that the drafters of the CISG were not able
to agree upon, such as validity, agency, and assignment, among others. Also
unlike the CISG, the UNIDROIT Principles are not a binding text and will
generally only be applied where chosen by the parties or through application by
an arbitral tribunal with the authority to do so.25

Significantly, the UNIDROIT Principles contain rules of interpretation almost

identical to CISG,26 making case law and academic writings of great use in
interpreting the Principles. In addition, the UNIDROIT Principles have a built-
in commentary that gives detailed guidance.

The advantage of Principles of International Commercial Contracts (PICC) is

that they do not favour one particular domestic system of contract law or even
legal system but rather provide a neutral set of rules that combine the best practices
from legal systems around the world. The UNCITRAL on its’ endorsement of
the 2010 PICC stated that these Principles and the CISG principles are
complementary relationship and that PICC can be used to interpret and supplement
the convention.27 The 2015 Hague principles on choice of law in International
Commercial Contracts, which were adopted by the Hague Conference on Private
International Law might trigger welcome change.28Continuously improved since
their first inception in 1983, the PICC have been described as a ‘restatement of
international contract law’29 The PICC could function as a new lex mecatoria.

Lex mercatoria
The lex mercatoria has been described as “a synthesis of generally held and
generally accepted commercial principles that may be expected to be applied to
contracts among the major trading nations.”30 There is a controversy31 surrounding
the lex mercatoria and, in particular, the specifics of its content,32but arbitral
tribunals can, nonetheless, where authorized, apply these principles.33 Certainly,
the content of the lex mercatoria may be informed by or, in fact, contain the
content of international instruments, such as the CISG and the UNIDROIT
Principles.34 For an example of a contract clause containing choice of such broad
principles, consider the United Nations General Conditions of Contract, which
state, with regard to dispute settlement, that “the decisions of the arbitral tribunal
shall be based on general principles of international commercial law.”35
136
Incoterms International Contracts of
Sale
In the specific area of delivery of goods, the International Chamber of Commerce
(ICC) has developed a set of rules governing trade terms that describe the
obligations of buyers and sellers and supplement any other rules governing the
contract. The terms are in combination of three letters. One example is FOB,
standing for “Free on Board”, and the Incoterms rules cover who bears the risks
and obligations when the seller has contracted to deliver goods in this way, namely
“on board the vessel nominated by the buyer at the named port of shipment or
procures the goods already so delivered.”36The Incoterms come with instructions
as to how parties can incorporate them in their contracts. There have been many
versions of the rules, and the most recent are the Incoterms 2010 and 2020. They
were first published in 1936. Incoterms 2010 defines 11 rules. They are upgraded
as per the trade practices.

The Uniform Customs and Practice for Documentary Credits (UCP 600)
This was another creation of International Chamber of Commerce for the
convenience of international trade. The Uniform Customs and Practice for
Documentary Credits, 2007 revision UCP 600, is the soft-law instrument for
regulating letters of credit, a common payment method in international
transactions. The contract must indicate the application of UCP 600 towards the
credit document. It contains rules specifically for electronic records.

6.4 MODEL CONTRACTS AND CLAUSES

International contracts refer to a legally binding agreement between parties, based
on different countries, in which they are obligated to do or not to do certain
things. International contracts may be written in a formal way. Most businesses
create contracts in writing to make the terms of agreement clear, often seeking
legal counsel when drafting important contracts. Contracts can cover all aspects
of international trade, although the most commonly used are:
International Sale Contract
International Distribution Contract
International Agency Contract
International Sales Representative Contract
International Supply Contract
International Manufacturing Contract
International Service Contract
International Strategic Alliance Contract
International Joint Contract
International Franchise Contract
Model contracts are particularly useful for preparing international business
transactions, but they are often expensive. The International Trade Centre offers
for free online its Model Contracts for Small Firms and Legal Guidance for Doing
International Business. The ICC offers (for purchase) an array of model contracts
for international transactions, including an influential model for sales contracts.
The contracts are the products of some of the finest legal minds in the field of
international commercial law. They are constructed to protect the interests of all 137
Business Contracts the parties, combining a single framework of rules with flexible provisions
allowing the parties to insert their own requirements.
Arbitration institutions and rules typically offer model clauses that can be useful
for incorporating an arbitration clause in a contract. For example, the model
clauses of the Arbitration Institute of the Stockholm Chamber of Commerce,
the LCIA, and the International Centre for Dispute Resolution.

Choice of law clauses can be found in the model contracts mentioned above, but
there are also other sources. UNIDROIT, for example, has prepared Model
Clauses for the use of the UNIDROIT Principles of International Commercial
Contracts. Some arbitration institutions also offer model choice of law clauses.
For example, the clauses from the Chinese European Arbitration Centre.

The ICC Confidentiality Agreement is the latest in a series of widely used model
contracts published by the International Chamber of Commerce.

The ICC Force Majeure Clause2003 and the ICC Hardship Clause 2003 are the
examples of the model readymade clauses to be inserted by the parties in their
International Commercial contract.

6.5 ASSESSMENT OF SALE OF GOODS BY

TRANSFER OF PROPERTY WITH CERTAINTY
AND FLEXIBILITY
The transfer of property takes place when the contract is concluded even the
delivery and payment of price happens subsequently. This principle was adopted
by French law by Code Civil of 1804. The same appears in English rule set out in
Sale of Goods Act (SOGA), 1893. The other system of transfer of property is
stipulated by the delivery which was seen in German Law and Australian Law;
the former talks of abstract delivery and the latter with casual delivery. The transfer
of property i.e., the ownership belongs to the realm of general formulas, while
the solutions of the various practical problems belong to the realm of operational
rules. Thus, it is observed that even legal systems with contrasting general
formulas can share identical operational rules.

When questions emerge from the perspective of the ownership, the judge must
refer to the domestic law applicable according to the usual rules of conflict. The
absence of precise rule in the CISG is not a loophole; it was a deliberate choice
by the drafters to leave it the judge to decide as it was a highly sensitive aspect in
the sale of goods. This facilitated the adoption of CISG by divergent legal systems
that adopt one solution or the other for domestic sales.

A certain degree of certainty is attributed to the sale laws that guarantee the
maximum predictability of the solutions asked by the judges and arbitrators.
This implies that legal rule must be as precise as possible and must avoid
loopholes, generic directive for the parties or interpretation gapes for the decision
of cases. On the other hand, any sale law that contains general clauses, such as
the good faith principle, binding the contracting parties to behaviour, whose
legitimacy is decided after the event by Judge or arbitrator, is considered flexible.
In particular, the English law considered a bulwark of certainty, and German law
is considered as very flexible. The former does not have an obligation to act in
138
good faith, while the latter, good faith and reasonableness permeate the entire International Contracts of
Sale
spectrum of contract relationships. The tension between certainty and fairness is
solved by the CISG principles.

6.6 CISG INFLUENCE ON INDIVIDUAL

NATIONAL SYSTEMS
It was noted by the scholars that CISG is having impact regarding both sales of
goods, obligations law and contractual law generally on the numerous legal
systems.37 Its’ influence on individual legal systems may be felt by the courts,
by doctrine, by legal practice and law-makers. The Dutch judges used the CISG
principles in interpreting the national law regarding the formation of contract,
breach of contract and non-conformity of goods sold.

The Scandinavian countries except Denmark revised their national Sale of Goods
Acts in line with the most of the principles of CISG: Finland in 1988, Norway in
1989, Sweden in 1991, and Iceland in 2000.

The CISG influenced the Europe by the Law of Obligations Act in 2002 which is
the identical transposed binding’s nature of usages and practices, the objective
interpretation of the declaration of intent, the freedom of form, the mitigation of
harm and the prohibition of abuse of rights38. The Tokelu Islands has adopted the
rules of the CISG as domestic law both for the sale of goods and for general
contract law. The largest economy, China, the CISG has essentially become part
of domestic law. The Contract Law 1999 was amply supported by CISG rules.
The drafters of new Chinese Civil code were able to find in the CISG a very
important resource of rules both for the sale of goods and the contract law in
general.

In some legal systems reforms in the national laws have begun or have been
suggested. New Zealand Sale of Goods Act, 1908 is the example of this reform.
The largest economy in Africa, Nigeria though not ratified the CISG; Nigerian
Law Reform Commission began to consider a reform of the Sale of Goods Act,
189339. It reproduces the old English law on sale of goods and now there is a call
for the reform to take the CISG as model law40.

Japan didn’t ratify the CISG for a long period. The scholars noted that CISG
rules are arguably better than the Japanese sales law41. The on-going reform42 of
the Japanese law of obligation could raise the level of reception of CISG principles
and rules in the Japanese legal system. The Turkey new Code of Obligations
deeply reformed the contract law which was, based on the Swiss model adopted
in 192043.

Seventeen central African countries who are currently the members of the
Organization for the Harmonization of business law in Africa (OHADA) intended
to remedy the legal and juridical uncertainty that exists among the signatory
states. In 1997 they adopted a uniform law governing commercial law which
was modified and modernised in 2010. This regulates all the sales of goods
between companies, and excludes the sales to consumers. With French culture
they adopted the CISG principles to domestic sale of goods, including several
rules deriving from English Common Law.

139
Business Contracts
6.7 REGIONAL EFFORTS
The preamble to CISG states that: The adaptation of uniform rules which govern
contracts for the international sale of goods and take into account the different
social, economic, and legal systems would contribute to the removal of legal
barriers in international trade and promote the development of international trade.

The European Commission proposed a new uniform law on the sale of goods,
intending to solve the problems arising from this diversity of national contract
laws. The Common European Sales law (CESL) governs sales to both consumers
and businesses. The CESL would then offer a new choice between the legal
systems that the parties can make freely; any national law either of EU members
or of other states.

The Association of Southeast Asian Nations (ASEAN) approved the ASEAN

Trade in Goods Agreement. These treaties expand the free trade area beyond the
borders of the community of ASEAN countries, and envisage the gradual
implementation of the free circulation of goods between ratifying state, elimination
of customs and protectionist barriers. However, these treaties do not contain rule
to be applied to the international trade contracts, but are limited to encouraging
strong regional standardisation.

The UNCITRAL and The Hague have recently established regional centres that
offer a significant opportunity to promote the various private international law
instruments, including those relating to international contract law.44 In the light
of the importance of the issue, efforts by the UNCITRAL Secretariat are welcome
to explore other means of promoting and maintaining uniformity in the
interpretation of the CISG. The Secretariat recently proposed the establishment
of a system of national centres of expertise in the field of commercial law that go
beyond the current national correspondent system of Case Law on Uncitral
Texts (CLOUT).
According to the Secretariat, the system would
a) Collect, analyse, and monitor national case law related to UNCITRAL texts
b) Report the findings to UNCITRAL, and
c) Address the need of the judiciary to better understand the internationally
prevailing application and interpretation of UNCITRAL standards and
achieve effective cross-border co-operation.45
Resources are the biggest obstacle to such a proposal as noted by the Secretariat.

Cooperation:
The UNCITRAL and its sibling operations, UNIDROIT and the Hague
Conference should continue to coordinate and cooperate on all matters regarding
the international contract law in order to ensure that the organisations’ agendas
remain complimentary. The UNIDROIT and UNCITRAL have recently supported
consideration of joint collaboration between the two organisations on substantive
law projects as suggested by US46. These two may consider a joint project on
long-term contracts.

Naturally evolving harmonisation through progressive interpretation and the use

140 of existing instruments will continue to ensure that harmonisation is workable
and feasible. The CISG and PICC working together, have been remarkably International Contracts of
Sale
successful in addressing the needs of commercial players in international
commerce. There are more practical, positive and forward-looking alternative
that build on the existing platform of the CISG and the PICC. The UNCITRAL
must continue its efforts to assist States in maintaining uniform interpretation
and implementation of the CISG.

Battle of forms:
Battle of the forms is one of the unresolved legal problems to which different
counties’ courts have their own approach. There are three main approaches in
the literature as to the battle of forms; domestic approach, last shot rule and
knock-out rule. The last shot rule and knock-out rule are in competition with
each other. The courts are required to answer two questions; a. Is there a valid
contract between the parties? b. If yes, which terms of the standard forms are the
parts of the contract? The CISG has not given uniform answers to solve the
arisen disputes.47 The battle of forms dilemma can’t be resolved by single formula
as there are different situations of collusion and the various positive behaviours
of the parties.
The CISG is not concerned with validity of contract. Which standard terms should
be incorporated into the contract shall be solved by the applicable domestic law.48
The courts are required to look to the general principles of the CISG first, before
recourse to domestic law. Domestic approach is not widespread as this is
inconsistent with the main reason with the existence of CISG, namely unification
of the sales law.
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. The traditional common law rule namely the ‘mirror image ‘ rule
, which produces the last shot rule in order to answer to the battle of forms issue.
The last shot rule ‘treats every statement made with reference to confliction
standard terms as a rejection of the earlier offer, combined with counteroffer.49
In other words, the contract is concluded on the terms of the final form used,
without being objected by the other party.50 The conflicting standard terms knock
each other out and the provisions of CISG are applied instead of them. The courts
are to find the actual or deemed consensus of the parties based on their negotiations
in respect of the essential elements of transaction.
The aforesaid analysis of the battle of the forms makes it clear that knock-out
rule is supported by scholars and cases, because of advantages such as conformity
with the intention of the parties to the business, balanced and fair approach,
supportive approach to the contract validity issue, and providing uniform
application of the Convention by referring to its provisions in case of knock –out
terms.

6.8 COVID-19 PANDEMIC AND ITS IMPACT ON

THE PERFORMANCE OF INTERNATIONAL
SALE OF GOODS CONTRACT
A force majeure clause in international sale of goods contract relives a party
from performing its contractual obligations when certain circumstance beyond
its control arise, making performance inadvisable, commercially impracticable,
illegal or impossible. 141
Business Contracts The CISG Article 79 provides that “(a) Party is not liable for a failure to perform
any of his obligations if he proves that the failure was due to an impediment
beyond his control and that he could not reasonably be expected to have taken
impediment into account at the time of conclusion of the contract or to have
avoided or overcome it, or its consequences”

The treatment of impediment under CISG is different from the treatment under
common law. Generally, four conditions must be satisfied to assert the force
majeure protection under the CISG:
1) The impediment must be beyond the party’s control
2) The impediment is unforeseeable at the time the contract was signed.
3) The impediment and its consequences could not be reasonably avoided or
overcome.
4) The non-performance of the party is the result of the impediment.
Under Article 2 of the Uniform Commercial Code (UCC) of US a seller may be
excused from delay or non-delivery of the goods if performance has been made
impracticable by either:
1) The occurrence of an event “The non occurrence of the which was a basic
assumption on which contract was made” or
2) Good faith compliance with foreign or domestic government regulation

The Common law doctrines of frustration and impossibility may be invoked, but
they have higher threshold to overcome.

Predating the Covid-19 pandemic, well known examples such contractual

arrangements are found in model clauses issued by International Chamber of
Commerce (ICC), namely ICC’s 2003 force majeure clause, and the ICC’s
Hardship clause. This has changed with the ICC’s 2020 Hardship clause which
suggest three different legal consequences in the event of failed renegotiations,
any of which the parties can choose when concluding the contract;
1) The termination of the contract by one of the parties,
2) The termination of the contract by a Judge (or Arbitrator) or
3) finally, the adjustment or termination of the contract by a Judge (or Arbitrator)
To combat uncertainties for future crises like COVID-19, it is therefore advisable
to negotiate individual contractual clauses pertaining to force majeure and
hardship in order to determine the desired distribution of contractual risk in
advance51.

6.9 SUMMARY
In business-to-business international transactions, it would appear that the market
is operating affectively on that differences in contract law do not pose a serious
obstacle to cross-border trade. The conventions, the national laws, soft laws and
trade usages, Unidriot principles, lex Mercatoria, incoterms, UCP 600, model
contracts and clauses, CISG, PICC, Uncitral principles will help to overcome the
obstacles faced by the parties in their cross-border trade through international
contracts of sale of goods.
142
 International Contracts of
6.10 SELF ASSESSMENT QUESTIONS Sale

1) Explain the importance and significance of international contracts.

2) Discuss in detail the law and rules applicable to international contracts
3) Write a note on the historical back ground of the international sale of goods
contracts.
4) Analyse the assessment of sale of goods by transfer of property with certainty
and flexibility.
5) Make a brief note on CISG influence on individual national systems
6) Elucidate the regional efforts and cooperation in unifying the sales law.
7) Critically evaluate the methods of battle of forms.
8) Discuss the unforeseen circumstances which resulted the non-performance
by a seller in an international contract of sale.

6.11 FURTHER READINGS

1) Michael J. Dennis, Modernizing and harmonizing International Contract
law: The CISG and the UNIDROIT Principles continue to provide the best
war forward, Unif.L.Rev.Vol.19,2014,114-151
2) Jurgen Basedow, Some conflict-of-Laws Perspectives on the European
Banking Union,Texas Inernational Journal Vol.54:2 p.245
3) Kamal Huseynli, different Aproaches to conflicting Standard Terms under
the United Nations Convention on Contracts for the International Sale of
Goods, BAKU State University Law Review, vol.2. Issue 2, May 2016 p.197
4) J Cotzee, A Pluralist Approach to the Law of International Sales,PER/PELJ
2017(20) p.1
5) Angelo Chianale, The CISG As a Model Law: A Comparative Law Approach,
Singapore Journal of Legal Studies(2016) 29-45
6) Phillip Hellwege, Understanding Usage in International Contract Law
Harmonization,Vol.66 The American Journal of Comparative Law,127-171
7) Marija D. Mijatovic,The Currentness of the UNIDROIT Principles of
International Contracts-Effects of bottom –up method of Law Harmonization
8) Luca G. Castellani, Review: LRethinking Choice of Law in Cross-Border
Sales, NJCL2019/1
9) Petra Butler, Book Review: UNIDROIT Principles of International
Commercial. Contracts
10) IEckart Broderman, Book Review:UNIDROIT Principles of International
Commercial. Contracts
11) Andre Janssen and Christian Johannes Wahnschaffe, COVID-19 and
international sale contracts: unprecedented grounds for exemptions are
business as usual? Uniform Law Review, 2021 February 2, published online
2021 Feb 2. doi: 10.1093/ulr/unaa026.

143
Business Contracts References:
1
see United Nations Convention on Contracts for the International Sale of
Goods (Vienna, 1980) (the “CISG”), Article 1(1); Principles on Choice of
Law in International Commercial Contracts (2015) (the “Hague Principles”),
Article 1(2)).
2
Preamble Comment UNIDROIT Principles of International Commercial
Contracts 2010
3
Cyril Emery , International Commercial Contracts, Published in March 2016
4
governed by the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (New York, 1958) (the “New York Convention”) with 156
State parties
5
(Vienna, 1980, the “CISG”)
6
see CISG, Part I, Articles 1-5
7
Renaud Sorieul et al., Possible Future Work by UNCITRAL in the Field of
Contract Law: Preliminary Thoughts from the Secretariat, 58 VILL. L.
REV. 491, 500 at n.25 (2013) (citing John O. Honnold, The Sales Convention
in Action—Uniform International Words: Uniform Application?, 8 J.L. &
COM. 207, 208 (1988)).
8
References in this text are to the amended Convention unless stated otherwise.
9
see Limitation Convention, Articles 1-6
10
Limitation Convention, Article 8
11
Limitation Convention, Article 3(2)
12
Limitation Convention, Article 7
13
New York, 2005-the “Electronic Communications Convention”
14
Electronic Communications Convention, Article 3
15
Ibid, Article 5.
16
See, e.g., GIUDITTA CORDERO-MOSS, INTERNATIONAL COMMERCIAL CONTRACTS:
APPLICABLE SOURCES AND ENFORCEABILITY 137 (2014); Gerhard Dannemann,
Common Law-Based Contracts under German Law, in BOILERPLATE CLAUSES,
INTERNATIONAL COMMERCIAL CONTRACTS AND THE APPLICABLE LAW 62, 63
(Giuditta Cordero-Moss ed., 2011).
17
Ingeborg Schwenzer & Christopher Kee, International Sales Law – The Actual
Practice, 29 PENN ST. INT’L L. REV. 425, 440-441 (2011).
18
2010International Arbitration Survey:Choices in International Arbitration
19
2013 Statistical Report, 25 ICC INT’L CT. OF ARB. BULL., no.1, 2014 at 5, 13.
20
A few States have made declarations under CISG, Article 95, including the
United States, indicating that they will not be bound by Article 1(1)(b). With
regard to choice of law, it should be noted that courts and arbitration tribunals
have generally found that, for the purposes of considering which law should
apply when parties have generically chosen the law of a CISG State, the
CISG forms part of the law of that State and will apply unless the parties
have excluded its application or have specifically referred to the domestic
law of the State, for example, by identifying the particular code in
144
 question. UNCITRAL D IGEST OF C ASE LAW ON THE U NITED N ATIONS International Contracts of
Sale
CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS Art. 6, paras.
9-17 (2012).
21
See, e.g., CORDERO-MOSS, supra note 16, at 31.
22
see section 3.1.1
23
see section 2.2
24
Consider, for example, the UCP 600 (see section 3.3.4). While very widely
used and applied, State courts have, in some instances, overridden the UCP
600 with State law despite party choice to be governed by its
provisions. CORDERO-MOSS, supra note 16, at 64-68.
25
MODEL CLAUSES FOR THE USE OF THE UNIDROIT PRINCIPLES OF INTERNATIONAL
COMMERCIAL CONTRACTS 4-6 (2013).
26
, Article 7, (UNIDROIT Principles, Article 1.6)
27
Report of the United Nations Commission on International Trade Law, 45th
Session UN Doc A/67/17 (2012)
28
These principles were endorsed by UNCITRAL at its 48th session. Report of
the United Nations Commission on International Trade Law,48th Session Un
Doc/A70/17(2015)
29
Michael Joachim Bonell “The Law governing International Commercial
Contracts: Hard law Versus Soft law” in collected courses of the Hague
Academy of International law (Brill Leiden-2018) vol 388
30
WILLIAM F. FOX, INTERNATIONAL COMMERCIAL AGREEMENTS AND ELECTRONIC
COMMERCE 31 (5th rev. ed. 2013).
31
Regarding the customary, trade practice and normative understanding of
contractual terms in the international sales contracts with regard to dispute
between the parties to an international sales contract.
32
INGEBORG SCHWENZER ET AL., GLOBAL SALES AND CONTRACT LAW (3d ed. 2012)at
49-50
33
ibid
34
See, e.g., Alexis Mourre, Applications of the Vienna International Sales
Convention in Arbitration, 17 ICC INT’L CT. OF ARB. BULL., no.1, 2006 at 43,
49; SCHWENZER, supra note 27, at 49-50.
35
The term that was used in an international sales contract keep in view the
meaning of the term as per customary, trade practice or normative
understanding of the said term.
36
INCOTERMS 2010: ICC RULES FOR THE USE OF DOMESTIC AND INTERNATIONAL
TRADE TERMS 87 (2010).
37
Cf Franco Ferrari, ed, The CISG and its Impact on National Legal Systems
(Munich: Sellier European Publishers 2008); Peter Schlechtriem, “Basic
Structures and General Concepts of the CISG as models for harmonisation
of Law Obligations” (2005) 10 Juridica Int’l. 27
38
Cf Irene Krull, “Reform of Contract Law in Estonia: Influences of
Harmonisation of European Private Law” (2008) 14 Juridica Int’l 1 22.
39
At a workshop on 2nd September 2014, the Nigerian Law Reform Commission
began to consider a reform of the Sale of Goods Act, 1893 though CISG was
not ratified by Nigeria. 145
Business Contracts 40
Cf Nkiruka Maduekwe, “The CISG and Nigeria: is there a Meeting Point”
(2009/10) 14 CEPMLP Ann. Rev., online.
41
Cf Noboru Kashiwagi, “Accession by Japan to Vienna Sales Convention
(CISG)” (2008) 25 J Japan L 207 at page 214.
42
Ibid.
43
The New Code (Article 208) follows the solution of the CISG (arts. 67, 68)
regarding risk of accidental destruction and deterioration of the goods sold.
The old code connected the passage of risk with the conclusion of the contract
where as risk and benefit on the goods sold in the new code pass to the buyer
at the moment of the transfer of possession.
44
See UN Information Service, New UNCITRAL Regional Center for Asia
and the Pacific opens Republic of Korea, Press release UNIS/L/159(26
January 2012); see Hague Permanent Bureau, Report on the Activities of the
New Regional Offices of Latin America and the Pacific, Doc Information no
1(March 2013)
See Unicitral Secretariate, Technical Cooperation And Assistance Un Doc
A/CN.9/775(May2013) Para 11.
45
See Renaud Sorieul, Emma Hatcher and Cyril Emery, “Possible Future work
by UNICITRAL in the field of Contract Law: Preliminary Thoughts from
the Secretariat” 58 VillanovalLaw Review 491, 505
46
US proposal on UNCITRAL Future Work (n 10) 4-5; UNIDROIT Governing
Council, 92nd Session (n 133) para 35.
47
See Larry A. Dimatteo et.al., The interpretive turn in International Sales law:
An Analysis of Fifteen years of CISG Jurisprudence, 24Nw.J.Intl & Bus.299,
pp.349-357(2004)
48
Freancois Vergne, The “Battle of the Forms” Under the United Nations
convention on Contracts for the International Sale of Goods, 33 Am.J. Comp.
L 233 pp.256-257(1985)
49
Andre Corterier, A Peace Plan for the Battle of the Forms, 10 Int’l Trade &
Bus.L.Rev.195 p .197 (2006)
50
Peter Huber, Standard Terms under the CISG, 13 Vinodnona Journal of
International Commercial law & Arbitration 123, p.129( 2009)
51
Andre Janssen and Christian Johannes Wahnschaffe, COVID-19 and
international sale contracts: unprecedented grounds for exemptions are
business as usual? Uniform Law Review, 2021 February 2, published online
2021 Feb 2. doi: 10.1093/ulr/unaa026.

146