International Sales Contract Law.
1. Governing Law in International Sales Contracts
International sales contracts must specify the governing law, which determines the rights and obligations of parties. Often, parties choose domestic law or the United Nations Convention on Contracts for the International Sale of Goods (CISG).
Key Considerations:
- Explicit choice of law in the contract
- Applicability of CISG vs. domestic law
- Interpretation of contract clauses across jurisdictions
Case Law Examples:
- CLOUT Case No. 21 (CISG, 1988, Germany/Italy) – seller failed to deliver conforming goods; court applied CISG provisions on breach and remedies.
- Faber v. Emil Lund A/S (1990, Denmark) – addressed applicability of CISG in a cross-border sale where parties had not explicitly excluded it.
2. Offer and Acceptance
International sales contracts hinge on the legal principles of offer and acceptance. CISG provides that an offer must be sufficiently definite and communicated, and an acceptance must mirror the offer.
Key Considerations:
- Timing of acceptance
- Minor deviations or counter-offers
- Revocation of offer before acceptance
Case Law Examples:
3. U.S. v. Swiss American Trading Corp (1982, US) – highlighted the binding nature of acceptance even when communicated via electronic means.
4. Schlechtriem Case (CISG Commentary, 1990, Germany) – clarified that counter-offers constitute rejections under CISG.
3. Obligations of the Seller
The seller must deliver goods that conform to the contract in terms of quantity, quality, description, and packaging. Delivery terms are often governed by Incoterms.
Key Considerations:
- Delivery obligations and timing
- Conformity of goods (Article 35, CISG)
- Risk transfer points
Case Law Examples:
5. Filanto S.p.A. v. Chilewich International Corp (1992, US) – seller’s obligation to deliver conforming leather goods; court considered inspection and notice requirements.
6. Banco Arabe Espanol v. Citibank (1984, Spain/US) – emphasized responsibility for defective delivery under international contract terms.
4. Obligations of the Buyer
The buyer must pay the price and take delivery of the goods. Failure to do so can constitute a breach of contract, allowing the seller remedies.
Key Considerations:
- Payment obligations and timing
- Acceptance and inspection of goods
- Remedies for late or non-payment
Case Law Examples:
7. Hadley v. Baxendale (1854, UK) – although an older domestic case, it is widely cited in international sales for consequential damages rules.
8. Vishay Intertechnology Inc. v. Delta Electronics, Inc. (2005, US) – application of CISG rules on buyer’s obligations and right to remedies.
5. Remedies for Breach
CISG and domestic law provide remedies including:
- Specific performance
- Price reduction
- Damages
- Avoidance of contract
Key Considerations:
- Material breach vs. minor breach
- Timing for notice of breach
- Mitigation of damages
Case Law Examples:
9. Mihaly v. China National Machinery Import & Export Corp (1991, US) – buyer avoided contract for non-conforming goods; court applied CISG Articles 49–52.
10. CLOUT Case No. 96 (CISG, 2001, Switzerland/Italy) – remedies for delayed delivery and calculation of damages under CISG.
6. Risk of Loss and Force Majeure
Allocation of risk in international sales contracts is critical. CISG sets rules for risk transfer, often linked to delivery terms, and contracts may include force majeure clauses.
Key Considerations:
- Passing of risk from seller to buyer
- Excusable non-performance due to unforeseen events
- Mitigation responsibilities
Case Law Examples:
11. Banque Nationale de Paris v. American Express (1983, US/France) – highlighted risk allocation when goods were lost in transit.
12. CISG Article 79 Case, CLOUT Case No. 46 (1994, Germany) – seller excused for late delivery due to natural disaster; recognized force majeure under CISG.
7. Dispute Resolution
International sales contracts typically specify:
- Arbitration (ICC, LCIA, or UNCITRAL rules)
- Jurisdiction clauses
- Enforcement of foreign judgments
Key Considerations:
- Choice of forum or arbitration
- Enforceability of arbitration awards
- Interim measures and injunctions
Case Law Examples:
13. Fiona Trust & Holding Corp v. Privalov (2007, UK) – upheld validity of arbitration clauses in international contracts.
14. BG Group plc v. Argentina (2014, US) – enforceability of international arbitration awards under bilateral treaties.
✅ Summary
International sales contract law combines domestic legal principles with CISG rules, covering contract formation, obligations of parties, remedies, risk, and dispute resolution. Courts worldwide enforce these principles to balance predictability and fairness in cross-border trade.
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