Application of the Convention
Discuss about the Uniform Law For International Sales Under.
The Convention on International Sales of Goods (the Convention) has increasingly become globalized in terms of its application. This essay discusses the requirements and the extent of its application. It also evaluates the extent of its application, the rules on the passage of risk and delivery and how they apply to the instant transaction between Prime Productions Limited and Frenzy Pty Limited. It further evaluates the remedies that can be claimed should there be a breach of the obligations. The Convention brings uniformity to international business contracts and parties can still vary it using written agreements and to provide for protective soft law measures.
The issue is whether the 7 x 3 cameras, 20 HD Microphones, and the 4 camera mounts can be classified as goods. Secondly, the other issue is whether there was a contract created by the emails. The third issue is whether the Convention can ultimately govern the relationship between Frenzy Pty Ltd and the Prime Productions.
The major law which applies is article 1(a) of the Convention which provides for the provides for the applicability of the Convention. The Convention applies when contracts for the sale of goods are between different places of business in two or more contracting states (Romberg, 2011, p, 629). Article 2 provides that the Convention is inapplicable to personal goods, or an auction, electricity, stock, and shares or goods bought in the execution of public authorization (Sarcebvic & Volken, 2009, 271). In the Asante Technologies, Inc. v. PMC-Sierra, INC. INC. 164 F. Supp. 2d 1142, the court noted that the Convention governs the substantive provisions of international sales contracts for the sale of goods whose parties operate from places of business in different states that are contracting parties to the Convention (Huber, 2008, p, 408).
In the instant case, the Frenzy Limited is a based in the United States. The Prime Productions Pty Limited is based in Australia. Both the United States and Australia are contracting parties since they are signatories to the Convention. The places of business for the Prime Productions and Frenzy were in Queensland, Australia and United States respectively. Also, it is notable that the cameras, camera mounts, and the microphones do not fall within the exception of goods listed under article 2 of the Convention. Further, communication between Mark and Felicia were based on emails only. Today’s marketplace globally has been based on email exchanges between different countries. So long as the emails can be deemed a contract, the Convention shall apply because it has no specific requirement for a contract to be formal (Ramberg, 2011, p, 216).
Issues
The requirement raises the issue of whether the Convention applies to contracts involving the United Kingdom as a place of business.
The applicable law is article 1(a) of the Convention which provides that the Convention applies to the contracts for the sale of goods that is arrived between parties who operate business in two or more contracting states. Also, Article 1(3) of the Convention provides that the nationality of parties and the commercial character is not a determining factor in the applicability of the Convention (Huber & Mullis, 2011, p, 408).
Currently, the United Kingdom is a major contracting party to the Convention. Australia is a contracting party to the Convention (Gabriel, 2009, p, 455). The two states are contracting states as under the provisions of article 1(a) of the Convention. Neither the difference in the nationality of the company as a corporate person and the commercial character between the United States and the United Kingdom will affect the applicability of the Convention to the said direct contract.
Conclusion
A direct contract between Prime Productions which is based in Australia and a United Kingdom based firm would still be governed by the Convention.
The first issue is what is meant by DAT term. The other issue is whether DAT term applies to the contract between Mark and Felicia.
Incoterm Rules of 2010 provides for the D-terms that are used in international commercial transactions. The DAT term according to the Rules means Delivery at Terminal. Under the DAT, goods are delivered by the seller when the seller places them at a terminal and unloading them. The terminal as used in the DAT term means place, road or cargo terminal.
In the instant agreement between Felicia and Mark, the cameras, microphones and camera mounts had been delivered to the Port of Brisbane. The port is a terminal within the meaning of the Incoterm Rules. It is also clear that the goods had been offloaded as they were in containers of identifiable packages. Therefore, the present contractual agreement has a DAT term in it.
Conclusion
In conclusion, the delivery of the ordered goods Frenzy limited to the Port of Brisbane and the earlier communication that the delivery would be DAT qualifies terms which apply to the contract.
The requirement seeks to determine the issue whether Felicia and Mark entered into a valid contract.
The Convention provides the various elements of a valid contract under it. One element is thee offer which the Convention refers is that a buyer may make an offer. The offer can be to a specific group or a group of persons. The other one is the subjective intention of the offeror to be legally bound ad recognized under Article 14 (5) of the convention. The other is the sufficient definitiveness in terms of goods, quality and the price as required under article 14 (1) of the Convention. Further, Article 23 states that the exact point of contract conclusion occurs when the acceptance is included. Therefore, a contract is concluded if the acceptance reaches the arty that made the offer (Giannini, 2009, p. 123).
Rule
Mark’s email dated 10th December 2017 does not qualify to be an offer. It does not have specified price quotation as required by article 55 of the Convention. It is an invitation to treat (Van Houtte, 2010, p. 432). Only the confirmation email from Felicia qualifies to be a complete declaration of intent. The offer was also addressed to Mark definitively.
Regarding the intention to be legally bound, Felicia exchanged emails made phone calls and made commitments for pay and supply of goods. The actions point to existence of a positive intention to be bound as under article 14 as it was not a mere proposal but was an effective order with an intention to be binding within the rules enshrined under article 18 to article 22 of the Convention. Though there is lack of consensus ad idem in the mode of delivery, the Convention makes the requirement of intention to be subjective from the point of Frenzy which is the offerors (Huber, 2008, p, 409).
On determinateness, the proposal by Frenzy Limited to Prime Productions was determinable based on the quantity and description of the camera, the microphone, and the camera mounts that it needed. Therefore, it meets the test of sufficient definitiveness under article 14 of the Convention (Kroll & Pilar, 2011, p. 910). There was also a full acceptance by Mark on behalf of Prime production by acceptance of the email which reached Frenzy Limited and prompted them to supply. Certainly, the acceptance of the email reached Felicia. The delivery became affective at the port of Brisbane (Viscasillas, 2012, p, 219).
Conclusion
Therefore, all elements of the contracts were present. As a result, the contract between Felicia and Mark was effective and valid.
The major issue is whether Frenzy Limited as the seller breached the contract of sale of goods between her and Mark.
Article 33 of the Convention requires a seller to deliver undertake its obligation to deliver goods at an agreed place and time. Article 35 further provides that the seller is under and duty to cause delivery of goods of right quality, right quantity and fits the description. The international commercial law also embraces the principle of puncta sunt servanda (Ramberg, 2008, p. 629).
The Cameras were not the latest version. This was a fundamental breach because the initial proposal by Mark described that the procurement was to get equipment that would aid in 3D productions. This is a breach of the seller’s obligation to deliver goods which are in conformity.
Application
Also, microphones were not operational. They were covered in a liquid in the ship. Under DAT contract, the risk had not passed at the time of the said cause of damage. Accordingly, the liability for the loss or damage when goods are on the transit can be attributed to Frenzy Limited. Frenzy limited has breached its obligation under article 35 of delivering goods which are in conformity.
The camera mounts were unsecure. Accordingly, Frenzy limited has breached its obligation under article 35 of the Convention that requires it as the seller to deliver goods of merchantable quality.
On delivery of goods, article 33 of the Convention binds a seller to deliver goods. In the instant case, goods were agreed delivered on DAT terms. According to the Incoterm Rules of 2010, the seller obligation ends with the delivery and offloading from means of delivery of goods at a terminal. The delivery at Port of Brisbane was according to the DAT term in the email dated 17th December 2017. Therefore, the contract was concluded with a DAT term.
Conclusion
Mark is bound by the principle of puncta sunt servanda on the claim of wrongful delivery. However, the claim for breach of duty to deliver the right description of cameras, right quantity of microphones and camera mounts is highly likely to succeed.
The issue is on what the available remedies and the most appropriate remedies are for the buyer.
Article 38 and 39 of the Convention require Mark to examine the foods and send a notice to Felecia of the deficiencies. Article 46 entitles a buyer specific performance for fundamental breaches. Article 48 grants the remedy of a claim for damages. Further, article 49 entitles a buyer treat the contract as void. Article 50 also provides for the remedy of proportional reduction in price (Lookosfsky , 2008, p. 243).
The deficiency in 3X cameras was fundamental. Mark would be entitled to specific performance. In all the insufficient deliveries, Mark can claim damages that are directly consequential to the poor quality of the goods delivered.
Conclusion
Mark can claim damages for the breaches of the obligations of the seller. However, the remedy of avoidance of the contract and reduction in price is not appropriate owing to their economic inefficiency regarding the urgency of change of technology in video production
It raises the issue on the application of domestic law to sale of goods at an international plane.
Application of the Convention to Contract with Movie Equipment Pty Ltd.
Article 7 of the Convention provides for the universal application of the Convention. Article 12 of the Convention allows parties to modify its substantive provisions.
In order to ensure that Australia commercial laws apply, Mark should have had a written agreement with Felicia to that effect and ensure that the agreement is signed and executed.
Conclusion
Therefore, it is possible to include the operation of Australian commercial laws in a a contract of sale of goods through a written agreement between parties.
The issue is what soft law measures could be incorporated into the contract to cure any insufficiency of the Convention in solving conflicts in standard terms.
The Convention has no provision for standard terms of a contract. Writers note that there are options to cure the deficiency using domestic law, last shot rule, and knock out rule (Eiselen, 2011, p. 2).
Mark could use domestic laws of countries on standards by inserting a clause of the governing law. Secondly, Mark could use strict offer and acceptance rule based on terms in accordance with the last shot rule. Lastly, Mark would only consider only terms that are essential and to the contract.
Conclusion
There are many alternatives for Mark but the most effective one is the application of last shot rule.
The issue is how Mark could have mitigated any damage to goods.
Incoterms Rules of 2010 provide that the risk passes on offloading the goods at a terminal
In order to circumvent this possibly onerous rule, Mark ought to have provided for a term to inspecting the goods before offloading (Fletchner et al, 2008, p, 390).
Conclusion
The term on inspection of the goods would assist Mark in determining whether the supplied goods meet the prescribed conditions.
References
Bridge, M., 2017. The International Sale of Goods. Oxford University Press, p. 165
Flechtner. H. M, Band R. A., Walter M.S., 2008. Drafting Contracts under the CISG. New
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Halloway D., Murray C. and Timson Hunt, D. 2013. Schmitthoff’s Export Trade. London:
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Convention. Kluwer law international.
Huber, P., Mullis, A., 2008 The CISG. Mainz: Sellier. p. 408
Gabriel H. 2009. Contracts for the Sale of Goods: a comparison of US and international law.
Oxford, Oxford University Press, p. 455
Kroll, S. L., Pilar, M. V., 2011. UN Convention on Contracts for the International Sale of
Goods (CISG): Commentary. Oxford: Hart, p. 909-911.
Ramberg, J., 2011. ICC Guide to Incoterms 2010. Paris: ICC Publication, p. 216
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Sarcebvic P. and Volken P. 2009. International Sale of Goods: Dubrovnik Lectures. New
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Van Houtte H. 2010. The Law of International Trade. London: Sweet and Maxwell, p. 432
Eiselen, S., 2011. The Requirements for the Inclusion of Standard Terms in International
Sales Contracts. Potchefstroom Electronic Law Journal, 14 (1), 2011, p.2-31.
Giannini, G., 2009. The Formation of the Contract in the UN Convention on the International
Sale of Goods: A Comparative Analysis. Nordic Journal of Commercial Law.
Viscasillias, M., 2012. Contract Conclusion under CISG, Journal of Law and Commerce
Spring 16, p. 315-344.
United Nations. 2010. United Nations Convention on Contracts for International Sale of Goods available at www.unidroit.org.
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