International Business Law International purchase-sale (concluding the purchase contract) Mgr. Tomáš Gongol, Ph.D. International Business Law PEM/NPPMO Purchase contract in international business •The most common business transaction •Business transaction purchase-sale can be in two forms: oDirect trade oProducer (importer) acts on its own with the partner oIndirect trade §Between producer (importer) and partner is the third party – mediater • •Entrepreneurs do not include all facts in contracting oThat’s why it is important to determine the applicable law will be followed oDetermination by two methods (direct and collision) Direct method of purchase contract •Special norms (esp. international agreements) are basic for direct methods, they contains directly rights and obligations of parties oi.e. there is no need to determine the legal order •Direct norms take precedence over collision ones • •Worldwide effort to unify purchase contracts •1964 in Haag : 2 international agreements adopted §Uniform Law on the International Sale of Goods §Uniform Law on the International Sale of Goods unsuccessful o1980 United Nationals Commission on international trade law (UNCITRAL) §United Nations Concention on Contracts for the International Sale of Goods (Vienna convention or CISG) Extension of Vienna Convention (CISG) •Ratified by 92 countries (the greatest success in unification of private law) •Created by UNCITRAL •1991 Czechoslovakia, 1.1.1993 the Czech Republic •Published under No. 160/1991 Coll. Updated: 2019 Text of Vienna Convention Structure (4 parts, 101 articles) 1.Sphere of Application and General Provisions 2.Formation of the Contract 3.Sale of Goods 4.Final Provisions ™ Reservations in articles 92 - 96 Legal nature Incomplete – doesn’t contain everything oDoesn`t regulate e.g. validity, responsibility for damages on health and life oFor these questions need to be applied conflict rule The nature of standards is dispositive oNorms and also the convention are dispositive – it’s application can be excluded by agreement of the parties §Beware of that : „this purchase contract is followed by czech law“ -> Vienna Convention would be applicable because it is a part of Czech law as ratified international treaty §There is need to explicitly write: „this purchase contract is not regulated by Vienna Convention “ Conditions of application 1.Seller and buyer are entrepreneurs from different countries (A,B) which are contractual parties of Vienna Convention 2. 2.It is a purchase contract 3. 3.Subjects of purchase are some kind od goods 1. Condition No. 1 Example: A is subject having a place of business on territory of Poland. B is subject doing business on territory of Czech republic. Both coutries are contractual parties of the Convention. Their relation is qualified as international purchase contract without any reference to Vienna Convention and also this Convention will be applicable Compare to: A is subject from China and B is subject from India •If an entrepreneur has more than one place of business oThe decisive place is the one which has the closes relation to the contract and its performance o •The term „place of business“ is not defined oIt can be e.g. settlement of the company or oplace where the goods are produced Condition No. 2 •It’s based on article 30 and 53 CISG •The definition of purchase contract oThe seller is oblige to deliver goods, hand over the documents and transfer the ownership oThe buyer is oblige to pay for goods purchase price and take the delivery Purchase contract X Contract of Work Case oThe Swiss company as buyer and German company as seller concluded a contract on deliver and installation of fitness devices oIt was water tank with high concentration of salt. This tank began to leak out even after several reparations o oThe Swiss buyer resigned from the contract and requested to refund the purchasing price and damages oThe Court decided that Vienna Convention will be applicable because the price of labour is not more valuable than the goods. Condition No. 3 •The object of purchase must be goods oGoods = movable and tangible things o oCase: oThe German client let Swizz marketing institute make an analysis of market. German client refused to pay because the result doesn’t match the assignment according to him. oThe Court decided that Vienna convention will not be applicable because for the sale of goods is characteristic transfering of ownership rights. oAlthough the report written, it is not a transfer of ownership of the paper but of the ideas which are there Vienna convention cannot be used for purchasing: •Goods bought for personal, family or household uses i.e. consumer contracts Differentiation: especially by amount of purchased goods, place of purchase, etc. •Goods sold at auctions o Differentiation: seller do not know buyer – it is another contracting process •Goods sold during execution o Seller do not have things disposal •Securities or money •Boats, ships, hovercrafts or aircrafts •Electricity Not everywhere is understood as “thing” Creation of purchase contract 1. 2. Proposer Recipient (Acceptor) Proposal (offer) Proposer Recipient (Acceptor) Acceptance Proposal (art.14 CISG) Proposer Proposal (oferta) Requirements: oPersonal - the proposal has to be design to one or more specific persons §Otherwise it is a call for file a motion (e.g. advertising) oContent- it has to be sufficiently definite §goods (individualy/ group) - can be determined by samples or originals, reffering to catalogue, description… §amount §puchase price or provision allowing its determination (e.g. price lists, price arbitrage) o The proposal has to demonstrate willingness of Proposer to be committed if the proposal is accepted. Cancellation and withdrawal of an offer Cancellation oIt is possible if the notice of cancellation of an offer reaches the Acceptor sooner or simultaneously with the offer. oThis is the way to cancel the offer which is even described as irrevocable Withdrawal oAfter the offer reached the Acceptor it cannot be cancelled, but it can be withdraw if: 1.Until potential Acceptor sends an acceptance and 2.An offer is not irrevocable Acceptance (art. 18 CISG) Recepient (Acceptor) Acceptance •Declaration – e.g. signing a contract, consent with an order oEffective when the acceptance reaches the proposer oNo need to use the same mean of communication •Acting – other than sending a consent oE.g. delivering goods, paying the purchase prices oCondition: reflected in the proposal or it’s common practice between parties o •Silence generally doesn’t mean an acceptance of an offer oBut it might become based on conventions and customs or previous contractual agreement (framework agreement containing a commitment to purchase contracts realization) Deadline (art. 18/2,20,21 CISG) •Acceptance of an offer is effective if it reaches the proposer • oAcceptor has to reply: oAt the time they both agreed (the best option in practice) o oNo time is fixed – it means at reasonable time with taking into account circumstances oTime for proposal to get there, acceptance, bridging time, the form of the proposal (email is faster), type of goods o oVerbal proposal has to be accepted immediately (unless it’s otherwise according the circumstances) Doba cesty oferty, akceptace, překlenovací doby, forma návrhu (email rychleji), povaha zboží (perishable?) Deadline for acceptance is from…. •From the day specified in the letter or on the envelope •From the moment when the proposal gets to acceptor in case it was arrange by phone, telex or other means allowing immediate communication ™ •If the last day of the deadline is public holiday then it extends to the first working day •Acceptor sent it late • •No contract conclude • • Late acceptance of a proposal is effective as normal acceptance only if Proposer notify the receiver without any delay • •Acceptor sent it on time • •If the acceptance was sent on time but due i.e. failure of post service reaches Proposer late -> The contract is concluded • • Only if Proposer urgently inform Acceptor that he consider this offer as tedminated • Late acceptance / delivery Rejection / acceptance with slight changes •Rejection oMeans termination of the offer as soon as it reaches Proposer o •Acceptance with slight changes oAnswer which contains changes or appendix which does not significantly change the terms of the proposal is considered as acceptance !!! oProposer has to protest if doesn’t want the contract to be concluded oSignificant change = change of the price, payment, quality, amount, place and time of delivery, liability, dispute resolution Tady jsem trochu pozmenila smysl, protoze doslovny preklad prijeti s odchylkami by bylo with deviations, coz ma v aj trochu jiny podtext Standard form contracts Represent standardised text prepared one of the parties of contractual agreement. There are supposed to be fill in those data: 1) about the other party, 2) specification of goods and its amount, 3) purchase price •Advantage is speeding up and simplifying of the contractual process •It is used often in international business