International Business Law
International purchase-sale  (2)
(Requisites, rights and duties)
Mgr. Tomáš Gongol, Ph.D.
International Business Law PEM/NPPMO

Requisites of contract form (art. 11)
•Doesn’t have to be concluded or proven in written form
oCan be proved by other means, included witnesses
•Doesn’t require any other formal requisites

Purchase contract content requisites
•Contractual parties
oIdentification
§„…see below as seller/buyer“
•The will of both parties to enter into the contract
§„Parties above have decided….“
•The object of contract – description of goods
oCan be specified by the reference to the catalogue, or samples…
oMachines – has to be also description with technical specification
o„internal part of the contract is description of contractual subject which is technical file
attached in the Annex No. …“

Purchase contract content requisites



Purchase contract content requisites



Seller’s duties
Article 30:
The seller must deliver the goods, hand over any documents relating to them and transfer the
property in the goods, as required by the contract and this Convention.

Place of delivery
 1) In the place specified in the contract
oIn International Business it’s typical that place of delivery differs from final destination of
goods
 2) If there is no place of delivery defined in the contract
•and the contract contains transportation – at the place of handover of goods to the first carrier
(art. 31 a)
•and the contract doesn’t contain transport
1.In the place where is warehouse- if it’s goods which both parties knew where it is located (31 b)
2.In other cases the place is the seller’s place of business (31 c)
Article 31: If the seller is not bound to deliver the goods at any other particular place, his
obligation to deliver consists:
(a) if the contract of sale involves carriage of the goods - in handing the goods over to the first
carrier for transmission to the buyer;
(b) if, in cases not within the preceding subparagraph, the contract relates to specific goods, or
unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at the
time of the conclusion of the contract the parties knew that the goods were at, or were to be
manufactured or produced at, a particular place - in placing the goods at the buyer's disposal at
that place;
(c) in other cases - in placing the goods at the buyer's disposal at the place where the seller had
his place of business at the time of the conclusion of the contract.

PASSING OF RISK
Article 66
Loss of or damage to the goods after the risk has passed to the buyer does not discharge him from
his obligation to pay the price, unless the loss or damage is due to an act or omission of the
seller.
Article 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. …
Article 68
The risk in respect of goods sold in transit passes to the buyer from the time of the conclusion of
the contract...
Article 69
(1) In cases not within articles 67 and 68, the risk passes to the buyer when he takes over the
goods or, if he does not do so in due time, from the time when the goods are placed at his disposal
and he commits a breach of contract by failing to take delivery.(2) However, if the buyer is bound
to take over the goods at a place other than a place of business of the seller, the risk passes
when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal
at that place.
(3) If the contract relates to goods not then identified, the goods are considered not to be placed
at the disposal of the buyer until they are clearly identified to the contract.
Article 70
If the seller has committed a fundamental breach of contract, articles 67, 68 and 69 do not impair
the remedies available to the buyer on account of the breach.
Passing of risk

Delivery time
1.The date specified in the contract
oFixed transactions(„21.9.2009 FIX“)
2.If there is delivery period in the contract, then anytime in that perion (seller sets the exact
date)
odelivery trades – exact or approximate delivery times (e.g. during September, or after harvest
time in 2009)
oprompt trades - „immediately“ it means usually within 7 days after concluding the contract

3.In other cases in reasonable time after concluding the contract
§The time period usual in comparable cases
•
Fixed –convenient for buyer X    Period– convenient for seller
Article 33: The seller must deliver the goods:
(a) if a date is fixed by or determinable from the contract, on that date;
(b) if a period of time is fixed by or determinable from the contract, at any time within that
period unless circumstances indicate that the buyer is to choose a date; or
(c) in any other case, within a reasonable time after the conclusion of the contract.

Late delivery
There might be two kinds of situation:
1.Buyer delivered goods late and delivery time was se as fixed – then late delivery means
significant breache of contract
§Buyer has right to withdraw from the contract and claim damages (art. 74-77)

2.Buyer didn’t deliver goods on time, but fixed clause was not included in the contract – in that
case buyer breached the contract in insignificant way
§Buyer can claim own right which are in art. 46 – 52 (e.g. insist on performing, set additional
delivery time…). The right to claim damages is kept ( art. 74-77)

Early delivery (art. 52)
•Buyer is not obliged to take over early delivered goods
•Problem: if he took over and wants to return, then has to:
oTake all possible measures appropriate to circumstances to preserve goods
oInform the seller
Article 52(1) If the seller delivers the goods before the date fixed, the buyer may take delivery
or refuse to take delivery.

Quality and quantity of goods (art.35/1)
•
•Duty to deliver doesn’t mean only to get something to certain place on time but
•Seller is obliged to deliver goods in quality, quantity and type which is written in the contract
and also the goods has to be packed or anyhow preserved as the contract specify
Article 35(1) The seller must deliver goods which are of the quantity, quality and description
required by the contract and which are contained or packaged in the manner required by the
contract.

Quality and quantity of goods (art.35/2)
Unless the parties arrange otherwise the procedure with goods is according to the contract if…
1.It is suitable for purposes for which is used the same implementation (or special purpose)
2.It has characteristics of goods which the seller presented as a sample
3.It is stored for transport of wrapped in a way usual for transportation of that kind of goods
•
If those points are breached, then goods have factual defects
(2) Except where the parties have agreed otherwise, the goods do not conform with the contract
unless they:
(a) are fit for the purposes for which goods of the same description would ordinarily be used;…
(c) possess the qualities of goods which the seller has held out to the buyer as a sample or model;
(d) are contained or packaged in the manner usual for such goods or, where there is no such manner,
in a manner adequate to preserve and protect the goods.

Documents of goods handover (art. 34)
•
•Hand over must be according the contract – in the place, time and form
•Documents which are typically handed over
oManual
oTechnical documentation
oCertificate of origin
oCertificate of quality control
oDocuments relating to transport
oInsurance certificates
Article 31: If the seller is bound to hand over documents relating to the goods, he must hand them
over at the time and place and in the form required by the contract. If the seller has handed over
documents before that time, he may, up to that time, cure any lack of conformity in the documents,
if the exercise of this right does not cause the buyer unreasonable inconvenience or unreasonable
expense. However, the buyer retains any right to claim damages as provided for in this Convention.

Ownership transfer
Seller’s obligation to deliver goods which must not be limited
oBy right of third person
§Unless buyer agrees
oBy right arising from intelectual property rights
§To exclude liability the buyer has to prove that he didn’t know about branches and he couldn’t
know
§E.g. dutch buyer bought textiles from italian seller. Buyer selled him goods to end customers and
was sued for copyright infringement
•
•If this duty is not followed then the goods have legal defects
•Ownership transfer can be postponed till payment: so-called ownership right reservation
•
Art. 41: The seller must deliver goods which are free from any right or claim of a third party,
unless the buyer agreed to take the goods subject to that right or claim
Art. 42: The seller must deliver goods which are free from any right or claim of a third party
based on industrial property or other intellectual property, of which at the time of the conclusion
of the contract the seller knew or could not have been unaware,

Buyer’s duties
•To pay the purchase price
oIn required amount, currency, time and place
•To take delivery
o
o
o
o
oDo all necessary steps so the seller could deliver goods
oE.g. send traffic instructions
oThe very act of taking the deliver
oNote: in case of early delivery can buyer refuse
Art. 53: The buyer must pay the price for the goods and take delivery of them as required by the
contract and this Convention.
Art. 60: The buyer's obligation to take delivery consists:
(a) in doing all the acts which could reasonably be expected of him in order to enable the seller
to make delivery; and
(b) in taking over the goods.

Paying the price
•Amount
oIn the contract (directly or indirectly)
oOtherwise the purchase price which is normally charged in the time of contract concluding in
certain industrial area
o
oTime
oIn the contract (date / period)
obefore, during, after deliver of goods
oOtherwise in the time when seller allows the buyer to keep the goods and documents
oBuyer can postpone it untill checking the goods

Paying the price
Payment place
oIn the contract
§E.g. bank account (in practice: the payment is consider to be paid after the money gets to the
other account)
oIn place of taking over the delivery or documents if the price is supposed to be paid like that
oOr in the place of business of the seller

Means
oCash payments
oCashless payments
§Clean payments (bank transfers)
§Documentary payments  (documentary credit or encashment)
§Bills and checks

Example NewAge
Company Furniture, s.r.o. (buyer) which is settled in Karviná
sell and buy furniture. They have been using form
 contracts for a long time with NewAge Ltd. Company which has headquarters in Great Britain
(seller). However their production hall are in Washington, USA.
25.2.2003 those companies made a deal on supply garden furniture of brand NewGarden 102Pk1, which
included:
“Place of delivery: Baltimore, Maryland, USA”
“The responsibility for any loss or damage of goods passes to the buyer in the moment of unloading
the goods in Hamburg, Germany”
On 3.3. 2003, unfortunately, the hurricane Dave hit a ship of one supply and captain found out that
all the cargo was damaged by salt water from the sea. While unloading the goods in Hamburg, one
representative of company Furniture, s.r.o. noticed that the colour of the furniture is damaged.
Due to that he demanded reduction of the purchasing price by 10% and paying for repairing the
damaged furniture. Company NewAge rejected this claim with reasoning that furniture was damaged
during transport.

Rozhodci soud: uvedla jsem radeji cely oficialni nazev, jak jsem ho nasla na strankach en.soud.cz,
nejsem si jista, jestli by zkratky (HK a AK) v AJ byly pochopitelne..

In the contract was also included this clause:
”Any disputes arising from this particular contract shall be settled by the Arbitration court
attached to the Economic Chamber of the Czech republic and Agricultural Chamber of the Czech
republic in Prague”

Rozdelila jsem predchozi slide na dva, zdalo se mi tam zbytecne moc textu na jednom, tj. I male
pismo…

Questions and answers
 Q: Consider the application of Vienna Convention for the example above – Furniture s.r.o. and
NewAge Ltd.
A: The settlement of NewAge Ltd. is not important. Enough is to know the place of business
(production hall) in the territory of a member state.
o
 Q: Would be using of Vienna Convention differs if the production halls and administrative office
settled in London, GB?
A: Yes, Great Britain in not one of the contractual parties of Vienna Convention
 Q: Consider the validity of the arbitration clause
A: It is valid. The selection of arbitrators will be made according to Rules of Court of
Arbitration
o

Questions and answers
Q: Consider an argument of NewAge Ltd. They claim it’s not their responsibility because the damage
was made during the transport
A: According to art. 36 (Vienna Convention), the seller takes the responsibility for goods to the
moment of transfer of risks
oIn case that the contract involves also a transport (which was the case) the responsibility passes
on the buyer in the moment of handing over to the first transporter. Parties however contractually
agreed that the moment is landing in Hamburg. Upon this time the responsibility had the seller =
NewAge Ltd.
Q: Consider how the claims of Furniture s.r.o. would change in case the contract was signed
8.3.2003, i.e. during transport of goods and there was no clause, but just: “Place of delivery.
Hamburg”
A: The moment of transferring risks is regulated by art. 68, according which the transfer is in the
moment of signing the contract
oGoods was damaged 3.3.2003 and the contract was signed on 8. 3. 2003. The claims of Furniture
s.r.o. doesn’t change, because the damage was made when the seller took the responsibility